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March 16th, 2019 by geoffhodgson1946

Geoffrey M. Hodgson

The idea of Ludwig Mises, Friedrich Hayek and Milton Friedman, that there was once an ultra-individualist ‘classical liberalism’ promoting unrestrained markets, is a myth.

So-called neoliberals such as Ludwig Mises, Friedrich Hayek and Milton Friedman described themselves as ‘classical’ or ‘old-style’ liberals.1 Their declared mission was to revive an economic and political liberal tradition of the eighteenth and nineteenth centuries. They believed that this earlier liberal tradition had been perverted in the English-speaking world: it had come to signify extensive government intervention.

In his 1962 preface to his book now titled Liberalism: The Classical Tradition, Mises complained that in the US the term liberal ‘means today a set of ideas and political postulates that in every regard are the opposite of all that liberalism meant to the preceding generations.’ This account of the evolution of the term liberalism is widely taken for granted, by both its supporters and its critics.2

Ludwig von Mises

But in key respects it is false. Mises, Hayek and others adopted the following methodology. First, they conjured a picture of what classical liberalism means. In their case it is a doctrine of liberty seen as the absence of individual coercion, treating the individual as the best judge of his or her interests, with an emphasis on rights over duties, and the proselytization of a minimal state.

Then they read back into the history of ideas, searching for statements and writers who espouse such views. A history of classical liberalism is then constructed, typically going back to early Enlightenment thinkers like Locke in the seventeenth century.

There are major problems with this methodology. First it paints the portrait before studying its historical subject in the round. Given the scale and diversity of political and philosophical thought in over three hundred years, it is quite conceivable that one or more persons resembling the portrait can be found.

Thomas Paine

But this retro-constructivist methodology has to quickly pass over writers such as Thomas Paine, who were strong on social obligation, redistribution and economic equality, as well as on rights and liberty.

It also has problems dealing with people who have important distinctive features that are additional to those in the preconceived painting. A foremost example is Adam Smith, who is applauded for his recognition of individual incentives and for his celebration of markets and of spontaneous order. But other prominent features of his thought – including his extensive discussions of unselfishness, sympathy, justice and moral sentiments – are given less emphasis.

This retrospective methodology works backwards. Sure enough, it finds what it was looking for. But it becomes blind to much else. It constructs a history that is blinkered by its contemporary prejudices. It has no answer to a rival retrospective attempt that might start from a different preconception of classical liberalism and looks back to find thinkers that fit a different portrait. For example, it might accent an emphasis on moral motivation, sympathy, duty and justice, as virtues in themselves rather than as means to other ends, to find that Adam Smith, Edmund Burke, Thomas Paine and William Cobbett were classic liberals, whereas others such as Bernard Mandeville and Frédéric Bastiat were not.

An important corrective to this one-sided, retro-constructivist methodology is to look at the past usage of terms such as liberal and liberalism and to find the thinkers and ideas to which they adhered.3 Helena Rosenblatt performs this task in her Lost History of Liberalism. She is fully aware of the difficulties, as term such as liberal have shifted in meaning. But the origins of the word are still important.

In ancient Rome: ‘liberalitas signified the moral and magnanimous attitude that the ancients believed was essential to the cohesion and smooth functioning of a free society.’ In the fourteenth century the adjective liberal was used to mean ‘generous’, ‘noble’, ‘selfless’, ‘magnanimous’ or ‘admirable’. In the King James version of the Bible (1604-11) the word liberal appears several times, ‘each time referring to generous giving, especially to the poor.’ The first edition of the Dictionary of the Académie française (1694) saw a liberal as ‘he who likes to give … to people of merit’.

Then the term shifts slightly in meaning. The Oxford English Dictionary records that by 1772 the word ‘liberal’ had come to mean ‘free from bias, prejudice, or bigotry; open-minded, tolerant.’ Rosenblatt found such sentiments in early liberal writings:

‘At heart, most liberals were moralists. Their liberalism had nothing to do with the atomistic individualism we hear of today. They never spoke about rights without stressing duties. Most liberals believed that people had rights because they had duties, and most were deeply interested in questions of social justice. They always rejected the idea that a viable community could be constructed on the basis of self-interestedness alone. Ad infinitum they warned of the dangers of selfishness. Liberals ceaselessly advocated generosity, moral probity, and civic values.’

As Rosenblatt explained, the term liberalism ‘owes its birth to the French Revolution. The word itself was coined around 1811, and it was men and women like the Marquis de Lafayette and his friends, Madame de Staël and Benjamin Constant, who first formulated the ideas to which it referred.’ The word first appeared in English in 1815. Rosenblatt thus offered an entirely different account of early liberalism:

‘Contrary to what is often said today about nineteenth-century liberalism, early liberals were not doctrinaire about laissez-faire. They did not stress property rights or celebrate the virtues of unbounded self-interest. What today is called ‘classical’ or ‘orthodox’ liberalism did not exist. … In fact, the concept … never actually existed during the period under consideration. Liberals held a spectrum of economic views … the great majority of nineteenth-century liberals, whether British, French, or German, were not all that adverse to government intervention. Nor did they advocate absolute property rights. And they certainly did not believe that individuals pursuing their own self-interest would spontaneously create a healthy wealth distribution or social harmony. They denounced selfishness and individualism at every opportunity.’

It is true that many (if not most) early liberals argued for a small state. But they lived in a period when the state and its tax levels were much smaller than they became in the twentieth century. We cannot automatically assume that they would have taken the same small-state view in the present context, especially if they were responsive to practical experiment and historical experience.

