Social Justice, Libertarianism

John Rawls, Margaret Thatcher, and Property Owning Democracy

[Editor’s Note: The following is a guest contribution by Felix Bungay, a student at the University of Cambridge  reading an MPhil in Intellectual History and Political Thought.]

While many Bleeding Heart Libertarians are interested in Rawls, not many of them seem enamoured with his idea of a Property Owning Democracy (POD). I want to argue that those of us on the classical liberal right can look to Margaret Thatcher and the Conservative tradition of POD to provide an alternative interpretation of the POD presented in Rawls’s theory. I want to argue for a more free market interpretation of POD, one that is compatible with Rawls’s two principles of justice and that draws on the free market policies of Margaret Thatcher, rather than the traditional POD inspired by James Meade that is associated with Rawls.

Kevin Vallier helpfully summed up the traditional Rawlsian conception of POD, as defended by Martin O’Neill and Thad Williamson. But here in the UK, the term POD is actually much more associated with the Conservative party than with John Rawls. The term POD was coined by a Conservative MP, Noel Skelton, in the 1920’s and was referenced frequently by two Conservative Prime Ministers – Anthony Eden and Margaret Thatcher.

Some on the left claim that in contrast to Rawls’s vision for a POD, the Conservative Thatcherite tradition of POD was explicitly anti-egalitarian. This was not the case, and Thatcher was keen to defend her economic policies on Rawlsian terms; that they were of the greatest benefit to the least well off.

In Thatcher’s last Prime Minister’s Questions (video above), the Liberal Democrat MP, Simon Hughes and the SNP MP, Jim Sillars, would attack Mrs Thatcher along these lines. Hughes raised the following point: “There is no doubt that the Prime Minister, in many ways, has achieved substantial success. There is one statistic, however, that I understand is not challenged, and that is that, during her 11 years as Prime Minister, the gap between the richest 10 per cent and the poorest 10 per cent in this country has widened substantially. At the end of her chapter of British politics, how can she say that she can justify the fact that many people in a constituency such as mine are relatively much poorer, much less well housed and much less well provided for than they were in 1979? Surely she accepts that that is not a record that she or any Prime Minister can be proud of?”

Thatcher’s reply amounted to the ‘levelling down objection’ with a Rawlsian ‘difference principle’ flavour. “People on all levels of income are better off than they were in 1979. The hon. Gentleman is saying that he would rather that the poor were poorer, provided that the rich were less rich. That way one will never create the wealth for better social services, as we have. What a policy. Yes, he would rather have the poor poorer, provided that the rich were less rich.” She continued on this theme when she replied to Jim Sillars: “I think that I must have hit the right nail on the head when I pointed out that the logic of those [socialist] policies is that they would rather the poor were poorer. Once they start to talk about the gap, they would rather that the gap were that—[indicating]—down here, not this—[indicating higher, but bigger gap]—but—[indicating lower, but smaller gap] So long as the gap is smaller, they would rather have the poor poorer. One does not create wealth and opportunity that way. One does not create a property-owning democracy that way.”

When we think of the best ways to practically achieve the aims of POD, the policies of Margaret Thatcher provide a superior free market alternative to the ‘tax and redistribute’ policies traditionally associated with Rawls’s POD. Thatcher was determined that home ownership should be for the many, not just the few. “Our concern,” she said, “is to create a property owning democracy and it is therefore a very human concern. It is a natural desire of Conservatives that every family should have a stake in society and that the privilege of a family home should not be restricted to the few.” To achieve this goal, Thatcher introduced the Right to Buy. The Right to Buy allowed the tenants of Government owned housing to buy their homes, transforming them from state dependents into independent property owners. This policy was by far the Thatcher government’s most memorable and popular, and the one which would see the term POD become distinctly entwined with her time in power.

However, Rawls’s POD requires more than citizens being able to own their homes; more importantly it entails the widespread ownership of productive property. Through privatising state owned industries, the Thatcher Government enabled millions to become share owners for the first time. Ownership of capital would no longer be something for investment bankers and the wealthy, but something millions of ordinary Britons would have a stake in. Thatcher sold off dozens of state owned industries to the public. This not only widened share ownership but returned loss-making state industries to the private sector, where instead of needing large government subsidies they soon became profitable again.

