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no one uses Keynesian

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China, North Korea, Vietnam, Laos, and Cuba

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The United States

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North Korea

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Classical Liberal Capitalism
Marxism and communism
Socialism
Keynesian-ism

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you do get to keep your property only if you work

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you do get rewarded

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capitalism is a good economic system. In a capitalist system, people earn money from their work. Businesses employ and pay people to work. Then people can spend their money on things they want.

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liquidity preference is the demand for money, considered as liquidity.

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government policy in relation to private sector business. His macroeconomics approach was to use government-infused money into the private sector to spur job growth and economic output, thereby increasing a country's gross domestic product.

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The Federal Reserve is the government agency that monitors inflation.

Jupiterimages/Photos.com/Getty Images

John Maynard Keynes was a 20th century British economist who developed a theory about government policy in relation to private sector business. His macroeconomics approach was to use government-infused money into the private sector to spur job growth and economic output, thereby increasing a country's gross domestic product. His theory has been debated by economists, politicians and think tanks for decades. According to author Sheldon Filger, any negative impact is outweighed by positive gains. But the Heritage Foundation finds Keynes' theory fundamentally flawed.

Demand Side versus Supply Side Economics

Both economic theories are based on the inverse law of supply and demand--which states that when a product or service is plentiful, its price falls; when a product or service is scarce, its price rises. Keynesian economics, also known as demand side economics, is based on the theory that by government injection of monies into the citizenry, aggregate demand will increase and suppliers must meet that newly created demand.

Supply side economics on the other hand theorizes that private citizens will create demand on their own in the course of their daily lives and thereby, create more wealth.

Positive Effects

Because aggregate demand is the main staple of Keynesian economics, its positive effects are more or improved infrastructure and a rise in employment. When these two factors are calculated into the overall economy--they in theory--lower inflation, raising the buying power of the dollar and create greater tax receipts to the government.

Other positive effects are that government spending on infrastructure is it is what economists call "visible effect" or "visible hand" meaning that people can actually see the work in progress and the end result, which creates greater consumer confidence.

Negative Effects

Dr. Walter E. Williams, an economist and professor at George Mason University, points out that Frédéric Bastiat's "Broken window fallacy" supersedes Keynes' theory. The "broken window fallacy" simply put says that although government spending has a visual effect, it merely rearranges jobs temporarily and does not contribute to new job creation. What's more, economist Milton Friedman argued that government does not produce anything and therefore the money it spends comes from taxpayers. The result is more tax dollars have to be collected, which encourages inflation and leads to higher unemployment. Other negative effects are lower consumer confidence and less private investment, which can lead to stagnation.

Resources (3)

"The General Theory of Employment, Interest, and Money"; John Maynard Keynes; 1997

"Theory of the Consumption Function"; Milton Friedman; 2008

"Basic Economics: A Common Sense Guide to the Economy"; Thomas Sowell; 2007

About the Author

Owen Richason grew up working in his family's small contracting business. He later became an outplacement consultant, then a retail business consultant. Richason is a former personal finance and business writer for "Tampa Bay Business and Financier." He now writes for various publications, websites and blogs.

Photo Credits

Jupiterimages/Photos.com/Getty Images

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John Maynard Keynes was a 20th century British economist who developed a theory about government policy in relation to private sector business. His macroeconomics approach was to use government-infused money into the private sector to spur job growth and economic output, thereby increasing a country's gross domestic ...

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i Socialism you do keep your stuff

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Economic theory is about the fundamentals of economics and how they apply to current events. Learning about economic theory may help you better understand the global economy.

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economic system where everyone in the society equally owns the factors of production. The ownership is acquired through a democratically elected government. It could also be a cooperative or a public corporation where everyone owns shares. The four factors of production are labor, entrepreneurship, capital goods, and natural resources.

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What Is Socialism?, socialist education, socialism online, socialist organization

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SLP web page with the party's definition of socialism.

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“abolishes” profits and losses, socialism eliminates incentives. Defenders maintain that since it eliminates the role of capitalists and entrepreneurs, workers under socialism “produce for themselves.”

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social and economic doctrine that calls for public rather than private ownership or control of property and natural resources. According to the socialist view, individuals do not live or work in isolation but live in cooperation with one another.

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Table of Contents

socialism, social and economic doctrine that calls for public rather than private ownership or control of property and natural resources. According to the socialist view, individuals do not live or work in isolation but live in cooperation with one another. Furthermore, everything that people produce is in some sense a social product, and everyone who contributes to the production of a good is entitled to a share in it. Society as a whole, therefore, should own or at least control property for the benefit of all its members.

This conviction puts socialism in opposition to capitalism, which is based on private ownership of the means of production and allows individual choices in a free market to determine how goods and services are distributed. Socialists complain that capitalism necessarily leads to unfair and exploitative concentrations of wealth and power in the hands of the relative few who emerge victorious from free-market competition-people who then use their wealth and power to reinforce their dominance in society. Because such people are rich, they may choose where and how to live, and their choices in turn limit the options of the poor. As a result, terms such as individual freedom and equality of opportunity may be meaningful for capitalists but can only ring hollow for working people, who must do the capitalists' bidding if they are to survive. As socialists see it, true freedom and true equality require social control of the resources that provide the basis for prosperity in any society. Karl Marx and Friedrich Engels made this point in Manifesto of the Communist Party (1848) when they proclaimed that in a socialist society "the condition for the free development of each is the free development of all."

This fundamental conviction nevertheless leaves room for socialists to disagree among themselves with regard to two key points. The first concerns the extent and the kind of property that society should own or control. Some socialists have thought that almost everything except personal items such as clothing should be public property; this is true, for example, of the society envisioned by the English humanist Sir Thomas More in his (1516). Other socialists, however, have been willing to accept or even welcome private ownership of farms, shops, and other small or medium-sized businesses.

The second disagreement concerns the way in which society is to exercise its control of property and other resources. In this case the main camps consist of loosely defined groups of centralists and decentralists. On the centralist side are socialists who want to invest public control of property in some central authority, such as the state-or the state under the guidance of a political party, as was the case in the Soviet Union. Those in the decentralist camp believe that decisions about the use of public property and resources should be made at the local, or lowest-possible, level by the people who will be most directly affected by those decisions. This conflict has persisted throughout the history of socialism as a political movement.

Origins

The origins of socialism as a political movement lie in the Industrial Revolution. Its intellectual roots, however, reach back almost as far as recorded thought-even as far as Moses, according to one history of the subject. Socialist or communist ideas certainly play an important part in the ideas of the ancient Greek philosopher Plato, whose depicts an austere society in which men and women of the "guardian" class share with each other not only their few material goods but also their spouses and children. Early Christian communities also practiced the sharing of goods and labour, a simple form of socialism subsequently followed in certain forms of monasticism. Several monastic orders continue these practices today.

Christianity and Platonism were combined in More's Utopia, which apparently recommends communal ownership as a way of controlling the sins of pride, envy, and greed. Land and houses are common property on More's imaginary island of Utopia, where everyone works for at least two years on the communal farms and people change houses every 10 years so that no one develops pride of possession. Money has been abolished, and people are free to take what they need from common storehouses. All the Utopians live simply, moreover, so that they are able to meet their needs with only a few hours of work a day, leaving the rest for leisure.

More's Utopia is not so much a blueprint for a socialist society as it is a commentary on the failings he perceived in the supposedly Christian societies of his day. Religious and political turmoil, however, soon inspired others to try to put utopian ideas into practice. Common ownership was one of the aims of the brief Anabaptist regime in the Westphalian city of Münster during the Protestant Reformation, and several communist or socialist sects sprang up in England in the wake of the Civil Wars (1642-51). Chief among them was the Diggers, whose members claimed that God had created the world for people to share, not to divide and exploit for private profit. When they acted on this belief by digging and planting on land that was not legally theirs, they ran afoul of Oliver Cromwell's Protectorate, which forcibly disbanded them.

Whether utopian or practical, these early visions of socialism were largely agrarian. This remained true as late as the French Revolution, when the journalist François-Noël Babeuf and other radicals complained that the Revolution had failed to fulfill the ideals of liberty, equality, and fraternity. Adherence to "the precious principle of equality," Babeuf argued, requires the abolition of private property and common enjoyment of the land and its fruits. Such beliefs led to his execution for conspiring to overthrow the government. The publicity that followed his trial and death, however, made him a hero to many in the 19th century who reacted against the emergence of industrial capitalism.

Conservatives who saw the settled life of agricultural society disrupted by the insistent demands of industrialism were as likely as their radical counterparts to be outraged by the self-interested competition of capitalists and the squalor of industrial cities. The radicals distinguished themselves, however, by their commitment to equality and their willingness to envision a future in which industrial power and capitalism were divorced. To their moral outrage at the conditions that were reducing many workers to pauperism, the radical critics of industrial capitalism added a faith in the power of people to put science and an understanding of history to work in the creation of a new and glorious society. The term socialist came into use about 1830 to describe these radicals, some of the most important of whom subsequently acquired the title of "utopian" socialists.