Consequently, classical liberalism does not denote one distinctive type or phase of liberalism. The original Liberalism from the seventeenth to the mid-nineteenth century contained widely diverging variants. Contrary to Mises and Hayek, the kind of government-interventionist and welfarist liberalism that we find today in Britain and North America is not an abuse of the classical label. It can trace its origins and legitimacy back to variants of liberalism that emerged during and after the French Revolution. Mises, Hayek and Friedman have no greater claim to the title of classic liberalism than interventionists such as John A. Hobson, John Dewey, John Maynard Keynes and Michael Polanyi.

In liberal chaos of miss-labelling we have to build up again from the remnants of history that have survived critical scrutiny. With such hindsight, and in terms of core sentiment rather than detailed argument, there is nothing ‘new’ or ‘neo’ in the interventionist liberalism of Hobson, Dewey or Keynes, or in the so-called ordoliberalismus of Eucken, Röpke or Rüstow. Despite their novelty, their justifications of some state intervention build on considerations raised within liberalism for more than two hundred years.  

Furthermore, taking the historical panoply of liberalism as a whole, and even if we confine our gaze to the nineteenth century, Mises, Hayek and Friedman do not come across as classical or typical, but as rather extreme. This is evident not only in their persistent devotion to a minimal state in an era of complex trading relations where it is arguably unfeasible, but also in their emphasis on individual gain, and in their lack of stress on duties, social justice and moral motivation as intrinsic virtues. If it can apply to any liberal, then the ‘neo’ epithet can apply to them. We need to restore much of classical liberalism, against the so-called neoliberal axis of Mises, Hayek and Friedman.

16 March 2019

Minor edits – 17 March 2019

Published by University of Chicago Press



1. I am overlooking here the problem that the term neoliberalism is used to describe a host of very different things. It has become a much-abused term of abuse (Boas and Gans-Morse 2009, Audier 2012, Burgin 2012, Venugopal 2015, Hodgson 2019a). Nevertheless, it could have a meaningful usage if it could be confined to the stream of thought around Mises, Hayek and Friedman (Hodgson 2019b).

2. Hayek’s (1960, pp. 55-57) position was more nuanced. He contrasted the ‘British’ and ‘empiricist’ tradition of liberalism, including David Hume, Adam Smith and Edmund Burke, with the ‘rationalist’ and ‘French’ tradition.

2. Similar problems and possible remedies occur with the contested term social Darwinism. In this case too, a practice of first assuming what it meant, and then looking back to find exponents, is commonplace. But a systematic search for appearances of the term (in Anglophone journals) revealed a very different story. It was discovered that in its early years the term was often a label attached by critics of belligerent nationalism or racism. Accordingly, Herbert Spencer and William Graham Sumner (who were critical of imperialist wars) were not described as social Darwinists until the 1930s, and that meaning of the term then shifted to downplay nationalism in favour of notions of competitive individualism (Hodgson 2004, 2006).



Audier, Serge (2012) Néoliberalisme(s): Une archéologie intellectuelle (Paris: Grasset).

Boas, Taylor C. and Gans-Morse, Jordan (2009) ‘Neoliberalism: From New Liberal Philosophy to Anti-Liberal Slogan’, Studies in Comparative International Development. 44(2), June, pp. 137–61.

Burgin, Angus (2012) The Great Persuasion: Reinventing Free Markets since the Depression (Cambridge MA: Harvard University Press).

Hayek, Friedrich A. (1960) The Constitution of Liberty (London and Chicago: Routledge and Kegan Paul, and University of Chicago Press).

Hodgson, Geoffrey M. (2004) ‘Social Darwinism in Anglophone Academic Journals: A Contribution to the History of the Term’, Journal of Historical Sociology, 17(4), December, pp. 428-63.

Hodgson, Geoffrey M. (2006) Economics in the Shadows of Darwin and Marx: Essays on Institutional and Evolutionary Themes (Cheltenham: Edward Elgar).

Hodgson, Geoffrey M. (2019a) Is Socialism Feasible? Towards an Alternative Future (Cheltenham UK and Northampton MA: Edward Elgar), forthcoming.

Hodgson, Geoffrey M. (2019b) ‘How Mythical Markets Mislead Analysis: An Institutionalist Critique of Market Universalism’, Socio-Economic Review, forthcoming.

Mises, Ludwig von (2005) Liberalism: The Classical Tradition, translated from the German edition of 1927(Indianapolis: Liberty Fund).

Rosenblatt, Helena (2018) The Lost History of Liberalism: From Ancient Rome to the Twenty-First Century (Princeton NJ and Oxford UK: Princeton University Press). See especially pp. 4, 9, 16, 29, 42, 82, 112, 114-15.

Venugopal, Rajesh (2015) ‘Neoliberalism as a Concept’, Economy and Society, 44(2), pp. 165-87.

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February 28th, 2019 by geoffhodgson1946

Geoffrey M. Hodgson

A summary of Geoffrey M. Hodgson (2019) ‘How Mythical Markets Mislead Analysis: An Institutionalist Critique of Market Universalism’, Socio-Economic Review, published online. DOI: 10.1093/ser/mwy049.

There has been much debate over the alleged virtues or vices of markets, and over the extent to which they should be accepted in a modern economy. This paper is not about this normative debate. Instead it is about how the term market can be misused.