During Thatcher’s time in power and in the subsequent Major Government, the Conservatives were able to go a long way towards delivering their vision for a POD. The 1997 Conservative Manifesto set out the party’s progress towards a POD after 18 years in power. “It is ownership which brings true security and genuine independence from the state. That is why Conservatives have long dreamed of a property-owning democracy. Now we are delivering it in practice. Home ownership is up by 4.7 million. 10 million people own a direct personal stake in our economy. 16 million are gaining shares in their building societies thanks to our deregulation of them. We intend to carry forward our vision of a people’s share.” The Conservatives had spread wealth and property ownership not by heavy taxation and economic intervention, but through privatisation and deregulation.

All of this isn’t to say that Thatcher and the Conservatives were proto Bleeding Heart Libertarians. They were not. Instead, I hope I have given a brief sketch of the work I am currently undertaking, looking both at Rawls and post war British political economy. There is still much work to done in fleshing out a POD that draws on the free market ideas of Thatcher while still fulfilling the terms of Rawls’s two principles of justice – I do hope that other Bleeding Heart Libertarians will join in the task. Nevertheless, I hope it has been an interesting introduction to the ideas much richer history beyond the Rawlsian left, as well as showing that classical liberals need not reject POD but can instead embrace a more free market version of it.

  • martinbrock

    “So long as the gap is smaller, they would rather have the poor poorer.”

    This straw man is clearly fallacious, since it excludes possible alternatives to Thatcher’s policies (including more libertarian policies) leaving a smaller gap and also leaving the poorest richer.

    • Sean II

      If Thatcher was addressing you or Kevin Carson or Roderick Long, then that might be a strawman.

      It was most emphatically not a strawman as she used it. Many on the statist left are very open about the fact that they would accept a poorer poor to rid the world of a richer rich.

      Hell, many apolitical people state that very preference when asked. I’m sure you’ve seen those studies where people indicate they’d be happier making $30,000 where the average income is $40,000, than they would making $40,000 where the average income is $80,000.

      • If those people would *actually* be happier (and not merely think they would be), then don’t the ‘statist left’ have a point?

        • martinbrock

          In my way of thinking, they don’t have a point. Even if I accept the dubious proposition that a state can devise policies optimizing some aggregate happiness, you should not be obliged to impoverish yourself to make me happier.

          I rather wish you to do as you please while leaving me similarly free. If I see you becoming richer and feel unhappy, I should have the option of following your example without constraints imposed by you.

          • I know it’s usually dismissed as ‘envy’, but if there is something inherent to our nature that means inequality leads to anxiety or reduced happiness, then anyone who intentionally contributes to it is imposing constraints on the psychological well-being of another.

          • MARK_D_FRIEDMAN

            I’m afraid this is rather silly. To use your logic: “If there is something [inherently sadistic] to our nature that means [your unwillingness to let me inflict pain on you], leads to anxiety and reduced hapiness, then anyone who intentionally contributes to is imposing constraints on the psychological well-being of another.” This is the form of your argument. Do you think it is sound?

          • martinbrock

            We differ on the meaning of “impose” and “constrain”. In my way of thinking, I don’t impose on you simply by existing, even if your knowledge of my existence affects you. My existence constrains you in a relevant sense only if I exert a physical force upon you.

            But I don’t dispute your point. Sure, if your dick is longer than mine, shortening your dick might make me happier, but I have no right to this happiness. Some of us have shorter dicks, and envy can make us less happy. I also envy the birds, always have and presumably always will, but clipping their wings seems a terrible solution to this problem.

          • Sean II

            Martin, you wrote: “Sure, if your dick is longer than mine, shortening your dick might make me happier, but I have no right to this happiness. Some of us have shorter dicks, and envy can make us less happy.”

            I find your analysis on this point a bit…one-dimensional.

          • martinbrock

            Some of us have an one-dimensionally tracked mind.

          • I think the correct penis analogy would be more along the following lines:

            I go around showing off my big dick, then imply that people who have small dicks are inferior and should probably invest in penis enlargement surgery. Of course, since this would be a positional good, all that would happen would be a pointless penis-enlargement race with resources, time and energy wasted.

            Basically, if you are subtly (or not so subtly) surrounded by constant messages that tell you how you are failing compared to other people because you lack ownership of certain products or property, eventually it’s gonna take a toll.

