Illogical but Reasonable Limits to Freedom

Classical liberals, like me, always say that fundamentally one is free to do anything one wishes as long as one does not coerce others against their will. This very simple approach leads to everyone being better off through mutually beneficial trade (I sell you an apple for £1 because I value £1 more than the apple, and you buy the apple because you value the apple more than £1, hence both of us gain in value).

However this kind of freedom could result in situations which most people would regard as unreasonable. An example is production and sale of nuclear weapons. But banning production and sale of nuclear weapons results in breaking the classical liberal fundamental principle which undermines the coherence of classical liberalism.

Firstly let me outline different but related ideas: Sorites paradox and slippery slope fallacy. I will then use to show exactly how the classical liberal thinking may be faulty in terms of informal logic.

In Sorites paradox, one begins with a heap of sand and one continuously removes grains of sand until one is left with just one particle of sand. The paradox: at what time did the heap stop being a heap?

The slippery slope fallacy can be illustrated with the following scenario: a tree in a forest falls. The probability it makes another tree fall is 0.9. The probability that 3 trees end up falling is 0.9*0.9*0.9=0.729. The probability of more trees falling approaches 0 as one calculates the probability of more and more trees fall.

Now here is the puzzle:
In a liberal and open society law is such that one is free to do whatever one wishes as long as it does not impose on others. Clearly this means that one may make and sell firearms (single particle of sand). What about other weapons? Can one make and sell large nuclear weapons (the heap of sand)? Clearly any reasonable social order would curtail the freedom of individuals to produce and sell such weapons because the risk of use of such weapons is just too devastating. This reasonable step has just broken our liberal principle of freedom to allow anyone to do anything one wishes as long as it does not harm others. What about small nuclear weapons? These ought to be reasonably banned too. What about biological or chemical weapons? As we move down the scale of lethality at some point society must stop banning weapons in order to allow the freedom of the individual of having and trading a firearm, which reasonably ought to be allowed for self-defence. But this sudden break in what is considered too lethal and ok is arbitrary, just like when a heap of sand stops being a heap and becomes just a number of particles of sand. For me it is unreasonable for people own fully automatic assault rifles but pump action shotguns are ok, while for others it is very unreasonable for people to own pump action shotguns while very reasonable for people to own assault rifles. An open liberal society thus must either ban all weapons or not ban any weapons to stick to the coherence of the principle that law is not arbitrary.

Some problems arise from such a scenario. Firstly, if an open and liberal society wishes to avoid arbitrary power of the administrator, it must allow all weapons to be made and freely traded or none at all. Clearly both of these are undesirable to the classical liberal. What is the objective test the society use to define weapons which cannot be made and traded?

Secondly we assumed that there is a slippery slope which inevitably will lead to all forms of weapons being banned if society bans just nuclear weapons. However as we have seen with the trees in a forest example, this could be a fallacy in itself as the individual events in the chain are discrete and may break the chain that leads to the supposedly inevitable event of all weapons being banned. The slippery slope argument which is often used by classical liberals may be a fallacy if the events in the chain are not clearly illustrated and proved to be likely. Although history often demonstrates that slippery slope to an illiberal outcome often occurs, we cannot place our faith fully into the idea that it will occur again if a piece of legislation which is illiberal, is passed. By arguing that since other slippery slopes have occurred in the past, they will happen again we are also hitting upon the David Hume’s problem of induction (just because something often happened in the past does not guarantee it will occur again in the future). So by using the slippery slope argument the classical liberal runs the risk of two logical fallacies: the fallacy of slippery slope and the problem of induction.

Clearly there is some thinking to be done by classical liberals. Specifically there appears to be some very reasonable but nonetheless arbitrary limits to freedom and classical liberal argument against certain legislation may be unfounded in logic (but not in history).

Charitable Giving in a Classical Liberal State

In a free and open society one cannot escape profiting from others’ misfortunes when one gives to charity. This may be thought to be immoral especially if the charitable act is obviously motivated by self advancement. Yet others may say that charity is immoral because it somehow denies self-interest, which they deem to be the foundation of a free and open society. Both opinions may have grim implications.

By a free and open society I mean a liberal society with a liberal state. A liberal state is where the community recognised the natural trait of man that he does not like to be told what to do by others. Man is left alone to be guided by his own wit and feelings as long as this does not interfere with others’ freedom to do the same. This means that in this state one is reasonably protected from coercion of others. There is a place for a central government but its major functions are limited to protecting the personal private sphere of individuals from coercion and reducing transaction costs. Reducing transaction costs means reducing cost of trade. This may mean reducing cost of risk of trade by enforcing contracts, or creating standards like a measurement system. The society in such a state still looks after the needy by mandatory contributions from the rest. So there is some coercion and personal private sphere of individuals do overlap. But such provisions are only the minimum which ensures that coercion is minimised. This prevents extreme hardship of fellow man and also protects the general society from acts of desperation (e.g. food riots etc.).

In such liberal state one may not be forced to contribute to help the needy beyond stopping starvation. This means that if one does contribute to charity it is more likely to be a show of genuine, and more importantly voluntary, compassion.