Some authors suggest that markets are ubiquitous, or nearly so, as if they were the universal essence of unhindered human interaction. Here the term market universalism is used to refer to such a prolific, non-metaphorical use of the term market to describe a large number of varied arrangements or processes in the real world.

A problem with market universalism that its use of the word market becomes so pliable that it is difficult to identify adequately any non-market processes or arrangements. Some market universalists identify exchange with choice and markets with competition. But these features exist outside markets. We choose what clothes to wear or what books to read. Competition covers any contest, including sports or games. Not all choice or competition involves exchange or markets. We need additional criteria, particularly to identify what are not markets.

An institutionalist critique of market universalism treats genuine markets and trade as necessarily guided by specific systems of legal or other rules. But among the foremost proselytizers of market universalism are two institutional economists who won Nobel prizes for their work.

The rise of the m-word

In the full paper I provide evidence of the increasing use of terms like political market and market for ideas since the 1960s. This dramatic rise may be associated with the increasing influence of the strong pro-market ‘neo-liberal’ ideologies associated with Ludwig Mises Friedrich Hayek and Milton Friedman. Historians of neoliberalism mostly agree that its spectacular rise of influence dates from the 1970s (Harvey 2005, Mirowski and Plehwe 2009, Burgin 2012, Stedman Jones 2012, Mirowski 2013). The correlation in timing seems too strong to be coincidental. In particular, Philip Mirowski (2013, p. 77) has claimed that ‘the marketplace of ideas’ is ‘a neoliberal notion if ever there was one.’

But unfortunately, the term neoliberal has become so stretched in meaning to include almost every politician or thinker who advocates a market economy (e.g. Harvey 2005). This bland over-expansion of the term makes it useless as an analytic category. It would be much better to confine neoliberalism to the political economy of key exponents such as Ludwig Mises, Friedrich Hayek and Milton Friedman.

Much use of the word market may be metaphorical. Metaphor is legitimate and unavoidable in science. But some influential authors suggest that what are described as markets really are markets.

Of course, there have been attempts to increase the role of markets in the economy, including the extension of markets for intellectual property, and so on. There has also been a market rise in the use of contracted services – by lobbyists, advisors, consultants and others – in the political sphere. Hence, to a degree, rising usages of these terms may reflect real-world phenomena. But it is still the case that highly influential usages of these terms are not confined to these cases where genuine markets or contracts are involved.

This article is concerned solely with phenomena that are not markets. If a phenomenon is described a market, then that description may be intended as literal or metaphorical. This article is concerned with literal (non-metaphorical and false) descriptions of non-market phenomena as markets.

For effective rebuttal of such false claims, two conditions must be satisfied. First, it must be shown that there is no sign of metaphorical intent. Second, it must be shown that phenomenon does not qualify as a market by minimal criteria. It is unnecessary to provide a full definition. The following section outlines such minimal criteria.

The slippery idea of the market

In ordinary language a market typically refers to a place where commodities of a particular type or types are regularly traded. As Karl Polanyi (1944, p. 56) wrote: ‘A market is a meeting place for the purpose of barter or buying or selling.’ With the Internet, this ‘place’ may be virtual, as with eBay or Amazon.

By contrast, many economists propose a broader definition, where market implies any form of trade, not simply trade organized in one place. Trade is much older than organized markets (Hodgson 2015, ch. 5). But these days, economists tend to conflate the two.

In addition, some go even further, to regard any kind of exchange as a market. In economics and sociology, terms such as exchange have been applied in contexts where there is not a contract between agents.

In this vein, Mises (1949, p. 97) saw all action, even by an isolated individual, as ‘exchange’ – as a ‘rational’ attempt to swap inferior for superior circumstances. But, when he struggled alone to survive on his island, with whom did Robinson Crusoe ‘exchange’ rights to property? Who ensured that the agreement was enforced? By exchange, Mises meant any situation involving choice, even when one sole individual is involved.

We need to pin down some minimal elements. The requirement is not to define a market, but to establish some of the rudimentary conditions required for markets to exist. These minimal conditions help identify phenomena that are not markets.

A full and precise definition of a market would immediately become controversial because of the clash between broad and narrow definitions in the literature, as noted above. For the purposes of this essay, agreement on an adequate definition is unnecessary. Required instead is the establishment of some minimal, necessary characteristics to identify what are not markets.

A key precondition of a (broadly-conceived) market is the existence of multiple traders who are interacting and communicating with some shared understandings. The traders are capable of entering into agreements with others to supply assets or services in exchange for money or other assets. But (even with illegal markets) there need to be shared rules to determine what constitutes a mutually validated agreement.

These rules do not have to be written down and they do not need to be laws. It is accepted that there can be illegalas well as legal markets. With legal markets, a combination of law and custom may determine the essential rules. With illegal markets the rules may be those of a mafia or a criminal gang. The difference is important, but it need not delay further our attempt to pin down some minimal and necessary features of a market.

These are proposed minimal requirements for a market:

A market entails a system of accepted rules, enabling multiple traders to enter into voluntary agreements involving mutual obligations. These agreements are made through or between agents that can identify one another and communicate. Their agreed obligations are mutually understood to lead to the agreed delivery of goods, assets or services, in return for some agreed payment. This agreement involves allocations of mutually-endorsed rights to goods or services, according to mutually-accepted rules.