          • martinbrock

            At some point, you decide to love the dick you have and stop worrying about the bigger, more beautiful dicks.

            States create extremes of wealth and power, and I’m the first to object when they do, but inequality with always be with us, and states pretending to level the playing field invariably serve the interests of their most central authorities instead.

        • Sean II

          A separate question, that. You want to discuss the merits of this proposal (accepting a poorer poor to avoid a richer rich), but first we must join forces to convince Martin such a view actually exists.

      • martinbrock

        Her questioner immediately shakes his head indicating disagreement, and the grounds for legitimate disagreement are obvious, so it is a straw man in context.

        The hedonics of being poorer when everyone else is also poorer is a separate issue. Thatcher’s questioner never makes this point, and he explicitly disagrees with her conclusion.

        • les kyle Nearhood

          Well of course he disagreed, he was on camera. His “disagreement” was no more than a kid shaking his head and saying Nuh-uhn! The policies pursued by his party were guaranteed to keep the poor (and everyone else) poorer.

          • martinbrock

            They were both on camera, since he didn’t elaborate on his disagreement, you pretend omniscience here.

          • les kyle Nearhood

            But we can’t judge by the standard of the 1990’s because they had not happened yet. we have to judge by the standards of the 1970′ when Labour pursued horrible policies. I give them credit that during the 1990’s they did not repeat them. And while I don’t believe that governments can do a whole lot to promote prosperity except to get out of the way, they certainly can harm it.

          • martinbrock

            States can do a lot to harm to prosperity, but the questioner is not a member of the Labour party in the seventies during this question period. He presumably was a member of the Labour party at the time that he asked the question, and this party at that time was soon to pursue policies that did not repeat mistakes (according to you). Since his question proposes no repetition of past policies but only questions consequences of Thatcher’s policies, Thatcher is guilty of a straw man.

        • Sean II

          I find, Martin, that most people shake their heads when faced with the unpleasant consequences of their ideas.

          Are you under the impression that somehow makes the consequences less real?

          Please remember we’re not talking about the opinions of one little front bencher here. We’re talking about the people and the movement he represents.

          • martinbrock

            I took the head shake to indicate disagreement with a conclusion that the speaker’s words do not imply.

            When you start talking about some movement that a person allegedly represents rather than addressing the person’s own words, that’s precisely what “straw man” means.

          • Sean II

            Oh Martin, you just can’t resist. Please remember you left me no choice, and I’ll try to be quick about this.

            Mr. X: “I intend to mix a bit of sodium hydroxide with some hydrochloric acid.”

            Mr. Y: “Ah, so you intend to make salt.”

            Mr. X: (shakes his head “no!”)

            As you have it, Mr. Y is guilty of a strawman because Mr. X did not speak the exact words “I intend to make salt.” As you have it, it doesn’t matter that such is the natural and logical consequence of what Mr. X did say.

            So obviously that’s completely ridiculous, and the only difference between that use of strawman and your use of strawman is the greater precision available to physical science.

          • martinbrock

            If you see no other difference between my usage and your usage, you seem willfully blind.

            Mr. X is guilty of a straw man if he asserts that Mr Y asserts Mr. Y’s intention to create salt and then proceeds to argue that Mr. Y truly has some other intention.

            In your example, Mr. X seems rather to ask Mr Y’s intention, but if you say that Mr. X asserts that Mr. Y asserts Mr. Y’s intention to create salt in order then to argue that Mr Y has another intention, then Mr. X is guilty of a straw man.

            Thatcher positively asserts that her questioner asserts prefers poorer poor to a greater disparity between rich and poor. This is a straw man because her questioner never asserts such a thing. Neither does he imply such a thing.

            A preference for poorer poor over the greater disparity is not a natural or logical consequence of what the questioner asserts, and the questioner’s nod indicates that he does not prefer poorer poor over the greater disparity, yet Thatcher proceeds to defend her own assert (because it is only her assertion and was never the questioner’s assertion) that opposition to her policies amounts to a preference for poorer poor over the greater disparity.