One of the first utopian socialists was the French aristocrat Claude-Henri de Saint-Simon. Saint-Simon did not call for public ownership of productive property, but he did advocate public control of property through central planning, in which scientists, industrialists, and engineers would anticipate social needs and direct the energies of society to meet them. Such a system would be more efficient than capitalism, according to Saint-Simon, and it even has the endorsement of history itself. Saint-Simon believed that history moves through a series of stages, each of which is marked by a particular arrangement of social classes and a set of dominant beliefs. Thus, feudalism, with its landed nobility and monotheistic religion, was giving way to industrialism, a complex form of society characterized by its reliance on science, reason, and the division of labour. In such circumstances, Saint-Simon argued, it makes sense to put the economic arrangements of society in the hands of its most knowledgeable and productive members, so that they may direct economic production for the benefit of all.

Another early socialist, Robert Owen, was himself an industrialist. Owen first attracted attention by operating textile mills in New Lanark, Scot., that were both highly profitable and, by the standards of the day, remarkably humane: no children under age 10 were employed. Owen's fundamental belief was that human nature is not fixed but formed. If people are selfish, depraved, or vicious, it is because social conditions have made them so. Change the conditions, he argued, and people will change; teach them to live and work together in harmony, and they will do so. Thus, Owen set out in 1825 to establish a model of social organization, New Harmony, on land he had purchased in the U.S. state of Indiana. This was to be a self-sufficient, cooperative community in which property was commonly owned. New Harmony failed within a few years, taking most of Owen's fortune with it, but he soon turned his attention to other efforts to promote social cooperation- trade union s and cooperative businesses, in particular.

Similar themes mark the writings of François-Marie-Charles Fourier, a French clerk whose imagination, if not his fortune, was as extravagant as Owen's. Modern society breeds selfishness, deception, and other evils, Fourier charged, because institutions such as marriage, the male-dominated family, and the competitive market confine people to repetitive labour or a limited role in life and thus frustrate the need for variety. By setting people at odds with each other in the competition for profits, moreover, the market in particular frustrates the desire for harmony. Accordingly, Fourier envisioned a form of society that would be more in keeping with human needs and desires. Such a " phalanstery," as he called it, would be a largely self-sufficient community of about 1,600 people organized according to the principle of "attractive labour," which holds that people will work voluntarily and happily if their work engages their talents and interests. All tasks become tiresome at some point, however, so each member of the phalanstery would have several occupations, moving from one to another as his interest waned and waxed. Fourier left room for private investment in his utopian community, but every member was to share in ownership, and inequality of wealth, though permitted, was to be limited.

The ideas of common ownership, equality, and a simple life were taken up in the visionary novel Voyage en Icarie (1840; Travels in Icaria), by the French socialist Étienne Cabet. Icaria was to be a self-sufficient community, combining industry with farming, of about one million people. In practice, however, the Icaria that Cabet founded in Illinois in the 1850s was about the size of a Fourierist phalanstery, and dissension among the Icarians prompted Cabet to depart in 1856.

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Socialism | Definition, History, Types, Examples, & Facts

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socialism, social and economic doctrine that calls for public rather than private ownership or control of property and natural resources. According to the socialist view, individuals do not live or work in isolation but live in cooperation with one another.

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The origins of socialism as a political movement lie in the Industrial Revolution. Its intellectualroots, however, reach back almost as far as recorded thought—even as far as Moses, according to one history of the subject.

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You don’t have any property only the government has property you are just sharing with every one

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Success doesn’t get rewarded and the failure will not get punish

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Marxism and communism’s doesn’t have much freedom but you can do what you want but you will still get what every one else is getting

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drives such development? Ultimately, in Cohen’s account, it is human rationality.

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Karl Marx (Stanford Encyclopedia of Philosophy)

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Karl Marx (1818-1883) is best known not as a philosopher but as a revolutionary, whose works inspired the foundation of many communist regimes in the twentieth century. It is hard to think of many who have had as much influence in the creation of the modern world.

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Marxism and communism influence over people is that you will get what other people get. Every one is equal and it doesn’t matter what you  work for you’ll all get the same.

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The classical liberalism capitalism has an influence over individual that want to own their own business to make a living for themselves.

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Classical liberalism capitalism property right you do keep your property, because you earn it

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Prior to the 20th century, classical liberalism was the dominant political philosophy in the United States. It was the political philosophy of Thomas Jefferson and the signers of the Declaration of Independence and it permeates the Declaration of Independence, the Constitution, the Federalist Papers and many other documents produced by the people who created the American system of government. Many of the emancipationists who opposed slavery were essentially classical liberals, as were the suffragettes, who fought for equal rights for women.

Basically, classical liberalism is the belief in liberty. Even today, one of the clearest statements of this philosophy is found in Jefferson's Declaration of Independence. At that time, as is the case today, most people believed that rights came from government. People thought they only had such rights as government elected to give them. But following the British philosopher John Locke, Jefferson argued that it's the other way around. People have rights apart from government, as part of their nature. Further, people can form governments and dissolve them. The only legitimate purpose of government is to protect these rights.

People who call themselves classical liberals today tend to have the basic view of rights and role of government that Jefferson and his contemporaries had. Moreover, they do not tend to make any important distinction between economic liberties and civil liberties.

On the left of the political spectrum, things are more complicated. The major difference between 19th century liberals and 20th century liberals is that the former believed in economic liberties and the latter did not. Twentieth century liberals believed that it is not a violation of any fundamental right for government to regulate where people work, when they work, the wages they work for, what they can buy, what they can sell, the price they can sell it for, etc. In the economic sphere, then, almost anything goes.

At the same time, 20th century liberals continued to be influenced by the 19th century liberalism's belief in and respect for civil liberties. In fact, as the last century progressed, liberal support for civil liberties grew and groups like the American Civil Liberties Union (ACLU) began to proudly claim the label "civil libertarian." Since liberalism was the dominant 20th century ideology, public policy tended to reflect its beliefs. By the end of the century, people had far fewer economic rights than they had at the beginning. But they had more civil rights.
Characteristics of Individual Rights
The Bill of Rights proclaims that individuals have "rights." But what does it mean to have a right? Are some rights fundamentally different from others? In the classical liberal tradition, rights have several characteristics, including the following:

Rights Are Relational. Rights pertain to the moral responsibilities that people have to one another. In particular, they refer to a zone of sovereignty within which individuals are entitled to make choices without interference by others. In this way, rights serve as moral side-constraints on the actions of other people. In a world consisting of only one individual, or in which people never interacted, rights would not exist in the sense that there would be no one to claim a right against and no one who could interfere with the exercise of any individual's rights. Rights exist because people do interact in pursuit of their own interests. Rights are also relational in another sense: They limit the morally permissible actions government may take to interfere with the lives of individuals who are governed.

Rights Imply Obligations. Rights sanction morally allowable actions. In the process, they create obligations for other people to refrain from preventing those actions. To say that "Joe has the right to do X" implies all other people have an obligation not to interfere with Joe's doing X. For example, to say "Joe has a right to build a swing set in his backyard" implies that other people are obliged not to interfere with Joe's construction of the swing set.

Fundamental Rights Imply Negative Obligations. Joe's right to build a swing set obligates others to stay out of the way. It does not obligate others to help Joe - by furnishing labor, materials, etc. So, Joes' right creates negative obligations for others, not positive ones. All fundamental rights imply negative obligations in this way.

For example, the right to free speech implies a (negative) obligation on the part of others not to interfere with your speaking. It does not create the (positive) obligation to provide you with a platform, a microphone and an audience. The right to freedom of the press implies a (negative) obligation for others not to interfere with your publishing. It does not create the (positive) obligation to provide you with newsprint, ink and a printing press. The right to freedom of assembly creates the (negative) obligation for others not to interfere with your association with others. It does not create the (positive) obligation to furnish you with an assembly hall.

From primary rights (e.g., the rights to life, liberty and property) flow derivative rights. These are new obligations that arise as people exercise their primary rights. Virtually all rights created through trade, exchange or contract are derivative. For instance, Joe owns a motorcycle and agrees to let Tom rent it for a period of time. Joe has a right to expect to get his motorcycle back along with the agreed upon rental fee. Joe's rights entail positive obligations on the part of Tom.

Rights are Compossible. Can rights conflict? In the classical liberal conception, a conflict of rights implies a contradiction.

Consider two claims:

1. Joe has the right to do X.

2. Tom has the right to interfere with Joe's doing X.

The first sentence implies that Tom has an obligation not to interfere with Joe's doing X, whereas the second sentence implies that he has no such obligation. Hence, there is a contradiction.

