I want to thank Matt for the invitation to blog through the semester at BHL. And contrary to Steve Horwitz’s depiction I don’t roll my eyes at the phase “bleeding heart libertarianism” but at the state of intellectual play in academia, and our broader intellectual culture, that makes the introduction of such an adjective necessary. As Steve highlights in his post on Jeff Sachs’s understanding of libertarianism, there should be no doubt that folks misrepresent the classical liberal and libertarian position. Why would Sachs believe that “Compassion, justice, civic responsibility, honesty, decency, humility, respect, and even survival of the poor, weak, and vulnerable – are all to take a back seat.” Did he read that in Adam Smith, in J. B. Say, in J. S. Mill, in F. A. Hayek, in Milton Friedman, in James Buchanan, or in Vernon Smith? Deirdre McCloskey’s perhaps more than another other contemporary scholar is really trying hard to set the record straight. She has already published 2 weighty volumes, which I have written review essays on — Bourgeois Virtues and Bourgeois Dignity — and is currently finishing up Vol. 3, of a projected 6 volumes,  and her work is so weighty because the argument requires that much elaboration in our current intellectual culture.

Our modern understanding of the technical economics, the structural political economy, and deeper moral philosophy of Adam Smith is so flawed that such a basic common concern of the Scottish Philosophers as that of creating the institutional conditions for a civil and compassionate society is lost in the rendering. Hume’s focus on private property, the transference of property by consent, and the keeping of promises through contract are not rules that only benefit one segment of society at the expense of others, but instead form the general foundation for civil society and peaceful social cooperation. Smith’s analysis of the wealth of nations is not ultimately measured in trinkets and gluttonous acts of consumption, but by a rising standard of living that is shared by more and more of the general population. It is an empirical matter as to which set of institutions best achieves that task. But the concern with raising the living standards of the least advantaged in society is never far from view. Sachs, in other words, I am arguing should know better. And so should others in philosophy, politics and economics. The atomistic neoclassical model has nothing whatsoever to do with liberalism as understood by classical political economist or the modern descendants of the mainline of political and economic thought.

The classical liberal political economists treat the individual not as atomistic, but as embedded within social settings – in families, in communities, in history. Yes there is both the self-interest postulate and the invisible-hand postulate, but these are not understood as the conventional critic wants to present them. The mainline of economic thought from Smith to Hayek has a rational choice analytical structure to the questions of the logic of choice, but it is rational choice for mortals, not robots. And there are invisible hand processes, but they depend on an institutional context to provide the filter processes which dictates the equilibrating tendencies exhibited. In short, the mainline of political economy from Smith to Hayek is one that does rational choice as if the choosers are human, and institutional analysis as if history mattered. No atomistic, ego-centric, prudence only analysis is to be found in this work properly read.

Furthermore, this mainline of political economy approach while rejecting the claims to resource egalitarianism, is firmly grounded in analytical egalitarianism. Anyone, who challenges the analytical egalitarian perspective is subject to scorn by Smith – e.g., his proposition that the only difference between the philosopher and the street porter is in the eyes of the philosopher, or his warning that the statesman who attempts to out guess the market would not only assume of level of responsibility he is incapable of judiciously exercising, but also would be nowhere as dangerous as in the hands of a man who thought himself up to the task. Hume and Smith presented a structural argument in political economy; an argument intended to discover a set of institutions where bad men could do least harm if they were to assume positions of power. As Hume put it, when we design institutions of governance we must presume that all men are knaves. And in a move that anticipated the modern political economy of both Hayek and Buchanan, Smith basically argued that our knavish behavior manifests itself in either arrogance or opportunism.

But the emphasis I have provided so far is on the restraints that classical liberals hoped to establish on the abuse of power by political elites. However, it is just as important to stress the emancipatory aspect of the doctrine as well. As Hayek writes in his essay “Individualism: True and False”, Smith and other classical liberal political economists were concerned “not so much with what man might occasionally achieve when he was at his best but that he should have as little opportunity as possible to do harm when he was at his worst.” Hayek continues: “It would scarcely be too much to claim that the main merit of the individualism which he and his contemporaries advocated is that it is a system under which bad men can do least harm. It is a social system which does not depend for its functioning on our finding good men for running it, or on all men becoming better than they now are, but which makes use of men in all their given variety and complexity, sometimes good and sometimes bad, sometimes intelligent and more often stupid.” And Hayek concludes, “Their aim was a system under which it should be possible to grant freedom to all, instead of restricting it, as their French contemporaries wished, to ‘the good and the wise’.” (emphasis added)

The difference in judgment between Hayek and Sachs is not one of philosophical concern with the least advantage, but an empirical assessment of what system best provides “Compassion, justice, civic responsibility, honesty, decency, humility, respect, and even survival of the poor, weak, and vulnerable.” The liberal vision has been throughout its history that sought to find a set of institutions that would produce a society of free and responsible individuals, who have the opportunity to participate and prosper in a market economy based on profit and loss, and who live in, and are activity engaged in, caring communities.

As Deirdre McCloskey put this point in her Bourgeois Virtues, one cannot answer empirical questions philosophically — they must be answered empirically. And that means that we must push the conversation about compassion, justice, civic responsibility, honesty, decency, humility, respect, and a concern for the poor, the weak, and the vulnerable, beyond romantic poetry and to hard-headed institutional analysis. Check out this recent discussion with Bob Lawson on the relationship between Economic Freedom and Income Inequality.

No doubt the liberalism in the classical liberal tradition reflects a bleeding heart libertarianism, but that compassionate concern for the least advantaged is always disciplined by the hard noised analysis of how the institutional environment within which we live together structures the incentives actors face in making decisions, and mobilizes the dispersed information throughout the social system that must be utilized in making decisions and learning from social interaction.

Matt linked to my course syllabus for Econ 828 – Constitutional Economics. This class is one I inherited from Professor James Buchanan and it is largely inspired by his work in political economy and social philosophy. The course ultimately is an invitation to inquiry into the rules of governance that enable us as fallible but capable human beings to live better together; to realize the gains from social cooperation under the division of labor.