      • MARK_D_FRIEDMAN

        Hell, our President adopted this view. When asked a few years ago in an interview with Charles Gibson whether he would still favor higher cap gains taxes even if this resulted in less total tax reveune, he said “yes, because it’s fairer.” So, even if greater tax revenues would (from his perspective) benefit everyone, including the poor, it should be rejected. Why? Because the rich need to be less rich, whatever the consequences.

        • Sean II

          I remember an episode of whatever Bill Maher’s show is called where the guest says “if we have to give up income growth for the sake of income equality, why not?”

          The interesting thing was how enthusiastically the crowd cheered that line. Normally they cheer jokes about Bush or platitudes like “we have to put people first”. That was not even close to a red-meat line, but they cheered it like one.

          Honestly, I can’t believe anyone is taking the other end of this bet. The post 1917 Left has reliably been willing, in both word and deed, to settle for impoverished equality when the alternative is unequal prosperity.

          This isn’t some late-breaking scandal. It’s old news.

          • shemsky

            Sean, isn’t what Maher’s guest said kind of similar to saying that if we have to give up liberty for more security then it’s worth it? People who would say something like that value income equality the same way you and I value liberty.

          • Sean II

            Yeah, except they’re wrong. Both of them: the security seekers and the equality fetishists.

            The TSA grabbing your junk is real. But it’s impossible in practice to further reduce the already infinitesimal risk of terrorism, so the security gained is fake.

            A $50 mobile phone is real. The feeling that a public school art teacher is more or less equal to an orthopedic surgeon, that’s fake.

            A free society gives everyone civil liberty, but it gives no one illusory feelings of security. The market gives everyone $50 mobile phones, but it gives no one illusory feelings of equality.

            This isn’t just a matter of taste, Shemsky. This isn’t a case where Jack likes apples and Jill likes oranges. This is a case where Jack likes apples and Jill likes…for Jack not to have apples.

          • shemsky

            It sounds like taste to me, Sean. Very bad taste, in my view, but taste nonetheless.

          • Sean II

            “Is it an objective fact that the orthopedic surgeon is more valuable than the art teacher?”

            Oh no…it’s far more important than that. It’s subjective marginal fact.

          • shemsky

            My point, Sean, is that some people have a different belief system than you and I do. Some people just don’t value liberty as much as we do. And I don’t think that all of our discussions will change that for most of them. I don’t even try to pretend to know why they believe the way they do. For example, I totally reject the view that we have a duty to act benevolently toward others. I consider benevolence to be a virtue, so it can’t be a duty. But others, even here, seem to embrace the view that benevolence is a duty. Why, I don’t know.

            Which is the better way to resolve the differences between the two groups? Fight it out and the strongest side impose their belief on the other side? Or try to find common ground where we can and agree to leave each other be when we can’t?

            I highly recommend Michael Rozeff and Adam Knott’s articles about panarchy, if you haven’t already read them.

          • Sean II

            “…Or try to find common ground where we can, and agree to leave each other be when we can’t?”

            That’s just it, though. If our preference is to “leave each other be”, and their preference is “not to leave each other be”, there is strictly speaking no common ground. That was the point of my example: “Jacks likes apples, but Jill has a slightly different opinion: she prefers Jack not to have apples.”

            That’s why I say it’s not just a matter of taste. In this dispute, neither side can let the other indulge their taste without relinquishing its own.

          • shemsky

            Which do you think would be the easier task: Convincing someone else that they are wrong and you are right and that they should abandon their beliefs and adopt yours, or convincing someone else that since you can’t agree that it would be better if they would leave you alone and you will leave them alone? As in freedom of religion, which is very widely accepted in America and lots of other places.

            Jill may really believe that it’s just for Jack to not be allowed to have the apple.

          • matt b

            I watch Bill pretty often but don’t remember that episode. His audience is really rabidly far left though he isin’t if you actually listen closely. It’s scary when you see these sort of attitudes be labeled as “liberal” though when they are profoundly reactionary.

        • matt b

          Pretty scary to think that he may actually believe that. I’ve had this conversation with people on the left and say “Look if everyone was richer under free markets but there was more inequality but not a single person was worse off how would you feel” and they just will not answer the question. I just get a lot of “You are a lapdog for corporations.”

          • MARK_D_FRIEDMAN

            My suggestion: keep pressing this point in all future conversations. The fetish for equality is a central, unexamined feature of modern liberal thinking. There is no good answer to your challenge, which philosophers call the “levelling down” objection.