In order to be logically consistent, therefore, rights cannot conflict; which is to say, they must be compossible. Compossiblility means that each person's rights are compatible with everyone else having the same rights. This is the feature behind the adage "Your right to act ends at my nose," and vice versa. Take the claim that each person has a right to liberty. Compossibility implies that when any one person is exercising her liberty she is not violating other peoples' right to liberty.

This does not mean that people cannot compete to achieve mutually exclusive goals. It does mean that the competition must be in the context of rights. Put differently, there may be conflicts among people (e.g., they may be pursuing conflicting goals) but there cannot be conflicts of rights. Also, the statement that rights are compossible does not imply that there cannot be arguments and disputes about what those rights are (which is why we have courts of law). But the presumption of a legal hearing is that even though the disputants may disagree, there are objective, non-contradictory rights for the court to discover.

Fundamental Rights are Inalienable. In the Declaration of Independence, Thomas Jefferson declared that basic rights are inalienable. This means they cannot be alienated from the individual who holds the rights. They cannot be given away or taken away. They cannot be bought, sold or traded. They can be violated, however.

Joe can give away his swing set or sell it or trade it for some other asset. Joe can also buy, sell, trade or donate other pieces of property. But he cannot give away, sell or trade away his right to property as such. Individuals, through consent or contract, may limit their liberty to take specific acts (e.g., under the terms of a contract); but they may not give up their right to liberty as such.

Fundamental Rights Do Not Come from Government. Not only do rights not get their legitimacy from government, but - as the Declaration of Independence so eloquently states - it's the other way around. Government gets its legitimacy from the existence of rights. In the view of Locke, Jefferson and others, rational, moral people form governments for the express purpose of protecting rights. In the Second Treatise on Government, Locke argued that legitimate governments are, in fact, instituted to facilitate the more effective protection or enforcement of these rights, and may not abrogate an individual's natural rights. In natural rights theories, legitimate governments are created by consent, but fundamental rights are not grounded in consent.

Substantive Rights vs. Procedural Rights. Some of the rights enumerated in the Bill of Rights are "substantive" rights. Others are "procedural." The founding fathers were clearly very concerned with both. The distinction is as follows. Legitimate governments are created to protect substantive rights. But in carrying out this task, the government is required to adhere to certain procedures, and these requirements create procedural rights. For example, the Constitution specifies that certain government officials must be elected. This implies that citizens have a (procedural) right to vote.

Furthermore, in order to protect rights and to adjudicate disputes about rights, the government must exercise certain police powers. In our system, certain procedural safeguards were built into the Constitution specifying how the government must act in exercising these powers. For instance, the Constitution requires the government to get a warrant before arresting a person or seizing his property. In addition, for serious crimes it requires the government to provide the accused with a speedy, public trial before an impartial jury, the ability to confront witnesses and to compel testimony. All these rights are procedural rights.

Characteristics of Procedural Rights. As noted, the right to vote, the right to a trial by jury, the rights that flow from all the rules of evidence that courts enforce - these are examples of procedural rights. Procedural rights have at least four characteristics of interest:

1. They are less fundamental than substantive rights. Indeed, the reason for establishing procedural rights is to protect substantive rights.

2. They are conventional. Whether the legislature has one house or two, whether we vote once a year or once every six months, whether we have three branches of government or four or five - all these are decisions to be made. And one decision is not necessarily superior to any other. Despite the fact that these rights are conventional, many of them are nonetheless constitutional. The Founders did not want them to be easily changed.

3. They imply positive obligations. Unlike fundamental substantive rights (which imply only negative obligations), procedural rights imply positive obligations. For example, the right to vote obligates others (government officials) to provide a polling booth, set aside a day for voting, print up ballots, etc. The right to a trial by jury obligates others (government officials) to empanel jurors, provide a judge, make a court house available, etc.

4. They are the result of a balancing of interests. Because procedural rights create positive obligations, arguably, they cannot be secured without the exercise of force or the threat of force. Governments are thus empowered to make people do things which they might otherwise not do in order to secure such rights (including, for example, collecting taxes from unwilling taxpayers). For this reason, the securing of procedural rights requires a delicate balancing between the value of the substantive rights they are designed to protect and the danger of violating these rights in the very act of attempting to protect them.

Substantive Rights versus Police Powers of the State

In the classical liberal world, people are free to pursue their own interests so long as they do not violate the rights of others. They are free to trade with others or not to trade. They are free to associate with others or not to associate. Since fundamental, substantive rights create negative obligations, one respects another's rights by not interfering with the exercise of those rights. Interference generally consists of force, the threat of force or fraud (which is interpreted to be an indirect form of force). The classical liberal world, therefore, is a peaceful world. All interactions are voluntary. A world in which all rights are respected is a world without force or fraud.

However in order to prevent crime, catch and punish criminals, settle disputes and carry out other duties necessary to protect rights, every government will necessarily exercise police powers - powers that are generally denied to ordinary citizens. Among the questions these powers raise, here are three important ones:

1. If one individual violates another's rights (say, by committing a crime) does the violator forfeit his rights to life, liberty, etc.?

2. If the government compels testimony, subpoenas records, secures property, etc., from people who are subsequently shown to be completely innocent of any crime, is government violating the rights of the innocent? If the answer to the preceding question is "not always," where is the boundary to be drawn beyond which the legitimate exercise of police powers becomes a violation of individual rights?

3. A potential problem arises when government exercises its police powers in defense of rights. A classical liberal citizen clearly has the right not to be seized or searched at random. But suppose a government official suspects the citizen is a thief and that he harbors contraband. Suppose also, that after a search, seizure and trial, the citizen is proved to be guilty. How can we describe these government acts using the language of rights.?

Under certain circumstances rights are defeasable. That is, they are justifiably set aside. For instance, people who are imprisoned for committing crimes (i.e., violating the rights of others) have not lost their inalienable rights to life, liberty and the pursuit of happiness; but in order to punish them for the crimes they committed, their rights are (temporarily) set aside.

A person need not have done wrong, however, to have his or her rights set aside. For instance, the same reasoning applies to the search and seizure of a person who is later shown to be innocent. If the search was reasonable and well-founded, it does not count as a violation of the innocent person's rights. Instead, those rights are suspended or ignored in pursuit of a larger objective (defending everyone else's rights).

Clearly, a lot hinges on defining what is "reasonable." Defined too broadly, the police powers of the state threaten every substantive right of every citizen. To ensure that these powers are narrowly circumscribed, procedural rights are established and enshrined in the Constitution. These procedural rights are important not only to drug dealers and mafia capos (who use them to maximum advantage). They are important to every citizen in the exercise of every right.

Rights versus Needs

To appreciate the classical liberal concept of individual rights, it is as important to understand what is being rejected as it is to understand what is being asserted. To say that individuals have the right to pursue their own happiness implies that they are not obliged to pursue the happiness of others. Put differently, the right to life, liberty and the pursuit of happiness implies that people are not obligated to serve the needs, concerns, wishes and wants of others. This doesn't mean that everyone has to be selfish. It does imply that everyone has a right to be selfish.

In the classical liberal world, need is not a claim. That is, the needs, wishes, wants, feelings and desires of others are not a claim against your mind, body or property. At the time the Declaration of Independence was written, this meant that the American colonists had the right to pursue their own interests, independent of the needs of King George and the British Empire. In time, the concept was broadened - affirming each individual's right to pursue his or her own interest, despite the existence of unmet needs somewhere on the planet or even next door.

The idea that need is not a claim applies to procedural rights as well as substantive rights. Tom may feel safer if all suspicious-looking people are routinely seized and searched. But in the world of classical liberalism, Tom's need to feel safe is not a justification for initiating force against all suspicious-looking people.

The Collectivist Notion of Rights

It is worth noting that all forms of collectivism in the 20th century rejected this classical notion of rights and all asserted in their own way that need is a claim. For the communists, the needs of the class (proletariat) were a claim against every individual. For the Nazis, the needs of the race were a claim. For fascists (Italian-style) and for the architects of the welfare state, the needs of society as a whole were a claim. Since in all these systems the state is the personification of the class, the race, society as a whole, etc., all these ideologies imply that, to one degree or another, individuals have an obligation to live for the state.

Despite the fact that 20th century collectivists opposed the classical liberal concept of rights, very rarely did they attack the notion of "rights" as such. Instead, they often tried to redefine the concept of "right" in a way that virtually eviscerated any meaningful notion of liberty. For example, in his 1944 State of the Union Address, President Franklin D. Roosevelt called for a "second Bill of Rights," which included the following:

The right to a useful and remunerative job in the industries or shops or farms or mines of the nation.

The right to earn enough to provide adequate food and clothing and recreation.

The right of every farmer to raise and sell his products at a return which will give him and his family a decent living.

The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad.

