Tag Archives: Social Contract

Popular Sovereignty and Sovereign Debt

What does the friction between popular sovereignty and sovereign debt entail for our democratic orders? Are we experiencing a loss of popular sovereignty in the sovereign debt crisis?

Voices from both the left and the right decry the austerity measures devised by supranational institutions as amounting to nothing less but an assault on popular sovereignty. As fiscal hawks chip away at the welfare state in their “give-no-quarter” pursuit of balanced budgets, many a political pundit has donned the populist cape and rushed to the rescue of the “sovereign people”. Indeed, the austerity-medicine shoved down the throats of most European citizens -without their consent- has brought to the fore what now appear as two diametrically opposed concepts: popular sovereignty and sovereign debt.

It is easy at this point to slip into demagoguery, claiming that sovereign debts are illegitimate because, after all, “the people” did not cause the crisis. Blame the bankers, right? What is harder, however, is to understand what the friction between the concepts of popular sovereignty and sovereign debt entails for our democratic regimes. A look into the past at one of the first moments in history when this tension surfaced will help us understand the matter more profoundly.

The years were the 1690s in England, a period also known as the Financial Revolution. In 1694 the Bank of England was established to supply fresh credit to a cash-strapped Crown for the expansion of the Royal Navy’s fleet. For the first time individuals and firms could invest in the fortunes of government on the assumption that they would be paid back with interest at later date. Future revenues from taxation and/or economic growth of the nation would serve as collateral for investment – hence the build-up of national, or sovereign, debt[1].

The institution of national debt however was not well received. In fact, it implied a radical re-thinking of the relationship between the people and government. In the late seventeenth century this relationship had been defined by the political theories of civic republicanism (Harrington, Milton) and social contract theorists (Pufendorf, Locke) as one based explicitly on the consent of the governed. It was the people’s responsibility, as bearers of god-granted rights and as free citizens, to erect a government through the election of public magistrates (or monarchs) which would rule in their stead. Sovereignty ultimately resided with the people who enjoyed the right to revoke the mandate given to their representatives if their trust was breached. Late seventeenth century political consciousness generally conceived of a legitimate government as one founded upon on the will of the people and upon some idea of a social contract.

Accompanying the idea of “the people” as the original source of political sovereignty was the concept of civic virtue. The civic virtues were those qualities required by citizens and governments alike to be in control of their destiny and not succumb to external dominion. Civic virtue entailed political agency: participating in the political affairs of one’s community as a means of protecting individual freedoms. In fact, the very notion of personal liberty was intimately connected to the idea of civic virtue. Liberty was defined by a certain degree of political self-determination which ensured autonomy from external rule (the arbitrary rule of a monarch or of another nation for example). On the contrary, not being free was caused by being dependant on the will of someone or something else. Un-freedom thus entailed the condition in which one lost human agency and the ability to defend and define one’s liberty[2].

Within this conceptual universe, the idea of sovereign debt clashed with both the concepts of popular sovereignty and civic virtue. While before the fate of the nation was conceived as inextricably tied to the political agency of the sovereign people, now sovereign debt chained the fortunes of government to the will of anonymous investors. As nations increasingly relied on external and private credit (and eventually on the issuing of bonds), it was perceived that the people would steadily lose political agency and control over the fate of their nations. Sovereign debt therefore created a condition of dependence of government towards creditors. And, as we have seen, dependence signified the loss of civil freedom[3].

In such a way, the stability of government was no longer sustained by the civic virtue of its citizens, nor from that holy pact called the social contract. Now, government was to rely on the fickle nature of investors and what would eventually become the almighty bond market. As the historian J.G.A. Pocock puts it:

“Stability of government in the present became linked to the self-perpetuation of speculation concerning the future … government and politics seemed to have been placed at the mercy of passion, fantasy and appetite, and these forces were known to feed on themselves and to be without moral limit”[4]

“Booms and busts, bulls and bears became the determinants of politics”[5]

The lesson we may draw from this historical example is not that sovereign debt is intrinsically bad. Every modern government must at some point take up debt in order to deliver on its responsibilities. The lesson here is in recognizing the dangers posed by the loss of democratic control over the institutions of public governance. Increasingly the policies of sovereign nations are unduly influenced by credit rating agencies, international markets and anonymous investors through their speculating and passing judgment over sovereign debt. Brought to an extreme this situation becomes incompatible with the basic tenets of democracy. Subsuming popular sovereignty to the arbitrary whim of capricious markets robs the concept of the social contract of its fundamental source of legitimacy, namely, what Locke called the “consent of the governed”.