        • Damien S.

          Less total tax revenue doesn’t have to mean less wealth in general. If progressive taxes and other policies results in a more equal (‘fairer’) distribution of income, that can lead to lower tax revenues even with higher total income. So there’s no inconsistency or ‘fetish’ necessary.

  • Sceptic

    All very well and good, but attempting to justify anything along Rawlsian lines is unproductive.

    Rawls’ original position requires us to dispense with out conceptions of the good when formulating his principles of justice. If some objective good exists, his principles of justice are irrelevant; how can one justify constituting society according to them when one ought (by definition) to constitute it so as to achieve the good? If no objective good exists why ought one constitute society according any principles at all? Rawls’ principles are either rendered irrelevant in light of something morally prior to them or have no ethical bite.

    • Sceptic

      * with our

    • Murali

      Even if an objective good exists, Rawls’ principles or for that matter whatever would be chosen in the original position would still do reasonably well by that standard as those principles do reasonably well even if not perfectly across all non-perverse standards. Even if there was no objective conception of the good, people would still need to live well and would still need to adjudicate conflicting claims. A society that operated under the rough bounds described by principles chosen in such a situation would be stable.

  • Barry Stocker

    I have no disagreement with the basic point above, that a Rawlsian version of property owning democracy is worth taking up as a contribution to classical v liberal thought. On the practical consequences though of Margaret Thatcher’s policies, they are maybe less significant in two of the areas highlighted by the author. ‘Right to buy’ for council house (public housing) tenants largely created a windfall for those who exercised the right, and could buy at well below market prices, creating the opportunity to get free money on the property market, with no long term shift in property ownership. Sale of shares in public utilities worked in a comparable way. Shares were sold to people who were not previously share owners, but at initial prices well below what they soon reached in the stock market, so again there was widespread profit taking with not much of a shift in share ownership. As far as I can see (and I admit I am not an expert in this field) the biggest shift in share ownership has come from a general international growth of private pension funds and unit trusts, in which individuals are not themselves trading in shares, and a low risk approach is taken on their behalf by professional investment consultants.

    On a more general level, I question whether classical liberalism should lead us to think that more and more people should own their own home or directly own shares. The basic goal is to reduce state ownership and regulation, and for economic benefits to come to everyone. If this comes through more and more people having better privately rented accommodation, that is not a bad thing. I doubt there is much point in people at an average or even at somewhat above average incomes devoting time, and finite economic resources, to playing the stock market. We should think in terms of reducing barriers to choice, lowering entry costs to all forms of private investment and economic activity, so that there are more chances for individuals to make a living in a diverse private sector with many choices in how to save, invest, create a pension fund, and find satisfactory accommodation. There are certain levels of concentration of property which are the consequences of extreme state interference, land distribution to the advantage of local or colonial aristocratic elites is a classic example, and should be challenged, but that does not mean that we should have state policies designed to push other patterns of property ownership. The two aspects of Margaret Thatchers’ policies I mentioned highlight how, by accident or by design, this can form a client vote of people who benefit disproportionately from such policies and do no become mini ideal entrepreneurial capitalists as a result.

  • les kyle Nearhood

    I sort of soured on Democracy. Maybe we should explore POSPO. Property Owning Semi-pluralistic Oligarchy.

  • Sean II

    I am forever flogging this point in one form or another, and today will be no exception! The point is: interesting things happen when you remove the presumption of good will from our opponents.

    Assume, if only for a moment, that our opponents are not really nice, sweet, reasonable people. Assume they’re really elitists who just crave power (the opposite of equality, it should be noted), or maybe they just instinctively hate markets for some private reason never to be revealed.

    If that were true, they couldn’t just admit it. They would need at least a halfway decent cover story to tell the world.

    They could say “markets cause poverty, markets cause war, markets cause ever increasing misery, etc.” But those claims are falsifiable(-fied) to a dangerous degree. At some point it becomes obvious that people aren’t starving or dying in trenches like they once were, and that spoils the story.

    But if they shift the focus to a relative measure – say, by comparing the top 10% of a statistical population to the bottom 10% – the story becomes fool-proof. Now it’s heads they win, tails we lose. Now markets can be hated in bad times, and hated even more in good times. The only thing needed for the story to be fool-proof and infinitely renewable is that different human beings should have significantly different marginal revenue products…and good news, the market theorists themselves have assured us of that!