The right of every family to a decent home.

The right to adequate medical care and the opportunity to achieve and enjoy good health.

The right to adequate protection from the economic fears of old age, sickness, accident and unemployment.

The right to a good education.

Note that these rights are very different from the rights Locke, Jefferson and the Founding Fathers had in mind. Among the characteristics of Roosevelt's rights are the following:

1. They imply positive obligations on the part of others. When Roosevelt says people have the right to "earn enough to provide adequate food, clothing and recreation," he does not mean that people have the right to work hard (extra hours if necessary) to earn money to buy what they need. Instead, he means that other people (including potential employers, consumers, other workers, etc.) have an obligation to insure each worker's wage is sufficiently high. Similarly "the right of every farmer to ... a decent living" does not mean farmers have the right to work the land and produce sufficient output. Instead it means others are obliged to act in a way that insures the farmer's minimum income. In general, your "right to a useful...job" implies others are obligated to provide that job if you can't find one on your own. Your "right ... to a decent home" implies others are obligated to provide you with a home if you cannot otherwise obtain one. And so forth.

2. Each individual's positive obligations are notoriously unclear. Consider all of the ways in which you could potentially violate a farmer's "right" to a decent income. You might buy groceries on sale, or at a discount outlet, instead of paying a higher price. You might buy cheaper substitute products (corn instead of soybeans or vice versa). You might grow some crops in your own backyard instead of buying items at the supermarket. You might buy some land and become a farmer yourself - thereby increasing output and depressing overall market prices. You might change your diet and not buy the farmer's output at all. Clearly the list is almost endless, as is the list of things you might do to increase the farmer's income. One thing is certain: From the statement that a farmer has a "right to a decent income" there is no way for any of us to determine what precisely our positive obligations are.

3. As a practical matter, only government action could insure such rights. Even if you could figure out how your actions might help the farmer, you would by no means be home free. In Roosevelt's view, everyone has the right to earn a decent income. So in the very act of helping the farmer, you might be hurting someone else. Whenever you buy from A at the expense of B, you help the employees of A at the expense of the employees of B - and vice versa. Indeed, every transaction you make - every act of buying and every act of selling - potentially violates one of Roosevelt's "rights." As a practical matter, therefore, Roosevelt's rights could be observed only if all of us ceded much of our liberty to make economic decisions to the government. And the amount of power that would have to be ceded would be enormous.

4. They imply virtually unlimited government power with respect to the economy. Incredibly vague rights imply incredibly vague obligations, and, if nothing else, all of Roosevelt's rights are very, very vague. Hence if government is to act as the agent for all of us, the potential scope for action would be enormous. In fact, Roosevelt believed that there was no economic decision - no act of buying or selling or producing - that government should not be able to regulate. Thus in implementing Roosevelt's second Bill of Rights one would at the same time be eliminating all of the economic rights that classical liberals thought people had. That is, implementation of Roosevelt's scheme would eliminate the right of every individual to pursue his own happiness - at least in the marketplace.

Historical note: It's hard to exaggerate how truly collectivist Roosevelt's vision was. At his behest, Congress passed the National Industrial Recovery Act (NIRA), which attempted to regulate the entire economy, based on the Italian fascist model. In each industry, management and labor were ordered to collude to set prices, wages, output, etc. (acts that today would be a criminal violation of the anti-trust law). So intrusive were these regulations that what in retrospect seems like an incredibly silly regulation made it all the way to the Supreme Court, which responded by declaring the entire scheme unconstitutional.

Roosevelt was among the most collectivist (anti-individual rights) presidents the United States has ever had. And not just in the economic realm. Although Abraham Lincoln and Woodrow Wilson before him had suspended constitutional rights in the time of war, Roosevelt went further than any president before or since. On his orders Japanese Americans were rounded up and forced into detention camps (for no other reason than the fact that they were of Japanese ancestry) for the duration of World War II.

The Source of Rights

Where do rights come from? How can they be defended? The Founding Fathers believed that fundamental, substantive rights come from nature. Hence the term, "natural rights." But they also relied on other types of reasoning to defend both substantive and procedural rights, including utilitarianism, common law and social contract theory.

Nature as a Source of Rights. Rights as moral (and subsequently) legal claims limiting government and individual actions taken against an individual or for enforcement of certain claims arose first in the natural rights tradition in philosophy. Philosophers Hugo Grotius (15831645), Samuel von Pufendorf (1632-1694) and, most famously, John Locke (1632-1704) argued that humans have certain fundamental rights (e.g., to life, liberty and property). These ideas clearly influenced our Founding Fathers and are reflected in the Declaration of Independence and other documents. While early theorists, including Locke, believed that God granted humans these rights, all of them argued that, even absent God, humans had rights and that they could be discovered by using the human capacity for reason to examine the natural laws of the universe.

The argument from natural rights is appealing when applied to broad categories of substantive, fundamental rights, such as the right to life, liberty and property. It is easy to see how natural rights theory conforms to the substantive rights listed in the Bill of Rights including the areas of speech, religion, assembly, etc. But what about the procedural rights? On a natural rights theory, procedural rights or subsets of rights and restrictions upon government action are chosen on the basis of how well they protect the fundamental rights that government was established to protect.

Utility as a Source of Rights. A second philosophical line of argument used to ground rights, and recognized by the Constitution's writers, is the argument from utility. On this view certain rights are vital because they create the conditions under which happiness, or the general state of welfare, is maximized. And because most individuals are the best judge of their own needs, wants, desires and values, the sum of individual (and cumulatively) social welfare is likely to be maximized when people are free to make their own decisions rather than have those decisions made by someone else. Thus, in order to secure human happiness and well-being, it is necessary to create a sphere of personal autonomy within which each individual's personal judgment concerning what he or she wishes to do is paramount and cannot be legitimately interfered with by either other individuals or by governments, even for that person's own good.
Theorists as far back as Locke recognized a utilitarian argument for rights. For example, in arguing for property rights, Locke observed that by allowing people to remove property from the commons and make it their own, the effort they put into improving their property would produce benefits to society as a whole.

The Common Law as a Source of Rights. A third source of rights, closely tied to the natural rights view and known and noted by the Founders, was the common law. In general the law can be divided into two broad categories, the public law and private or common law. Public laws, created by legislative bodies, consist of statutes based on constitutional strictures. Private law, on the other hand, historically evolved as a result of court rulings or judicial determinations in the areas of property, contract and tort law.

"Common law" is a label used to describe the ancient legal process of discovering and delineating the law on a case-by-case basis. Historically, common law judges did not see themselves as creating law so much as discovering it. They subscribed to natural law doctrine whereby "there are natural rules of conduct inherent in humanity itself, most easily discovered by the evolution of customs of dealing. The job of the common law judge was to look to custom in an effort to discern the law that already existed and then render rulings based upon it. Over time the notion evolved that similar cases should be decided similarly and the concept of stare decisis was born.

Until the latter part of the 19th century, individuals used three bodies of the common law (e.g., trespass, tort and riparian law) to quite good effect. It is easy to see why the Constitution's authors were supportive of the common law. Its development is closely tied to recognition of the rights that they cherished. The common law is connected to the classical liberal analysis of natural rights to life, liberty and property.

Note that although the common law approach and the utilitarian approach to individuals' rights start with very different premises, theorists such as Richard Posner, Goodman and Rubin have argued that both approaches often arrive at the same conclusions.

Social Contract as a Source of Rights. In writing the Constitution, its authors were also aware of and profoundly influenced by social contract theory and its relation to individual rights. The philosopher Thomas Hobbes argued that legitimate government is founded on a social contract between subjects (who promise to obey the sovereign) and the sovereign (who in return for their obedience promises to protect them from crime and foreign aggression). Locke, whose views had more direct influence on the founders, construed the contract as between the members of society who mutually promise to forgo certain freedoms that they could rightfully exercise in the state of nature in exchange for security provided by a government instituted by the contract. Both Hobbes, in a very limited sense, and Locke argued that certain citizens retained certain rights even against government action. Once the contract is instituted and the government becomes established, it is expected to set up certain procedural rights and safeguards (derivative rights) to secure individuals' basic rights from violation whether by third parties or the government itself.

The basic insight of social contract theory is that government gains its legitimacy from the consent of the governed - people who have the right to form a political compact. The compact itself creates obligations and powers for both the governed and the governors. While no government ever arose from an actual social contract, social contract theory was developed as a way of both justifying obedience to the government by the governed - and placing justified limits on the government. On this view, governments are justified to the extent that they protect rights and unjustified when they either fail to persistently protect individuals from other persons violating their fundamental rights or when the government itself oversteps its legitimate authority and begin to violate individual rights.

More recently, John Rawls, among other philosophers, has brought new life to social contract theory. Rather than viewing rights as gifts from government or from God, or basing rights on utility or on principles that could be divined by applying reason to a study of natural law, Rawls argues for a social contract as the basis of rights. This is not an actual contract that people sign.