The political discourses of the late seventeenth century show us that, at times, the machinations of the world of finance and the balanced functioning of a democratic regime may be at odds. It also warns us that dependence of our governments on unaccountable institutions minimizes the political agency of citizens, thereby curbing our democratic freedoms first of which is the exercise of democratic control over government. No matter how serious the sovereign debt crisis may be, democracy and popular sovereignty must remain non-negotiable.

Bibliography

Pocock, J.G.A. 1985. Virtue, Commerce, and History, Cambridge University Press: Cambridge

Skinner, Q. 1990. “The Republican Ideal of Political Liberty”, in Bock, Skinner & Viroli ed. Machiavelli and Republicanism, Cambridge University Press: Cambridge


[1] Pocock 1985, p69

[2] Skinner 1990

[3] Pocock 1985, p69

[4] Pocock 1985, p112

[5] Pocock 1985, p112

3 Comments

Filed under Democratic Theory, John Locke, political economy, political philosophy, political theory, Social Contract

The Retreat to the State of Nature

The Tea Party’s Denial of the Enlightenment

Taming Leviathan

The economic views embraced by the Tea Party movement understand of big government as the major cause of America’s financial woes. An expansive, gargantuan and leviathan-like state is not only inefficient in delivering public services, but also has no right to decide what is right or wrong for private individuals. “Freedom to choose” said Milton Friedman in the 1960s, while calling for a retreat of the Keynesian welfare state in the name of private sector efficiency and individual freedom. Echoing neo-classical economics, the Tea Party movement calls for limited government and fiscal austerity through the reigning in of public spending particularly in services such as healthcare and education. However, this popular resurgence of neo-liberal ideology should be viewed with a critical eye, particularly because of its fiercely oppositional and almost phobic attitude towards the role government in society. We must ask therefore whether such a staunch and borderline-paranoid perception of government is in some way detrimental to American national unity and to its democratic process.

            The fierce rejection of government, accompanied by a deep suspicion of politics, in fact implies a denial of democratic values and traditions. Brought to its logical extreme, economic libertarianism attempts to remodel social interactions upon individuals inhabiting a state of nature devoid of an intrusive government. This represents a denial of the social contract, a rejection of democratic politics and the refutation of the politics of the enlightenment (with all of its flaws of course).

The Nightwatchman State

            Both libertarian and neo-classical economic theories –which the Tea Party movement broadly seems to subscribe to- believe that government should be limited for two main reasons. Firstly because individuals possess the inalienable right of self-ownership: they own themselves and the fruit of their labor. Government therefore has no right to coercively redistribute what they have acquired through the sweat of their brow. In addition, government has no right to force individuals to do anything which they don’t consent to, for example buying health insurance[1]. The second reason why government should be limited is that government formulates public policy on the basis of what it considers to be the common good. However, as David Hume and J. S. Mill have taught, and as F.A. Hayek has re-iterated, there is no way of discerning what this common good empirically is, as every single individual has a divergent conception of it. Centralized national planning (such as healthcare or education programs) should therefore be resisted[2].

            Without burdensome regulation and heavy taxation, so the theory assumes, private companies and entrepreneurs will be able to deliver efficient services which cater to specific consumer needs. The role of government in society is therefore minimal, as its main concerns become protecting the nation’s borders, protecting citizens and property, providing a just legal framework and enforcing private contracts[3]. There is of course disagreement over the extent to which government should be limited. Hayek and Friedman are critical of a complete laissez fair order; while, in Robert Nozick’s utopia, government should limit itself only to the protection of citizens and the enforcement of contracts, thereby merely acting as a night watchman.

The Retreat to the State of Nature

            Brought to its logical extreme, the doctrine of limited or minimal government implies the remodeling of society upon a world in which political participation and democratic deliberation are replaced by voluntary interactions between individuals in the state of nature. In its most extreme form, economic libertarianism does away with the idea of a community of consenting citizens while retaining solely individual natural rights. Moreover, it implies that the political act of national self-determination could be in some sense morally wrong because it offends the natural liberty of the individual by imposing laws and norms decided through a collective process.