    • ThaomasH

      I’d say things get less interesting; the person you disagree with does not actually believe what he claims to, so there’ s no point in addressing his arguments. Rinse Lather Repeat.

      • Sean II

        Wrong you are Thaomas.

        First you address his arguments, then you address the question of why he persists in offering them long after he should’ve stopped.

        I’m not inquiring into the motives and causes of statism as a substitute for a critique of statist policies. I’m inquiring into the motives and causes of statism as a supplement to that critique.

        I feel certain we covered this before, just a few weeks ago. Perhaps you remember? It was in the thread called “Koppl on Income Equality.” I furnished you a perfectly good example of a case where stubbornly stupid behavior on the part of a friend could only be explained by examining his ulterior motives.

        Such is the case with leftist economic policy. It is so stupid, and at this point in history so throughly debunked, that I am within my rights to wonder why anyone would persist in defending it. An assumption of good faith on that account made sense in 1848, and indeed even in 1932. It makes no sense today.

        • ThaomasH

          You are within your rights to be interested in and to wonder anything you want. I wonder why drag in a speaker’s supposed non-good faith when dissenting from his views. In the case at hand, *I* wonder if an assumption of non-good faith led Thatcher to attack a statement Hughes did not actually make.

          • Sean II

            I’m quite sure Thatcher was operating from a presumption of bad faith, even more than just a non-presumption of good faith, if you grant me the difference.

            I’m a child of the late cold war, and you can bet your life for a labor camp that I withdrew the presumption of good faith from any leftist who didn’t withdraw his own faith from the god that failed. That category includes some even of my own siblings.

            The party Thatcher was looking at across that aisle had come through a shameful progression which started with cheering the Soviet experiment, then being blind to its horrors, then excusing it on the grounds that it was better than Nazism, then simply making excuses for it, then finally accepting some of its faults, but equivocating on the pretense that Pinochet was as bad as Pol Pot, then brazenly changing the subject to nuclear disarmament, racism, sexism, the environment, etc., but all the while holding fast to the same insane economics.

            I’m sure she must have wondered, as I still do: “What is it with these guys?”

          • MARK_D_FRIEDMAN

            You are right to point out the shameful apologies and rationalizations by many on the left for Soviet-style communism long after its horrors were known. Not just in the U.K., but here as well. I think this actually ties into another point we have discussed. The fetish for equality of outcomes blinds people to the immoral means required to realize it.

          • ThaomasH

            If your are correct, it led her to address and argument that Mr. Hughes did not make.  I agree this can sometimes be effective in a debating sense, but it is not a “win” to advance an idea that is not quite right.  It implies that Thatcher chose not to defend a set of policies that, while making the poorest better off than they had been — not particularly hard in a macroeconomically well managed capitalistic economy — did not do as much for the poor as alternative policies might.  Now I’m a Thatcher fan, and cheered her on when she was in power (though I don’t claim to know that much about the UK economy and politics) and she might have had a good rebuttal to Hughes point, but from this clip at least, we don’t know what it would have been.

        • Damien S.

          Many leftists think libertarianism is so stupid, and at this point in history so thoroughly debunked, that they’re within their rights to wonder why anyone would persist in defending it, and to remove the assumption of good will. Libertarians as shills or useful idiots for increasing the wealth and power of the very wealthy. Sound familiar?

          Your weapon points both ways.

    • Damien S.

      At some points it becomes obvious that people aren’t starving because government food stamps and welfare supplement the market, and that spoils the libertarian story. So why do libertarians keep attacking welfare? What do they *really* want? Maybe they just instinctively hate poor people.

  • ThaomasH

    Thatcher’s reply to Hughes’s statement, “the gap between the richest 10 per cent and the poorest 10 per cent in this country has widened substantially,”
    “The hon. Gentleman is saying that he would rather that the poor were poorer, provided that the rich were less rich,” misrepresents Hughes’s stated position (maybe she has reason to believe he actually thinks as she characterizes).

    It is not unreasonable to criticize policies that result in greater relative inequality (even recognizing that the lot of the poorest have improved) if one thinks there were other policies that could have helped the poorest more.

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