Instead, it is a hypothetical agreement that rational people would agree to if they knew they were going to have to live under the agreement, but did not know what their individual positions were going to be. In real life, each of us has assets and liabilities, including intelligence, strength, health, income, wealth, family relations, etc. With this knowledge each of us would be inclined to choose social institutions advantageous to us. But Rawls asks us to imagine we are standing behind a "veil of ignorance." That is, we know we are going to be born into a world and be one of its people - but we don't know which one so we have to choose to institutions "position blind," without knowing which person we will be.

Rawls and others have argued that in an original position, absent personal biases or prejudices, rational people would conclude that basic political institutions are just if and only if each person has an equal right to the most extensive basic liberty compatible with similar liberty for all. Seen in this light, the social contract position is a different way of reasoning toward people having fundamental rights to life and liberty - with compossibility built in.

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John C. Goodman is President of the Goodman Institute for Public Policy.

See, for example, John Locke, Second Treatise on Government (1952) Sections 85, 88, 94 and Chapter IX (among other places) for statements concerning the role of government, and Sections 93, 131 and Chapters XI and XIX (among other places) for statements concerning the limitations on government power and what can be done when a government violates its trust. Following standard practice, citations of Locke are to section or chapter numbers.

This is not the world the Founding Fathers created. It is instead a vision or ideal that guided much of what they did in forming a government. Moreover, that ideal became more fully developed in the 19th century by classical liberals who argued for an end to slavery and for women's suffrage and the expansion of liberty in other ways.

The National Industrial Recovery Act (NIRA), passed in 1933, established price and wage codes with the intent of stimulating economic recovery during the Great Depression. The U.S. Supreme Court overturned the NIRA, when it ruled in A.L.A. Schechter Poultry Corp. v. United States (1935) (often referred to as the "sick chicken" case) that the Act encroached on states' rights and gave the executive branch powers reserved for the legislature.

A number of contemporary scholars have gone to great lengths to provide defenses of or argument for rights, rather than treating rights or liberty as fundamental and not needing justification. See, for example, Robert Nozick, Anarchy, State and Utopia (New York, N.Y.: Basic Books, 1974); A. John Simmons, The Lockean Theory of Rights (Princeton, N.J.: Princeton University Press, 1992); Ellen Frankel Paul, Property Rights and Eminent Domain (Somerset, N.J.: Transaction Publishers, 1987); Tibor R. Machan, Individuals and Their Rights (Peru, Ill.: Open Court Pub. Co., 1989).

1. Marlow H. Green, "Common Law, Property Rights & the Environment: Analysis of Historical Developments & a Model for the Future," Unpublished Manuscript Political Economy Research Center, 1995, page 3.

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"Stare decisis" literally translates as "to stand by decided matters." The phrase "stare decisis" is itself an abbreviation of the Latin phrase "stare decisis et non quieta mover" which translates as "to stand by decisions and not to disturb settled matters." What the doctrine of precedent declares is that cases must be decided the same way when their material facts are the same. Paul Perell, "Stare Decisis and Techniques of Legal Reasoning and Legal Argument," Legal Research Update 11-21, 1987. pages 1-2. Although the doctrine of stare decisis does not prevent reexamining and, if need be, overruling prior decisions, "It is . . . a fundamental jurisprudential policy that prior applicable precedent usually must be followed even though the case, if considered anew, might be decided differently by the current justices. This policy . . . 'is based on the assumption that certainty, predictability and stability in the law are the major objectives of the legal system; i.e., that parties should be able to regulate their conduct and enter into

As opposed to the common law, public or legislatively created law may be characterized as one group of individuals creating rules that govern others and sometimes themselves as well. This might be unobjectionable if the first groups interests were coextensive with the interests of everyone, but this is not often, if ever, the case. Rather, public law represents the interests of some groups too strongly and others too weakly, with rent-creating and rent-seeking rather than an equitable distribution of the benefits and burdens of social life being the norm.

Richard Posner, Economic Analysis of Law, New York: Aspen Law & Business, 1998.

John C. Goodman, "An Economic Theory of the Evolution of Common Law," Journal of Legal Studies, vol. 7, 1978, page 393.

1. See Hugo M. Mialon and Paul H. Rubin, "An Economic Analysis of the Conflict Between the Patriot Act and Civil Liberty," NCPA's Debate Central Web site, online at http://www.debate-central.org/topics /2005/LINKS/ economic.html

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Goodman Institute for Public Policy Research

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Prior to the 20th century, classical liberalism was the dominant political philosophy in the United States. It was the political philosophy of Thomas Jefferson and the signers of the Declaration of Independence and it permeates the Declaration of Independence, the Constitution, the Federalist Papers and many other documents produced by the people who created the American system of government.

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Substantive Rights versus Police Powers of the State

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Liberalism, political doctrine that takes protecting and enhancing the freedom of the individual to be the central problem of politics.

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Liberalism, or what we might now refer to as "classical liberalism" to distinguish it from today's usage of the term, emerged as a reaction to Europe's decaying feudal order in the 17th and 18th centuries. The rising urban business class, sometimes called the bourgeoisie, sought increased political influence to match their growing economic and social power. Momentum for change accelerated as political philosophers, developing ideas of natural rights and the social contract, began to articulate an ideology that rejected hereditary privilege and fit the political aspirations of these growing political actors. These ideas were profoundly influenced by two major movements in Western civilization. The first movement was the Protestant Reformation and its notion that a person has an individual relationship with the divine. The second movement was the Enlightenment with the assumption that the world has a natural order that individual reason can discover and understand independently of faith, a rationalist philosophy.

Individualism

Classical liberalism holds that there are certain natural rights of which no government, elected or otherwise, may deprive its citizens. This is an important distinction. Governments do not give rights to their citizens. Rights belong to citizens because they are inherent in the natural order or granted by God Almighty (take your pick). John Locke, a political theorist of the 18th century identified three such basic rights, "life, liberty, and property." Thomas Jefferson memorably plagiarized Locke's idea in the Declaration of Independence when he wrote that all men share certain inalienable rights, among them "life, liberty, and the pursuit of happiness."

Given the political and economic interests of its beneficiaries, classical liberalism places a very strong emphasis on the individual's right to property. This ideology is thus a natural favorite for proponents of a capitalist economic system. A capitalist economy allocates economic decision-making to individuals meeting in free markets. In such a system individuals, rather than the state, are the predominant owners of property. This highlights another key aspect of classical liberalism: its clear suspicion of centralized political power and its earnest advocacy of limited government. You may recall another famous phrase credited to that prolific phrase-turner, Thomas Jefferson: "That government is best which governs least."

Limited Government

This emphasis on limited government is notable in three particulars. First, classical liberalism is hostile to government interference in the marketplace. It was a reaction against the repressive medieval guild system of trades and the heavy-handed state policy of mercantilism, typified under France's economic minister, Colbert. Adam Smith, a Scottish political economist, invoked the metaphor of an invisible hand to describe how individual selfishness in an unregulated economy actually promotes the public good. More bluntly, big government is bad for business and prosperity. Second, the classical liberal tradition emphasizes separation of church and state (though not always the wall of separation endorsed by some modern constitutional scholars). The emerging business elites who embraced classical liberalism were often Protestants and victims of persecution or discrimination by Catholic, Anglican or other state churches. State control of religious practice was bad for business and, more fundamentally, a matter best left to individual conscience. They saw proof for these points in the apocalyptic bloodshed of Europe's Thirty Years War, a war waged in the name of religion.

Third, while the classical liberal tradition celebrates civil society (associations of individuals and institutions outside of government control) and charitable giving to the poor, it rejects the proposition that the state is responsible for the welfare of society's less fortunate, whether the poor or ill. This is a notable difference between classical liberalism and socialism. It is inclined to see an individual's fate as the outcome of his or her individual decisions, good or bad. It is relatively optimistic about an individual's capacity for self-transformation and accents individual responsibility. It is skeptical of theories emphasizing environmental determinism (the idea that individuals are severely limited by the social conditions into which they are born). The cliché maxim that someone should "pull himself up by his own bootstraps" is a reflection of the liberal ideal. Thus concerning the cardinal value of equality, it embraces equality of opportunity but rejects equality of results. Classical liberalism is adverse to the welfare state.

In conclusion, classical liberalism is a political ideology grounded in the notion of individualism and limited government, with a large helping of property rights on the side. It demands formal political and legal equality, but does not require or even expect social and economic equality.

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ADA Text Version Liberalism, or what we might now refer to as "classical liberalism" to distinguish it from today's usage of the term, emerged as a reaction to Europe's decaying feudal order in the 17th and 18th centuries. The rising urban business class, sometimes called the bourgeoisie, sought increased political influence to match their growing economic and social power.