There is some wiggle-room for varied interpretations here, particularly over terms such as accepted, rights, obligations and payment. Most definitions of this kind involve some degree of vagueness (Hodgson 2019). These issues are best addressed using concrete examples, as in the following section.

Note that agreements may be written or unwritten. They may have to be fulfilled over a shorter or longer period. There is no claim here that agreements have always to be enforced by external parties such as the state. Enforcement can be by reputation or by other means.

Mythical markets

Using the above minimal criteria, we can now examine cases where the minimal requirements are not satisfied, yet the phenomena are misleadingly described as markets. The term mythical markets refers to phenomena that are non-metaphorically described as markets, but are not markets, at least by the minimal requirements laid out in previous section.

Nobel Laureate Ronald Coase (1974) and Coase and Ning Wang (2012, pp. 190-207) described and advocated a ‘market for ideas’. They gave no indication that their usage was intended to be metaphorical. They used the term not primarily to refer to genuine markets in intellectual property, but to the need for ‘freedom of speech and expression’ and for ‘the creation and transmission of knowledge’ through educational institutions. For them, the ‘market for ideas’ was literal.

Addressing ‘the market for goods and the market for ideas’ Coase (1974, p. 389) went even further: ‘There is no fundamental difference between these two markets’. Given the nature of open conversation and free speech, this implies that contracts, agreements, prices or allocations of rights are not ‘fundamental’ to markets.

Some ideas – as with patents and copyrights – may be traded, but most are not. We have ideas, but mostly they are not deemed objects of property under any accepted system of legal or other rules. The ordinary communication or debating of ideas does not involve agreements with the shared intention of creating obligations according to those rules. Much day-to-day conversation is not a transfer of specific rights. Much broadcasting of information does not identify the individual recipients of the broadcast – so agreements in this case are problematic.

Certainly, there is competition between ideas and there is competition on markets. But this does not mean that all transmission of ideas is via a market. Competition takes place outside markets, as on the sports arena, the TV game show or the battlefield. Competition as such does not necessarily imply the existence of contracts or markets.

Consider the term ‘political market’. While some political services can be traded on genuine markets, and votes can be traded (illegally) in some countries, it is contestable that all voting and all politics can be regarded as markets. A literature emerged in the 1970s and 1980s that applied the term ‘political market’ both to voting in elections and to measures by lobbyists and pressure groups to gain the support and votes of politicians.

Nobel Laureate Douglass North (1990a, 1990b) joined this throng. Again, there was no indication by North that the usage of terms like market or exchange in such contexts was intended to be metaphorical.

In many countries (including the US) it is illegal for a lobbyist to pay or to give gifts to a member of the legislature in return for his or her vote. Legal lobbying is an information service, rather than a contract for votes. But of course, there are many ways in which lobbyists use gifts or campaign contributions to sway the votes of legislators. Nevertheless, incautious rhetoric involving ‘political markets’ blurs the distinction between information services and bribery. If lobbying really creates a market for votes, then it is an illegal one. But if there is compliance with the law, then North is wrong: votes are not literally the objects of market-like exchange.

In democracies under the rule of law, a vote by a member of the public for a politician or a party does not typically amount to an agreement that satisfies the minimal conditions for a market. The elected politician or party cannot normally identify all the individual voters who voted for them, so at least one of the minimal conditions for a market is violated. One is enough to prove the negative.

The manifesto of a political party is an indication of intent, not an enforceable contract. Typically, politicians cannot be sued for broken promises: the voter has no right of legal redress. A politician’s promise is not an ‘offer’ which is ‘accepted’ by casting a ballot: no legally binding agreement is created, involving prices or anything else. The law normally prohibits payments in return for votes. If there were such a contract, then it would be tantamount to political corruption. Of course, in many countries the rule of law is imperfect. But the point here is not to deny that votes can be traded. Instead it is denied that voting always involves some market-like deal.

The notion of ‘political market’ is strangely indifferent between less corrupt democracies and others (such as India) where the (illegal) buying of popular votes and the votes of elected politicians is frequent. The latter may legitimately be described as ‘political markets’ because (illegal) contracts for political services are involved. But this does not mean that the entire polity in every democracy is a political market.

These examples show that the non-metaphorical use of the term market has spread to all sorts of phenomena that should not reasonably be described as markets.

Analytical problems with market universalism

Market universalism impoverishes the concept of a market. True markets always involve rights and agreements, according to mutually accepted rules.

There are good practical reasons to prevent key services of the legislature and the judiciary from being traded, including those relating to property and markets. For example, if judicial rulings were for sale to the highest bidder, then the security of property rights and their exchanges would be undermined. Hence Michael Walzer (1983) established the need for ‘blocked exchanges’ in some spheres, excluding markets from politics, the legislature and the judiciary.

While much information and knowledge cannot readily be shared (because of tacitness, interpretative difficulty, or inaccessibility) much else can, and this can be of huge productive value. Over-restriction of the cheaply-acquired benefits of shared possession of non-rivalrous informational assets can generate remarkable inefficiencies. Consequently, the benefits of private and contractual provision of some information may be much less than the overall opportunity costs of charging a price for its use. A healthy market system itself depends on missing or incomplete markets for information.

Other markets are missing or incomplete. In today’s developed market economies, most people work under an employment contract. But crucially, employment contracts are for a limited period of time into the future. We cannot legally trade our lives away in lifetime contracts. This would be tantamount to voluntary servitude.