            But what is the state of nature exactly? As employed by the social contract theorists of the seventeenth and eighteenth centuries it referred to a condition of mankind before it entered civil society and before it erected authority or government: in short, before real society existed. A brief look at three of the most important social contract theorists will help us understand this concept better.

For Jean-Jacques Rousseau the state of nature is a hypothetical thought experiment used to determine mankind’s natural conditions, impulses and behaviors. Humans in the state of nature are neither good nor evil[4]. They live in a primitive world which is scarcely populated, where individuals are isolated from one another and where the only concern is that of self preservation. The impulse of self-preservation is however tempered by our inborn capacity for compassion, so that natural law tells us to “do good to yourself with as little possible harm to others”[5]. Humans become evil and selfish once they enter into society, when they begin to establish relations amongst themselves based on natural inequalities such as strength and intelligence.

            For John Locke, the state of nature is one where god created all humans free and equal. Natural law, which is discoverable by men through the application of their reason, tells individuals that everyone as god’s children possess the right to enjoy their life, liberty and property. “The State of Nature has a Law of Nature to govern it, which obliges everyone: and Reason, which is that Law, teaches all mankind, who will but consult it, that being all equal and independent, no one ought to harm another in his Life, Health, Liberty, or Possessions”[6]. However, in Locke’s state of nature, every man possesses the ability to exact his or her own justice, a condition which leads to the “State of War”. Individuals should therefore alienate this ability to a government established by the consent of the governed and ruled by law.

            Finally, for Thomas Hobbes, the state of nature is one in which every individual is solely concerned with preserving his or her life. The instinct of self –preservation inevitably clashes against that of others in the competition for scarce resources. This leads to the omnium bellum contra omnes: the war of all against all, and “it followeth, that in such a condition, every man has a Right to every thing; even to one anothers body.”[7]. As a result, the life of man in the state of nature is “poore, nasty, brutish and short”[8]. Only a complete surrender of all rights to a powerful sovereign, which will keep all individuals in awe, will allow for a condition of peace. 

The Libertarian State of Nature

            In  Anarchy State and Utopia (1974), Robert Nozick founds his theory of the minimal state upon Locke’s state of nature, in which humans are born with the inalienable rights to their life, liberty and possessions. More importantly, we are all born with the right of self-ownership: we own ourselves and the fruit of our labor. Mankind in the state of nature is thus in a “state of perfect freedom” [9], a condition which Nozick, as a libertarian, aims to preserve. However, in this state there is no institution which provides for the fair distribution of justice, thus every individual may exact his own justice inevitably leading to the “state of war”. For Locke, men should therefore erect a government to which they all consent, thereby instituting a social contract between citizens and governors based on trust and the rule of law. Nozick, however, does not agree. There is no real need for such a process as something resembling the state may arise out of the state of nature through an “invisible hand explanation”.

            Nozick believes that individuals in the state of nature will spontaneously bond together in “protective associations”. Such voluntary associations would protect their members’ life, liberty and possessions. Eventually, out of the maelstrom of competing protective associations one would muscle out competition and establish itself as the “dominant protective agency” [10]. This dominant protective agency fulfils the basic Weberian role of the state: providing for the monopoly of legitimate force within a territory, which for Nozick, qualifies as a minimal state. This is an “invisible hand explanation” of the emergence of government from the state of nature, as it arises spontaneously without a conscious collective effort[11].

“We have explained how, without anyone having this in mind, the self-interested and rational actions of persons in a Lockean state of nature will lead to single protective agencies dominant over geographical territories; each territory will have either one dominant agency or a number of agencies federally affiliated so as to constitute, in essence, one.” (Nozick 1974, p. 118)

The Invisible Hand vs. the Social Contract

            Nozick’s minimal state therefore emerges directly out of the state of nature and models itself upon natural and spontaneous behavior of individuals interacting in the state of nature. This is in direct contrast with the whole of the social contract tradition upon which the democratic politics of the enlightenment are founded. All three of the social contract theorists we have looked at propose some sort of contract between individuals and a sovereign body with the specific aim of lifting ourselves from the state of nature.