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Karl Marx

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John Maynard Keynes

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Karl Marx

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John Locke

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The single most important fault line in American constitutional law dates back to 1937. In that year, the Supreme Court granted several important victories to the progressive movement, which in the first third of the twentieth century displaced the more classical liberal movement of the so-called old court. The bedrock assumption of the progressives was that a combination of inclusive democratic politics and administrative expertise could forge a more prosperous economy while simultaneously reducing the economic gulf between the rich and the poor. To reach their goals, the progressives needed to win on two key constitutional issues. The first was a broad reading of the "commerce clause"-"Congress shall have the power . . . to regulate commerce with foreign nations, and among the several states, and with the Indian Tribes"-so that virtually all productive economic activities, from agriculture and manufacturing to transportation and communication, would become subject to centralized regulation from the national government. The second was to narrow the scope of economic liberty and private property so they could not block the will of the administrative state.

Illustration by Barbara Kelley

Hoover senior fellow Richard Epstein.

In my first encounter with progressive thought in college and law school in the 1960s, I thought that the progressive agenda was unpersuasive, both for its cavalier disregard of specific constitutional texts, and for its uncritical embrace of large government. I fancied myself a libertarian who insisted that the sole function of government was the control of force and fraud. Over years, my position evolved toward classical liberalism, which regards it as proper for government to also supply public goods like courts and infrastructure, to regulate monopoly, to tax to raise general revenues, and to use its eminent domain power to acquire specific assets needed for public use. My objective was to take the middle path between anarchy on the one side and state domination on the other. Classical liberalism stands in opposition to both hard-core libertarian minimalism and the unbounded progressive state. My new book, The Classical Liberal Constitution: The Uncertain Quest for Limited Government, offers a comprehensive synthesis of the common law origins of individual rights, the key provisions of the United States Constitution, and the classical liberal theory that undergirds both.
Cass Sunstein and The New Republic
One person who has long appreciated the various nuances of my intellectual odyssey is Cass Sunstein, my former colleague at the University of Chicago. His thoughtful review of my book in The New Republic carries two eye-popping titles. In the print version it reads: "Tea Party Constitutionalism: The unexamined dogmas of the libertarian right." The online title, with its mix of flattery, condescension, and denunciation, is probably worse: "The Man Who Made Libertarians Wrong About the Constitution: How Richard Epstein's highly influential, highly politicized scholarship cemented Tea Party dogma." I am confident that the editors of The New Republic chose both these inflammatory title to discredit my book to its readers. The magazine has little patience for the Tea Party, whose own website exhibits a hard-hitting style of politics that is at sharp variance with my own more cerebral approach. It is easy for them to debunk my book for its supposed Tea Party connections.

There is, of course, a complete disconnect between the inflammatory titles and the article that follows. To his credit, Sunstein's review goes to great pains to trace out the evolution of my intellectual approach before criticizing it. As he notes, I do not come to constitutional law as a full time teacher of the subject who treats the Supreme Court as its intellectual epicenter. Rather, my view is that we can only understand and interpret the document by explicit resort to its common law, or judge-made, foundations of individual rights and their correlative duties. One strong focus of the common law is on two-person disputes: A has hit B, or C has not kept his promise to D. In these cases, the equities between the parties loom large relative to the litigation costs needed to resolve them. Accordingly, a libertarian framework that prohibits the use of force and fraud and prizes voluntary cooperation helps us analyze particular cases.

Eventually, however, we must move beyond two-party disputes to those legal conflicts that implicate large numbers of people. Consider, for example, the case of pollution, a common form of nuisance, which may come from many sources and harm many people simultaneously. When that happens, ordinary two-party litigation becomes too costly relative to the benefits it generates. As a result, well-crafted direct regulation steps in to control the harmful externalities from pollution at a far lower cost than individual lawsuits. At the same time, many forms of noise or odor pollution are both low-level and widely distributed, such that it is best to adopt, as I argued in 1979, "the live-and-let-live approach" that Baron George Bramwell articulated so brilliantly in his 1862 masterpiece in Bamford v. Turnley.

The logic behind Bamford was that each landowner was forced to relinquish some of his property rights against all neighbors, in exchange for which they had to release their rights of action against him. Each release from others thus supplied in-kind the just compensation needed to offset the loss of property rights, so that everyone was better off than before.

These forced exchanges for mutual benefit became, in my view, the calling card for collective action. The broad application of the just compensation principle thus supplied the intellectual bridge between private and public law. In the classical liberal framework the government could force exchanges of property rights so long as all parties were left better off than before. That principle is connected to welfare economics through the notion of Pareto improvements, which favor any social change that leaves at least one person better off and no one worse off. It also links to the just compensation provision of the Fifth Amendment, "nor shall private property be taken for public use, without just compensation."

As I argued in my 1985 book, the Fifth Amendment marks a major advance over standard Lockean theory, which sought to ground limited government in the notion of consent. But if individual consent is required for each government action, then the government is paralyzed. If the majority can wipe out the minority, then factions are given free rein. However, if you allow the government to take only if it supplies an equivalent to the property taken, then you neatly avoid the twin problems of holdout and expropriation. The link between public and private law thus runs through this middle way.
Classical Liberal or Progressive?
My classical liberal position forces progressive intellectuals like Sunstein to combat a foe that cannot be dismissed on the ground that it cannot account for the most rudimentary forms of legitimate government action. Sunstein himself, I believe, commits just this error in his 1999 book, with Stephen Holmes, The Cost of Rights: Why Liberty Depends on Taxes. That book offers an elegant explanation of why taxation is needed to provide for public goods like fire prevention and to enforce private rights, including those of contract and property. What is most interesting about their book, however, is that it does not identify any major intellectual figure who thinks that the optimal level of taxation is zero. Indeed, their one quotation from Friedrich Hayek, himself a defender of the flat tax, warned against the excesses of laissez-faire that Hayek found distasteful.

The classical liberal position similarly recognizes the necessity of taxation along the lines found in the United States Constitution. Classical liberalism and the Constitution also both address the question that Holmes and Sunstein avoid in their book: What is the optimal form of taxation? Making the right choices requires a close study of the proper ends for taxation and of different types of taxation-income, real estate, sales, estate, and gift. In all cases, that search has a strong second-best flavor, because all taxes tend to distort the relative prices of the various goods and services subject to taxation.

Classical liberals tend to favor special assessments and user fees whenever individual benefits can be paired with individual burdens. Otherwise they gravitate to a single flat tax on income or consumption, on the ground that neither imposes any explicit limit on government revenues, but both reduce through their fixed forms the overall level of factional intrigue, which is magnified, for example, by blunderbuss egalitarian proposals such as those by Thomas Piketty.
What Constitutional Revolution?
Sunstein's review never challenges any of the particular places where I claim that the classical liberal approach is superior to its progressive alternative, as both theories relate to government structure or individual rights. Instead, Sunstein notes that many contemporary thinkers have rejected my basic constitutional orientation. He even invokes the authority of Oliver Wendell Holmes, Jr. to push for popular democracy: "If my fellow citizens want to go to Hell I will help them. It's my job." After expressing some sympathy with some of my (unidentified) positions, he concludes emphatically that "a judicially engineered constitutional revolution is not what America needs now."

The argument is too convenient to work. The general public is pessimistic about the current economic situation, and one progressive gimmick after another has not stemmed the retreat. Indeed, if Holmes were right, then the rights of the " discrete and insular minorities" could be trampled at will, both before and after the epic 1954 Supreme Court decision in Brown v. Board of Education.

So the question really is, which items should be left to political processes and which should not? On that score, Sunstein sometimes veers toward libertarianism, like when he writes in praise of Justice Anthony Kennedy's 2013 Supreme Court decision in United States v. Windsor: "The word 'dignity' can't be found in the Constitution," and yet Windsor's "insistence on human dignity as a constitutional value . . . stands at the heart of our longstanding commitment to equal protection of the laws." One freewheeling constitutional revolution that Sunstein blesses-gay marriage-ultimately rests on the strong libertarian foundations that both Sunstein and The New Republic attack.

If it is possible to support constitutional revolutions that go against the weight of history and tradition, why not support a return to a classical liberal reading of the Constitution that has both strong textual and theoretical support?

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The single most important fault line in American constitutional law dates back to 1937. In that year, the Supreme Court granted several important victories to the progressive movement, which in the first third of the twentieth century displaced the more classical liberal movement of the so-called old court.

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Liberalism | Definition, History, & Facts

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Liberalism, political doctrine that takes protecting and enhancing individual freedom to be the central problem of politics. Liberals typically believe that government is necessary to protect individuals from being harmed by others, but they also recognize that government itself can pose a threat to…

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The classical liberal position similarly recognizes the necessity of taxation along the lines found in the United States Constitution.