There is some future contracting for labour power, such as when a student receives financial support from a company, in return for a commitment to work for some years in the firm. But the time period is typically a few years, amounting to a small fraction of the student’s future working life. There are sometimes ‘non-compete’ agreements with skilled employees, that prevent them leaving a firm and working for a rival for a while. But these are still far short of lifetime contracts.

For this reason, under a market system with employment contracts, there can never be a complete set of markets for labour power. Although capitalism has meant a huge extension of property and markets, and it has made labour power a widespread commodity (as Marx emphasized), it has also, by freeing labour from servitude, sustained missing markets for labour futures. For there to be full futures markets for labour, all workers must be able to enter into contracts for every future instant in their expected working life. Such a complete curtailment of future discretion would be voluntary bondage. The uncertainties involved in modern, complex, dynamic economies make such extensive future contracting impractical.

There is in principle no satisfactory contractual solution, within a market economy with wage labour, to missing markets for labour power. Enforcing detailed and extended property and contracting rights, would limit the freedom of workers to quit their employment. Typically, workers are employed under a contract that allows exit, subject to notice of a few months. The short-term restriction of extended futures markets for labour is an important safeguard of the freedom of the employee.

The absence of futures markets for labour power creates a problem for the employer with the existing workforce. If the employer spends money on employee training and skill development, then this investment is lost when the worker leaves. As a result, without compensatory arrangements, employers might under-invest in human learning and education (Marshall 1920, p. 565).

The problem of missing markets has been addressed within general equilibrium theory. Here a missing market is a market that could exist in some possible state of the world, but does not in fact exist. If such a market is missing, then the absence of key information concerning prices on that missing market can cascade through the system and affect the overall outcome. The efficiency of other markets can be diminished (Hart 1975).  

Missing markets mean that we are in the world of ‘second best’ solutions. As Richard Lipsey and Kelvin Lancaster (1956) famously demonstrated, when one or more optimality conditions cannot be satisfied, it is possible that the next-best solution involves changing other variables away from the values that would otherwise be optimal. If it is infeasible to introduce a well-functioning market in any part of the system, then it is possible that the introduction of further market distortions or restrictions may partially counteract that omission, and lead to a more efficient outcome. There is no ‘one-size-fits-all’ policy solution where the removal of market impediments always brings efficiency or welfare. On the contrary, welfare outcomes of such interventions could be positive or negative – they would be dependent on context.

Policy temptations of market universalism

The non-metaphorical misuse of the term market, to cover arrangements that are not best described in such terms, opens up pro-market normative possibilities. It removes conceptual barriers to pushing actual non-market arrangements towards genuine market mode. If most things are already seen as markets, or they are deemed to have an immanent tendency to become markets, then it would be less consequence to create more markets. Objections to the extension of markets are removed by the claim that existing arrangements are already markets. The temptation then is to ally market universalism with normative policies such as privatization and deregulation.

There is another temptation, with serious consequences. Through notions such as ‘political markets’, market universalism conceptually dissolves the state and its legal system into a generally-marketized vision of society. They all become one and the same. The state and law become additional markets alongside others. This temptation within market universalism is the marketization of society and the state, and the denial of the autonomy of politics. The consequent temptation is to downgrade all non-commercial justifications for democracy, law or social life. Everything is forced into the conceptual straitjacket of property and contract, and then evaluated in terms of profit and loss.

One of the achievements of Enlightenment thought – from John Locke and Adam Smith –  was the notion of civil society, which was distinguished from the state and meant more than mere trade or business. Although it is a contested concept, in most accounts civil society includes private business and markets, but it is not reducible to them. As well as trade unions and employer associations, it embraces many forms of social association (including recreation, religion and philanthropy) that are not necessarily driven by business interests. Civil society is important to develop local knowledge, sustain democracy and to organize powers to lobby or protest against governments. It is a vital sphere of action and organization between the individual and the state.

Notwithstanding their interdependence, civil society is different from the state. Civil society is also irreducible to market relations, notwithstanding the inclusion of trade and business within its sphere. Market universalism doubly undermines these distinctions. First, civil society is reduced to matters of property and contract. Second, politics is seen as a market as well.

Making everything a market denies the autonomy of law and politics: everything is subsumed within the market zone. All forms of association are regarded as markets. Legal and political relations are reduced to the bland ‘economic’ facts of possession and exchange. Control over property becomes everything. Property moves from being a necessary condition of liberty, as in Enlightenment thought, to being necessary and sufficient for the same.

Also transformed is the prominent Enlightenment argument that the government must be legitimated by representative democracy, rather than by tradition or divine rule. Instead, the ‘political market’ helps to promote market criteria as the overriding means to legitimize democracy. Furthermore, democracy itself may be seen as secondary or expedient, especially when property or markets are under threat. By treating democracy as another market, a temptation is to regard markets and property as sovereign, rather than democracy.

Consequentially, market universalism enables something very different from other forms of liberalism. One may be tempted to call it neo-liberalism. As Mirowski (2009, p. 456) argued: ‘Neoliberals seek to transcend the intolerable contradiction by treating politics as if it were a market and promoting an economic theory of democracy.’

Whether or not we use the label neo-liberal, clearly there is a prominent strain of modern thought that tries to justify everything in market-like terms. This suggests that there are no longer any worthwhile moral values or principles – including norms of justice or democratic behaviour – that cannot be given a market price.


While absolute precision is unattainable, ongoing vigilance in the use of terms and metaphors is vital. It is suggested here that there is much more involved than casual analogy to the persistent use of the term market to describe a huge range of economic, political, social and legal phenomena.

