Ordoliberalism and the fallacy of Natural Rights

My co-blogger Samuel H. wrote a fantastic piece yesterday on Ordoliberalism, its role as true heir of the Scottish Enlightenment, and why Laissez Faire economies are mythical. It’s really a great post, and I encourage you to read it now if you haven’t already. This continuation to the discussion of Ordoliberalism will be here when you’re back.

The first thing I should make clear is that I really disagree with nothing in Samuel’s post. So this isn’t a critique at all. But it is a response to draw out the logic of Ordoliberal and to discuss what Noah Smith called the Markets in Almost Nothing. Namely, that discussion of Ordoliberalism does not stop with economic markets where prices are information, but can be applied to Noah’s Markets in Almost Nothing as well, the things we cannot easily price (such as dignity and satisfaction with life generally), but do know when we see them. And that’s because these un-markets are subject to political arrangements we can vote on, even if we cannot buy and sell them.

To see where this logic leads, let’s look at pensions, a very economic activity with lots of transparent pricing. A believer in laissez faire, or economic “natural rights”, would see no objection to an employee and employer bargaining to include a pension as one of the values exchanged for the employee’s labor. Instead of getting paid a fixed sum today, the employer pays an annuity at some point in the future. Dandy!

An Ordoliberal would look at this arrangement however and ask whether this arrangement is conducive with higher social values, such as the desire for a competitive market with lots of firm turnover and creative destruction. The Ordoliberal would recognize that there are several shortcomings to employer-provided pensions. For one thing, pensions probably aren’t that firm’s specialty, and they might not be good at it. For another, if a very large number of employees (and former employees) were receiving (or expected to receive) pension payments into the future, there would be an intense political pressure to bail out a struggling employer in order to save its pension, rather than allow the creative destruction of the market to unfold in its standard course. It would serve the higher values much better if pension investments were made to, and handled by, a firm other than the employer.

But as I said above, this logic does not stop at the market. We can look to other facets of human life and usefully dispense with talk of “natural rights” in order to make real progress towards higher social values. A good example would be the marriage market. Do people have the natural right to get divorced at will? As an Ordoliberal we can quickly dispense with that question with an easy “No, they do not. Nor do they have a right to get married in the first place. There are no rights, remember? Let’s decide on the society we want, and then decide what is legal or illegal, yes?”

What kind of societies do want? What kind of societies are possible given the limits of human nature? (This second question always trips up the Communists) These questions are difficult to answer even for individuals, and fiendishly difficult to find consensus on, but they do have one great advantage over discussions of natural rights – they are concrete. Anything at all could be a natural right, if we all agree it is, and if we all agree on natural rights being inviolable even in the face of harmful consequences to society, then we will never actually get to live in a society we want to live in. It is far easier for any individual to say “This is good”, or “This is bad”.

We must dispense with this fallacy of natural rights, not just to property and contract, but in all areas of our life – including areas of our personal life and non-contractual society that many people consider deeply personal. They are personal, it’s true, but to the extent these actions create measurable harm to the fabric of society, society has a right to modify them.

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