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"classical liberalism" to distinguish it from today's usage of the term, emerged as a reaction to Europe's decaying feudal order in the 17th and 18th centuries. The rising urban business class, sometimes called the bourgeoisie, sought increased political influence to match their growing economic and social power.

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It originally consisted of three related ideas: a philosophical anthropology, a theory of history, and an economic and political program. There is also Marxism as it has been understood and practiced by the various socialist movements, particularly before 1914.

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Where did Marxism come from?

Why is Marxism important?

How is Marxism different from other forms of socialism?

How does Marxism differ from Leninism?

Marxism, a body of doctrine developed by Karl Marx and, to a lesser extent, by Friedrich Engels in the mid-19th century. It originally consisted of three related ideas: a philosophical anthropology, a theory of history, and an economic and political program. There is also Marxism as it has been understood and practiced by the various socialist movements, particularly before 1914. Then there is Soviet Marxism as worked out by Vladimir Ilich Lenin and modified by Joseph Stalin, which under the name of Marxism-Leninism ( see Leninism) became the doctrine of the communist parties set up after the Russian Revolution (1917). Offshoots of this included Marxism as interpreted by the anti-Stalinist Leon Trotsky and his followers, Mao Zedong's Chinese variant of Marxism-Leninism, and various Marxisms in the developing world. There were also the post-World War II nondogmatic Marxisms that have modified Marx's thought with borrowings from modern philosophies, principally from those of Edmund Husserl and Martin Heidegger but also from Sigmund Freud and others.
(Read Leon Trotsky's 1926 Britannica essay on Lenin.)

The thought of Karl Marx

The written work of Marx cannot be reduced to a philosophy, much less to a philosophical system. The whole of his work is a radical critique of philosophy, especially of G.W.F. Hegel's idealist system and of the philosophies of the left and right post- Hegelians. It is not, however, a mere denial of those philosophies. Marx declared that philosophy must become reality. One could no longer be content with interpreting the world; one must be concerned with transforming it, which meant transforming both the world itself and human consciousness of it. This, in turn, required a critique of experience together with a critique of ideas. In fact, Marx believed that all knowledge involves a critique of ideas. He was not an empiricist. Rather, his work teems with concepts (appropriation, alienation, praxis, creative labour, value, and so on) that he had inherited from earlier philosophers and economists, including Hegel, Johann Fichte, Immanuel Kant, Adam Smith, David Ricardo, and John Stuart Mill. What uniquely characterizes the thought of Marx is that, instead of making abstract affirmations about a whole group of problems such as human nature, knowledge, and matter, he examines each problem in its dynamic relation to the others and, above all, tries to relate them to historical, social, political, and economic realities.

In 1859, in the preface to his Zur Kritik der politischen Ökonomie (Contribution to the Critique of Political Economy), Marx wrote that the hypothesis that had served him as the basis for his analysis of society could be briefly formulated as follows:

In the social production that men carry on, they enter into definite relations that are indispensable and independent of their will, relations of production which correspond to a definite stage of development of their material forces of production. The sum total of these relations of production constitutes the economic structure of society, the real foundation, on which rises a legal and political superstructure, and to which correspond definite forms of social consciousness. The mode of production in material life determines the general character of the social, political, and intellectual processes of life. It is not the consciousness of men which determines their existence; it is on the contrary their social existence which determines their consciousness.

Raised to the level of historical law, this hypothesis was subsequently called historical materialism. Marx applied it to capitalist society, both in Manifest der kommunistischen Partei (1848; The Communist Manifesto) and Das Kapital (vol. 1, 1867; "Capital") and in other writings. Although Marx reflected upon his working hypothesis for many years, he did not formulate it in a very exact manner: different expressions served him for identical realities. If one takes the text literally, social reality is structured in the following way:

1. Underlying everything as the real basis of society is the economic structure. This structure includes (a) the "material forces of production," that is, the labour and means of production, and (b) the overall "relations of production," or the social and political arrangements that regulate production and distribution. Although Marx stated that there is a correspondence between the "material forces" of production and the indispensable "relations" of production, he never made himself clear on the nature of the correspondence, a fact that was to be the source of differing interpretations among his later followers.

2. Above the economic structure rises the superstructure, consisting of legal and political "forms of social consciousness" that correspond to the economic structure. Marx says nothing about the nature of this correspondence between ideological forms and economic structure, except that through the ideological forms individuals become conscious of the conflict within the economic structure between the material forces of production and the existing relations of production expressed in the legal property relations. In other words, "The sum total of the forces of production accessible to men determines the condition of society" and is at the base of society. "The social structure and the state issue continually from the life processes of definite individuals . . . as they are in reality, that is acting and materially producing." The political relations that individuals establish among themselves are dependent on material production, as are the legal relations. This foundation of the social on the economic is not an incidental point: it colours Marx's whole analysis. It is found in Das Kapital as well as in Die deutsche Ideologie (written 1845-46; The German Ideology) and the Ökonomisch-philosophische Manuskripte aus dem Jahre 1844 (Economic and Philosophic Manuscripts of 1844).

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Marxism | Definition, History, Ideology, Examples, & Facts

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Marxism, a body of doctrine developed by Karl Marx and, to a lesser extent, by Friedrich Engels in the mid-19th century. It originally consisted of three related ideas: a philosophical anthropology, a theory of history, and an economic and political program.

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One of the major issues of socialism is that of incentives. Critics often argue that because it "abolishes" profits and losses, socialism eliminates incentives. Defenders maintain that since it eliminates the role of capitalists and entrepreneurs, workers under socialism "produce for themselves." Therefore, it is held, socialism actually maintains or even stimulates incentives.

The issue of incentives is vitally important. But the traditional way of presenting this issue is misleading. The real issue is not the presence or absence of incentives, per se. Incentives cannot be eliminated. They are omnipresent. Every politico-economic system generates a set of incentives. The real issue is whether a particular set of incentives is "right" or "wrong," i.e., whether it is appropriate to attain the goals sought or claimed for it by those implementing the political and economic policies.
The Record
The goals of both socialism and capitalism are identical: prosperity and freedom. This identity of goals makes a comparison of their performances relatively easy. The differences are indeed striking. Socialist systems have compiled an uninterrupted record of economic failure and political oppression.

The Soviet Union contains some of the most fertile agricultural land in the world. Prior to the communist revolution of 1917 Russia was the world's largest exporter of grain. Collectivization of agriculture during the 1920s and 1930s was quickly followed by dramatic declines in agricultural output. Between five and ten million Russians died of starvation during these years with twelve to thirteen million more saved by food donated from the Western capitalist countries. Today, the Soviet Union employs nearly 25 per cent of its labor force and invests in excess of 25 per cent of its capital in agriculture, both of which are far higher than any other industrialized country. Despite its tremendous agricultural potential, the Soviet Union is now the world's largest food importer. It now imports nearly one-third of its food, and this is despite having grudgingly permitted the establishment of private mini-farms one-half to one acre in size. These private plots comprise only three per cent of the total cropland yet produce 27 per cent of the nation's food. It is unlikely that the Soviet Union could exist without these plots.[1]

This pattern is repeated with monotonous regularity throughout socialist countries. Most of the Eastern European nations are blessed with fertile agricultural land. The adoption of socialist policies in most of these countries has been quickly followed by declining production, food shortages, and bread lines.[2]

Agricultural output in China was virtually stagnant during the 25-year reign of Mao Tse-tung. The Chinese government now acknowledges that during just one three-year period, the so-called "Three Difficult Years" from 195962, between 20 and 30 million Chinese died of starvation. By the time of Mao's death in the mid-1970s the average Chinese was less well fed than he was during the 1920s or even during the Japanese occupation of the 1930s. Beginning in 1977 Mao's successors abandoned his "socialist experiment." As a result, says The Economist, "food grain output has increased by 12 per cent a year since then, despite bad weather in 1980."[3]

Out of a population of only eight million, two million Cambodians died of starvation in the late 1970s after socialist measures were applied to agriculture by the Khmer Rouge.

In 1957 Ghana became the first African country to receive its independence, quickly followed by a number of others. At the time of independence famine had become a thing of the past in Africa. Yet within a few years the continent was being ravaged by perennial famines. Millions were dying from starvation or diseases associated with malnutrition. Once again, the * correlation is striking.

Ghana, as Sven Rydenfelt notes, "is one of the world's best endowed countries: fertile soil, ample rainfall, and a favorable climate . . . ."[4] At the time of independence it was the world's leading producer of cocoa. But after President Kwame Nkrumah adopted what he termed "African socialism" Ghana's cocoa production declined by 50 per cent. Similar production declines occurred in other crops such as cassava.