This paper shows that, by reasonable criteria, with minimal attention to the institutions and rules involved in a world of contracts a trade, the term market has been miss-used in instances such as ‘markets for ideas’ or ‘political markets’. Often, these things are not true markets.

It is necessary to be clear what arrangements are not markets. Furthermore, it also must be understood that not everything can be traded on a market.

A market system with ‘free’ wage labour (in contrast to slavery) inevitably entails some missing futures markets for future labour power. Otherwise the worker would be bonded by contracts for life. According to an important theoretical literature, the existence of missing markets means that attempted market solutions to inefficiencies cannot be guaranteed to work.

Although market universalism is not primarily a normative doctrine, it gives rise to major policy temptations. The most serious of these is the conceptual dissolution of the polity and the legal system into the ‘economic’ sphere of the ‘market’. The boundaries between the polity, the economy and civil society become invisible. In particular, by treating democracy as a market, the temptation is to regard markets as more important than democracy.


Burgin, Angus (2012) The Great Persuasion: Reinventing Free Markets since the Depression (Cambridge MA: Harvard University Press).

Coase, Ronald H. (1974) ‘The Market for Goods and the Market for Ideas’, American Economic Review (Papers and Proceedings), 64(2), May, pp. 384-91.

Coase, Ronald H. and Wang, Ning (2012) How China Became Capitalist (London and New York: Palgrave Macmillan).

Hart, Oliver D. (1975) ‘On the Optimality of Equilibrium when the Market Structure is Incomplete’, Journal of Economic Theory, 11(3), December, pp. 418-43.

Harvey, David (2005) A Brief History of Neoliberalism (Oxford and New York: Oxford University Press).

Hodgson, Geoffrey M. (2015) Conceptualizing Capitalism: Institutions, Evolution, Future (Chicago: University of Chicago Press).

Hodgson, Geoffrey M. (2019) ‘Taxonomic Definitions in Social Science, with Firms, Markets and Institutions as Case Studies’, Journal of Institutional Economics, 15(2), April, forthcoming.

Lipsey, Richard G. and Lancaster, Kelvin (1956) ‘The General Theory of Second Best’, Review of Economic Studies, 24(1), December, pp. 11-32.

Marshall, Alfred (1920) Principles of Economics: An Introductory Volume, 8th edn. (London: Macmillan).

Mirowski, Philip (2009) ‘Postface: Defining Neoliberalism’, in Mirowski and Plehwe (2009, pp. 417-55).

Mirowski, Philip (2013) Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown (London and New York: Verso).

Mirowski, Philip and Plehwe, Dieter (eds) (2009) The Road from Mont Pèlerin: The Making of the Neoliberal Thought Collective (Cambridge MA: Harvard University Press).

Mises, Ludwig von (1949) Human Action: A Treatise on Economics, 1st edn. (London and New Haven: William Hodge and Yale University Press).

North, Douglass C. (1990a) Institutions, Institutional Change and Economic Performance (Cambridge and New York: Cambridge University Press).

North, Douglass C. (1990b) ‘ATransactions Cost Theory of Politics’, Journal of Theoretical Politics, 2(4), October, pp. 355-67.

Polanyi, Karl (1944) The Great Transformation: The Political and Economic Origins of Our Time (New York: Rinehart).

Stedman Jones, Daniel (2012) Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics (Princeton: Princeton University Press).

Walzer, Michael (1983) Spheres of Justice: A Defence of Pluralism and Equality (New York: Basic Books).

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July 9th, 2018 by geoffhodgson1946


Despite their declared support for free trade, Tory libertarians like David Davis and Jacob Rees-Mogg are acting as if there were still a British Empire.


Geoffrey M. Hodgson


The Brexiteers in the Tory Party do not understand the mechanics of modern trade and have no viable blueprint for Brexit.

Substantial harmonization of standards and regulations is required when trade crosses international borders. The EU Single Market enables massive gains from trade within a harmonized system of regulation. EU member states have a say in the development of those regulations, within a common system.

Outside the EU, the UK would have to replace a huge apparatus of EU-wide regulation that has grown up since 1973 when it joined. This regulatory legislation would be an even more formidable burden than any increased tariff levels that would be adopted if the UK leaves the EU Customs Union and Single Market.

This problem creates a dilemma for libertarians who distrust all state machines – especially large ones outside their national comfort zone. Hence, alongside nationalists and hard left socialists, libertarians were in the intellectual forefront of the 2016 Brexit vote in the UK, chiming in with overblown complaints about Brussels bureaucracy, made more strident because this bureaucracy spans national boundaries and is staffed by foreigners.

Some of these libertarians are atomistic individualists, unable to accept that markets consist of more than individuals in isolation. These libertarians are seemingly unaware that all trade and markets must involve commonly accepted rules, as well as the wills and assets of individuals. Markets, in short, are social institutions.

Entering or leaving markets requires dealing with systems of rules. In practice, exit from the EU Single Market means either that regulations have to be developed independently, thus reducing trade possibilities, or that EU regulations have to be accepted for future trade, while having little say in their formation.

The libertarian dilemma

Minimal-state libertarians are thus caught in a dilemma. They have either to accept the adjudications of a foreign court, thus dramatically violating their characteristic anti-state position, by accepting not only state legal system but one outside their homeland, or they have to curtail their cherished ideological ambitions for free trade and markets across national boundaries.