            Thomas Hobbes believed that in order to stop the “war of all against all” we must institute a commonwealth so as to give up our rights to a sovereign which will establish peace and prohibit the private use of force:

“A Common-wealth is said to be instituted, when a Multitude of men do Agree, and Covenant, every one, with every one, that to whatsoever Man, or Assembly of Men, shall be given by the major part , the Right to Present the Person of them all.” (Leviathan, Part II, Chap. XVIII)

For John Locke it is the duty of man towards God to establish a government by consent which protects the natural liberties of individuals through the rule of law:

“And thus that, which begins and actually constitutes Political Society, is nothing but the consent of any number of Freemen capable of a majority to unite and incorporate into such a Society. And this is that, and only that, which did, or could give beginning to any lawful Government in the World.” (Second Treatise  §99)

Finally, for Rousseau, individuals cannot subsist in the state of nature and are thus required to come together and establish a sovereign body through the social contract:

“This act of association produces a moral and collective body made up of as many members as the assembly has voices, and which receives by the same act its unity, its common self, its life and its will…As for the associates, they collectively assume the name people and individually call themselves Citizens as participants in the sovereign authority, and Subjects as subjected to the laws of the State.” (The Social Contract, Book 1, Chap. 7)

Nozick’s idea of the minimal state does not lift people out of the state of nature, but is aimed specifically at reproducing the conditions of “perfect freedom” found in such a state. Yet, the idea that a government may arise spontaneously through an “invisible hand mechanism” represents a denial of the social contract theory tradition. The establishment of the minimal or “night watchman” state  is bereft of a founding political moment of collective self-determination. This implies a veiled attempt of denying social and national unity, democratic deliberation and citizen participation. It also implies a denial of the categories of the citizen and of government which are the participants of the social contract.

European and American democratic traditions are not perfect. Carole Pateman has revealed a sexual contract hidden within the idea of the social contract, thereby exposing the displacement of the female sex. Similarly, Bikhu Parekh and James Tully have shown how western democratic politics exclude different cultures through the establishment o universal rights[12]. However, the complete denial of democratic politics represented by a libertarian retreat to the state nature is very dangerous. The democratic politics of the enlightenment should be exposed for their colonialist, misogynist and exclusionary characteristics, but they must also be used as a platform on which to construct a broader participatory and more inclusive democratic framework. Let us not deny the social contract. Now, more than ever, we must revive it so as to counter the grave democratic deficit which is crippling our political and economic institutions.

Bibliography

  • Hayek, F.A. 1944. The Road to Serfdom
  • Hobbes, T. 1996. Leviathan, ed. Tuck, R. Cambridge University Press: Cambridge
  • Locke, J. 1988. Two Treatises of Government, ed. Laslett, P. Cambridge University Press
  • Nozick, R. 1974. Anarchy, State, and Utopia. Blackwell: Oxford
  • Rousseau, J. 1984. A Discourse on Inequality, Penguin: London
  • Rousseau, J. 1997. “Of The Social Contract” in The Social Contract and other later Political Writings” ed. Gourevitch, V. Cambridge University Press: Cambridge
  • Steger, M.B., Roy, R.K. 2010 Neoliberalism: a very short introduction. Oxford University Press: Oxford

[1] Nozick 1974, p ix

[2] Hayek 1944, p 79

[3] Steger & Roy 2010, p 14

[4] Rousseau 1984, p 98

[5] Rousseau 1984, p 101

[6] Locke, Second Treatise §6

[7] Hobbes, Leviathan, Part 1, Chap. XIV

[8] Hobbes, Leviathan, Part 1, Chap. XIII

[9] Locke, Second Treatise, §4

[10] Nozick 1974, p 17

[11] Nozick 1974, p 18

[12] See Carol Pateman’s Sexual Contract (1988), Bikhu Parekh’s Rethinking Multiculturalism (2002), and James Tully’s Strange Multiplicity (1995)

4 Comments

Filed under democracy, Democratic Theory, Jean-Jacques Rousseau, John Locke, Libertarianism, Neo-liberalism, neoliberalism, political philosophy, political theory, Social Contract, Tea Party, Thomas Hobbes, Uncategorized