At this point it may be said that because the individual is left to be guided by his own wit and feelings he most logically is actually guided by self-interest. This is because this is most likely to ensure the individual’s survival. However such thinking forgets that the individual is still a human. He is not just interested in his material well being. It is natural for men to derive pleasure from helping fellow man. Denying people from giving charity for the reason that it is against their own interest is thus contradictory. In a free and open society people will always do what is in their self interest, but that may also be interest of others. But charitable contributions may also benefit individuals in a more direct way.

A voluntary contribution to charity in a liberal state will obviously improve one's standing in the community. This is because the gift to the needy will be more likely to be a genuine show of compassion and mercy if one does not obviously boast about it. Naturally man values those who are willing to help him and ask for nothing back in return. However the receiver of charity may be less impressed by the gift if he found out that the charitable contribution was made for selfish reasons, like trying to improve his standing in a community which values selflessness. At the very least if one gives to charity only to improve his standing it is no longer compassion. At worst one may say that one is in fact is profiting from someone else’s misfortune. Profiting from someone else’s misfortune is in fact deemed unethical for selfish reasons. People generally would like to be treated by others as they would reasonably treat others. Thus a person in need would expect help instead of someone profiting by others by his position. This is why people think profiting from other’s misfortune is so unfavourable. Not because it hurts anyone but because if they themselves were in a position of need they would like to have had help instead of no particular gain for themselves while someone else was gaining something. One may characterise it as envy of someone else’s profit.

It must be noted that this is all somewhat of an oversimplification. People would be able to, to a large degree, judge when charity is genuine and when not. Certainly people would be able to tell if someone was boastful of his actions. Cultural norms will also have influence on when someone ought to help someone and when not.

Thus profiting from someone’s misfortune is not necessarily ‘bad’, at least from a materialistic point of view. It does not hurt the giver or the receiver but benefits both. The giver profits from his increased standing in the community. The receiver’s position is obviously helped out because of the hand out. This kind of an improvement where both parties benefit while no one is made worse off is called Pareto-improvement. However there is still the question of ethics. If one does not realise that demanding the stopping of profiting from someone else’s misfortune is in fact selfish one may still feel obligated to try to stop it. One may then argue that the state should concern itself to make the situation more ethical.

One possibility is banning all charitable giving. This would be impossible to enforce. People would still find a way to give to others. More importantly a ban on charity would be unnatural as it interferes with a basic natural trait of man to show compassion and mercy, whether for selfish reasons or not. This solution seems to be even more unethical (whatever that means) than the unethical situation it is trying to resolve.

A more reasonable solution may lie in making all charitable giving secret. This would mean that the giver no longer has the incentive of raising his own standing in the community. This would make it appear that some of the selfishness has been gotten rid of. Of course the giver may will still profit because he is fulfilling his own desires to give. So he is still ripping some profit. However if the incentive of raising one’s of standing is lost many people would stop contributing to charity and many needy would be worse off. It is also somewhat questionable if forcing people to make their contributions secret is in itself all that ethical. This is because this measure restricts people’s freedom (of basically boasting) while it does not stop any imposition on others’ personal private sphere which is the only excuse for restrictions of individuals in a liberal state and society. This solution may end up hurting the poor and the needy for the benefit of allowing a few moralists to sleep easier which seems a poor trade off.

Another possibility may be to allow the state to take from the well off and give to the poor like Robin Hood did. But forcing people to give in such a way is hardly ethical and constitutes robbery. This solution looses all traits of compassion and mercy and imposes on the natural freedom to choose not to give. This solution seems to be most unethical. From a materialistic point of view it does benefit the poor the most because the state can rob the rich to a very large extent and make the poor as rich as it pleases.

A theoretical solution may be to stop people from thinking selfishly or to make people stop regarding mercy and compassion as a virtue. This would require a vast social engineering project which of course would impose on individuals’ natural make up. This would be tyranny.

It seems that there are no ethical solutions to the unethical situation where one profits from another’s misfortune but falsely calls it compassion. All the solutions seem to be even more unethical. It seems that the best thing to do is simply let people be people and let them make their own judgment what is ethical and unethical, what they should do and not do.

In defence of capitalism

The recent financial crisis has made many people question capitalism. Before doing so one must consider some important points. Firstly what capitalism is and how exactly it works and secondly how beneficial it is.

At the heart of capitalism there is the free market, and the heart of the free market is the price mechanism. Through this mechanism efficient use of limited resources is achieved. After all the free market is nothing but a tool through which a society can distribute limited resources between unlimited wants of all the people. However for this efficient allocation to happen the market has to be competitive. This means that there must be many buyers and sellers, there must be good information available for all, and entry and exit to the market for producers must be easy and quick.

Perfectly competition unfortunately does not exist. However the closer we get to it the better are the results. We have seen countless times, where competition is applied the outcomes are beneficial, be it in the car market or food market. As we open our borders to free trade we get more choice and lower prices, improving the living conditions for the vast majority.

The recent credit crisis is not a demonstration of the free market failing. Businesses still are selfish entities hunting for profit. The only way they can make profit is through providing cheaper and better goods and services than their competitors. Prices still work as an allocation tool, if a good is scares it is more expensive and thus people think twice before buying that good, only people who really need that good will buy it. This system is still more efficient and produces vastly better results than some form of public ownership and central planning.