More generally, any contract between sellers and buyers across international boundaries requires agreement on the means of adjudication, if a dispute arises over its terms or fulfilment. Typically it is agreed that disputes will be resolved in the courts of one nominated country. The European Court of Justice was set up to deal with contractual disputes within the EU, and between EU traders and contracting businesses located outside the EU.

Regulatory harmonization and trade dispute adjudication create problems for libertarians. Just as big socialists believe in a fantasy world where the state can do everything, some libertarians believe in the obverse fantasy of a minimal state, where trade somehow operates without an extensive state legal infrastructure. As Jamie Peck put it, these “neoliberals” espouse “a self-contradictory form of regulation-in-denial”.

Nevertheless, when faced with the real world of business and contract, these libertarians acquiesce with the state machine and its legal system within their own national boundaries. Their nationalism means that they can live with that outcome.

But when trade crosses international boundaries, the problems of regulatory harmonization and dispute adjudication compel these libertarians to accept – especially when trading with a larger economic bloc – that disputes may have to be resolved in courts outside their national boundaries.

For closet nationalists in libertarian clothing, accepting the judgments of a foreign court is a step too far. The lenience granted to their national courts is not granted to those of foreigners.

Bring back the British Empire – and other fantasies

British nationalists in libertarian clothing may then call up another fantasy from the past. They can imagine that Britain is still a great power, and that it has the capacity to compel that all trade disputes be resolved in British courts. In their imagination these libertarians bring back the British Empire. Imperial power makes everyone else a rule-taker. They may talk of that bygone world in the corridors of Eton, but it is far beyond the reality of global power today.

Across the Atlantic, American nationalists in libertarian clothing perform ideological gymnastics by allying themselves with politicians such as Donald Trump. He an economic nationalist rather than an advocate of international free trade. As long as these dubious libertarians can concentrate their gaze on the domestic US market and avoid the world beyond, then with some additional fantasising they might continue to believe in their myth of a minimal state.

Instead of the Empire, a US national fantasy is the Wild West. Historically, this was a short-lived zone, partly out of reach of the state and its system of law. Deals were done, aside the barrel of a gun. It is the US version of a mythological libertarian paradise. Global reality today, however, is very different.

A third fantasy is the idea of Jeremy Corbyn that Britain can leave the EU and build socialism. This is a mythical as the other fantasies. Corbyn does not understand markets and has no viable blueprint either – but that is the subject of other blogs. In the meantime, we note that all these efforts to leave the EU are based on fantasies that have little connection to the world in which we live today.

9 July 2018

Published by University of Chicago Press in January 2018


Hodgson, Geoffrey M. (2015) Conceptualizing Capitalism: Institutions, Evolution, Future (Chicago: University of Chicago Press).

Hodgson, Geoffrey M. (2018) Wrong Turnings: How the Left Got Lost (Chicago: University of Chicago Press).

Peck, Jamie (2010) Constructions of Neoliberal Reason (Oxford and New York: Oxford University Press). See p. xiii.

Posted in Brexit, Donald Trump, Jeremy Corbyn, Left politics, Liberalism, Markets, Neoliberalism, Populism, Property, Right politics, Socialism, Uncategorized

June 1st, 2018 by geoffhodgson1946



Stretching the word “neoliberal” to cover people as different as Deng Xiaoping and Donald Trump has turned it into an absurdity.


Geoffrey M. Hodgson


Once upon a time, the word neoliberalism might have been confined to an extreme form of individualism that eschews state regulation, promotes economic austerity and a minimal state, opposes trade unions and vaunts unrestrained markets as the solution to all major politico-economic problems.

But today the usage of the word neoliberalism is no longer so restricted. I have been told more than once that anyone who is not a socialist is automatically a neoliberal. Any defence of the existence of markets now risks quick rejection with an angry neoliberal stamp upon it.

More frequently these days, a wide range of politicians, from Margaret Thatcher and Ronald Reagan at one extreme, to Bill Clinton, Hillary Clinton, Emmanuel Macron and Tony Blair at the other limit, are all described as neoliberals, despite, for example, hugely varied policies on taxation, government expenditure and the role of the state.

In their book on Neoliberalism, Damien Cahill and Martijn Konings describe the US President Donald Trump as a neoliberal. Yet he is a supporter of protectionism and he has imposed import tariffs: he does not believe in free trade. The word neoliberal is now stretched beyond credence and coherence.

Sneaky Deng Xiaoping was a neoliberal

Guardians of socialist purity have described some errant Marxist or socialists as neoliberals. In his Brief History of Neoliberalism, Marxist academic David Harvey described revisionist-Marxist Deng Xiaoping as a neoliberal.

From 1978, Deng supported the reintroduction of markets into the Chinese economy. But he still proposed a strong guiding hand by the state, including centralized management of the macro-economy and the financial system.

Harvey admitted that Deng’s policies led to strong economic growth and “rising standards of living for a significant proportion of the population” but he passed quickly over this ellipsis.

In fact, Deng’s Marxist-revisionist “neoliberal” reforms lifted more than half a billion people out of extreme poverty, albeit unevenly and at the cost of greater inequality. That was about one-twelfth of the entire world population in 2000. With this development, China halved the global level of extreme poverty. The bulk of the poverty reduction in China came from rural areas.

This achievement is unprecedented in human experience. If China’s extension of markets is neoliberalism, then neoliberalism is the most beneficial economic policy in history.