Like Ghana, much of Ethiopia is ideally suited for agriculture. "Ethiopia is one of those countries so richly endowed by nature," agronomist Doreen Warriner wrote in 1973, "that the agrarian structure, feudal in every sense of the term, does appear to be the only constraint on development."[5] In March 1975 the feudal period ended; "Ethiopian socialism" began. But instead of development, agricultural performance, poor to begin with, deteriorated rapidly. It is now well established that over one million Ethiopians have died of starvation in the most recent famine.[6]

And in Tanzania President Julius Nyerere began to collectivize agriculture in 1967. A food exporter in the late 1960s, Tanzania imported $18 million worth of food in 1980 despite the fact that nearly 70 per cent of its population was engaged in agriculture.[7]

In marked contrast to the socialist countries of the world which almost invariably find themselves on the verge of starvation despite employing between 25 and 90 per cent of their workforce in agriculture, the more capitalist countries of Western Europe and North America are able to produce huge food surpluses while employing only three to four per cent of their work force in agriculture.

A brief overview of the data reveals a clear correlation between economic systems and economic performances: socialist economies have performed goody; capitalist economies have performed quite well. The correlation is much too strong to be attributed to mere chance. To understand this correlation we need to examine the very different incentives generated by the two economic systems, and then look at how individuals would be expected to respond to these different sets of incentives.
The Incentives
Assume that an individual, Clem, is a member of a socialist commune. Assume that there are 1,000 members of the commune and that the output is divided equally among the members. (For the sake of simplicity we will ignore matters such as capital investment.) Let's say that the production of the commune totals 100,000 bushels of wheat a year, or an average of 100 bushels per member. At a price of, say, $5.00 per bushel total receipts for the commune are $500,000, or $500 per member. The question is: How is Clem likely to behave? Will he work hard? Will he shirk?

Let's assume that Clem is both naturally industrious and socially conscientious. He is concerned about the overall good of the commune. As a result, Clem works very hard and increases his production from 100 to 150 bushels of wheat a year. This increases the annual output of the commune from 100,000 to 100,050 bushels. At $5.00 per bushel the income of the commune increases from $500,000 to $500,250. Since total income is divided equally among the members, the income of each member rises from $500 to $500.25 a year. Thus, because of his extra work Clem's production increased 50 per cent. But his income increased by a mere 25C or by 0.05 per cent. Moreover, the income of the other 999 members also increased by 25c even though they did not work any harder and their productivity did not increase.

Clearly, Clem's activities benefited everyone in the commune except himself Everyone else had his income increase without increasing his work. But Clem's income increased only 25c despite increasing his work load by 50 per cent. While the benefits of the extra production were diffused throughout the commune, the costs were concentrated on Clem. Given the distributional policies of the socialist commune it is clear that Clem's decision to increase his work was "irrational," and it is highly unlikely that he would continue his Stakhanovite exertions, thereby subjecting himself to continued exploitation by the other members of the commune. In short, the distributional policies of socialism penalize industrious behavior.

Deeper insight into socialist incentives can be obtained by looking at the situation from a different angle. Assume that the conditions of the commune are the same as described above. But now assume that instead of increasing his production Clem begins to slough off, to shirk. Assume that he cuts his production from the aver age of 100 bushels a year to only 50. What are the effects? The total output of the commune drops from 100,000 bushels to 99,950 bushels. Its total receipts therefore fall from $500,000 to $499,750. As a result each member's income declines by 25c, from $500 to $499.75. Yet, they have not, we are assuming, reduced their work loads. Clem's income is also reduced 25C. But he has cut his work load in half. This is a great deal for Clem! He has obtained a 50 per cent increase in leisure at a cost to himself of only 25c, or a 0.05 per cent reduction in income. In short, since the cost of Clem's shirking is diffused among all the members of the commune while the benefits are channeled to Clem, socialism crates a strong incentive to shirk. The problem, of course, is that there is no mason why this is limited to Clem. It applies with equal force to all members of the commune. But if all members shirk, little or nothing will be produced and the commune will quickly find itself in dire straits.

The basic problem of socialism is the imbalance or asymmetry it creates between costs and benefits. At times the costs are diffused throughout the entire community while the benefits are concentrated on one or a few members. At other times it is the costs that are concentrated while the benefits are diffused. The result is that socialism, by its very nature, rewards sloth and indolence and penalizes diligence and hard work. It therefoR establishes incentives that are incompatible with its self-proclaimed goal of material prosperity. The inherent di lemma of socialism is that individuals who respond "rationally" to the incentives confronting them will produce results that are "irrational" for the community as a whole.
The Solution
The solution to the dilemma of socialist incentives lies in what economists call "internalizing the externalities," i.e., making sure that both the costs and benefits of individual actions are borne by the individual and do not spill onto "society" as a whole. There are two distinct methods by which this can be accomplished: private property or coercion.

Assume that instead of living in a commune Clem lives in a market society and owns his own farm. If Clem would increase his production, just as he did in the commune, from 100 to 150 bushels, he would receive the full benefit of the additional output. The result, again assuming $5 per bushel, is that Clem's income would increase not by a mere 25C but by $250, going from $500 to $750 per year. Conversely, by reducing his production from 100 to only 50 bushels, Clem's income would fall not by 25C but by $250, dropping from $500 per year to only $250. Thus, private property automatically "internalizes the externalities," i.e., it channels both the costs and the benefits of each individual's actions onto that particular individual. In doing so it creates incentives that automatically penalize indolence and reward hard work and productivity. These are the exact opposite of the incentives generated by socialism.

To permit private property would be to acknowledge the failure of socialism. As a result, socialist systems have allowed private property only grudgingly and on a very restricted basis. Rather than admit failure socialists have usually opted for the other means to internalize externalities: coercion. To counteract the incentive to shirk, the socialist rulers can establish production quotas for Clem and the other members of the commune and then threaten them with penalties for failure to meet the quotas. Since coercion will stimulate production only if the penalties are severe enough to counteract the incentive to shirk, socialism must reduce the population to virtual slavery. But even if coercion does stimulate production the increase will be far less than under private property. Since it insures that each producer will receive the total value of his production, private property pro vides the incentive to maximize production. Coercion, on the other hand, is only able to establish the incentive to produce the minimum required to avoid punishment. It is no accident that socialism ends up enslaving its workers. Nor is it an accident that free men have always been more productive than slaves.[8]

Socialism promises prosperity and freedom. But the incentives created by socialism place it in a dilemma. If the workers are allowed to remain "free," they will not produce. To stimulate production they must be denied their freedom. Thus, socialism cannot achieve both prosperity and freedom. Usually it results in neither. []

1. See Sven Rydenfelt, A Pattern for Failure (New York: Harcourt. 1983), pp. 27-45; Hedrick Smith. The Russians (New York: Ballantine, 1984), pp. 264-84; and Marshall Goldman. USSR in Crisis (New York: Norton. 1983), pp. 63-87.

2. Rydenfelt. pp. 46-79.

3. "In Praise of Peasants." The Economist (February 2. 1985), pp. 86-87. Also see Stephen Mosher, Broken Earth (New York; Free Press. 1983), pp. 28-52. Especially see pages 37-45. Mosher quotes a Chinese peasant as saying that "People aren't lazy all the time, just when they do collective labor. When they work on their private plots, they work hard. There is a saying, 'Energetic as dragons on private plots, sluggish as worms on the public fields.'"

4. Rydenfelt, p. 113.

5. Quoted in Gene Ellis, "Land Tenancy Reform in Ethiopia: A Retrospective Analysis," Economic Development and Cultural Change (April, 1980), p. 526.

6. See David Osterfeld, "Famine in Africa," The Journal of Social Political and Economic Studies (Fall, 1985), pp. 259-74.

7. Ibid., pp. 265 and 269; and Rydenfelt, pp. 117-24.

8. Two points are worthy of note. First, the reliance on devices such as "workpoints" has been ignored, To the extent that they work they constitute a clear violation of the principle of egalitarianism that permeates socialist literature, MoreOver, since "workpoints" are a reflection not of the preferences of the consumers but of the socialist ruler(s)' opinion of the value of one's contribution. "workpoints" are not only economically arbitrary but alsO reinforce the concentration of political power in the hands of the rulers, Second. the problem of incentives is not the sole reason for the poor performance of socialist economies. The related problem of economic calculation is also vitally important. On this issue see Ludwig von Mises' classic Socialism (London: Jonathan Cape, 1969): Don Lavoie, National Economic Planning: What Is Left? (Cambridge: Ballinger. 1985); and David Osterfeld. Freedom, Society and the State (San Francisco: Cobden Press, 1986), pp, 221-30,

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Socialism and Incentives | David Osterfeld

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One of the major issues of socialism is that of incentives. Critics often argue that because it "abolishes" profits and losses, socialism eliminates incentives. Defenders maintain that since it eliminates the role of capitalists and entrepreneurs, workers under socialism "produce for themselves." Therefore, it is held, socialism actually maintains or even stimulates incentives.