Vladimir Lenin and Josip Tito as neoliberals

But earlier contenders for the title of “the first neoliberals” can be found. In her book on Markets in the Name of Socialism: The Left-Wing Origins of Neoliberalism, the sociologist Johanna Bockman found roots of neoliberalism in the experiments in so-called “market socialism” in Josip Tito’s Yugoslavia from the 1950s and in Hungary from the 1960s.

There is no stopping this neoliberal treachery – infiltrating socialism as well as capitalism!

Josip Tito

Adopting the methodology of Harvey and Bockman, I would like to nominate Vladimir Ilyich Lenin as the first neoliberal, for his betrayal of socialist central planning and his introduction of the New Economic Policy (NEP) in Soviet Russia in 1921. In this admitted “retreat” from socialism, Lenin re-introduced markets and profit-seeking private firms.

Crucially, in support of this nomination, there is evidence that Deng’s post-1978 reforms drew a strong inspiration from Lenin.

“A brainless synonym for modern capitalism”

Of course, I am being ironic. My point is that, thanks to Harvey and others, neoliberalism as a term has become virtually useless. As Philip Mirowski and Dieter Plehwe put it, neoliberalism for some has become “a brainless synonym for modern capitalism.”

Mirowski also complained that opponents “often bandy about attributions of ‘neoliberalism’ as a portmanteau term of abuse”. But Mirowski did not drop the term.

Geoffrey Hodgson & Philip Mirowski

In his superb history of the Mont Pèlerin Society, Angus Burgin commented critically on the term neoliberalism:

“It is extremely difficult to treat in a sophisticated manner a concept that cannot be firmly identified or defined.”

The word is no longer sound currency. Bad usage has driven out the good. It has become a swear-word rather than a scientific term.

Neoliberalism as a ruling class strategy

Part of the impetus behind the excessive and ultimately destructive use of the word neoliberal is the Marxist belief, expressed by David Harvey among others, that neoliberalism is a strategy serving the interests of the capitalist class.

Following the post-war settlement of 1945-1970, which conceded greater power and shares of income to organized labour, rising neoliberalism allegedly rescued the capitalist class.

Their evidence is that in several major countries from the 1970s, trade unionism declined in strength and the shares of national incomes going to the top five per cent increased.

There is some truth in this. But first it overlooks the fact that levels of public welfare expenditure generally did not decrease after the 1970s.

Second, in several countries, including most dramatically in China, standards of living have increased, even for the lower income deciles. While for many people in the US, real wages have stagnated, this has not been the case in several other countries, particularly prior to the 2008 crash.

Third, the argument may exaggerate the degree to which the capitalist class is united, in terms of their real interests or of their perceptions of them.

Fourth, it is questionable that capitalist interests are best served by declines in real wages, given the powerful Keynesian argument that capitalist prosperity depends on effective demand in the economy as a whole. Higher real wages can increase prosperity across the board, and serve the interests of capitalists and capitalism.

Fifth, there are other, possibility more effective, strategies for countering the power of organized labour and reducing the incomes of many people in favour of the top five per cent. These alternatives include economic nationalism, which can take the extreme form of fascism. Generally these are not free-market, small-state approaches. If they are all labelled neoliberal, and regarded as the grand global strategy of the bourgeoisie, then the analysis becomes dangerously insensitive to the increasingly probable threats of economic nationalism and fascism.

Neoliberalism and the Mont Pèlerin Society

Perhaps the most well-informed and intelligent attempt to give neoliberalism a distinctive meaning is by Philip Mirowski, who associates it, more or less, with the Mont Pèlerin Society.

But the Mont Pèlerin Society changed to a degree, in substance and direction. It began under a different name in the 1930s and was first convened under its current name in 1947. It was then an attempt to convene different kinds of liberals in defence of a liberal market economy, just after the defeat of fascist tyranny, during an expansion of Communist totalitarianism, and while witnessing the rise of statist socialist ideas in Western Europe and elsewhere. Liberalism broadly was on the rocks: it needed its defenders.

As a measure of the relative inclusivity and internal diversity of the Mont Pèlerin Society, consider the testimony of the philosopher Karl Popper, who was a friend of Hayek and a prominent Mont Pèlerin member in the early years. Popper wrote to Hayek in 1947 that his aim was “always to try of a reconciliation of liberals and socialists”.

Michael Polanyi and Wilhelm Röpke

Michael Polanyi – the brother of Karl Polanyi – was a founder member of the Mont Pèlerin Society. He advocated Keynesian macroeconomics in a market economy, alongside a radical redistribution of income and wealth. He rejected a universal reliance on market solutions, seeing it as a mirror image of the socialist panacea of planning and public ownership. He did not mince his words against this “crude Liberalism”:

“For a Liberalism which believes in preserving every evil consequence of free trading, and objects in principle to every sort of State enterprise, is contrary to the very principles of civilization. … The protection given to barbarous anarchy in the illusion of vindicating freedom, as demanded by the doctrine of laissez faire, has been most effective in bringing contempt on the name of freedom …”

Polanyi had drifted away from the Mont Pèlerin Society by 1955, stressing its inadequate solutions to the problem of unemployment and its promotion of a narrow view of liberty as the absence of coercion, neglecting the need to prioritize human self-realization and development.

Michael Polanyi

In its early years, the Mont Pèlerin Society hosted debates on the possible role of the state in promoting welfare, on financial stability, on economic justice, and on the moral limits to markets. Like Polanyi and other early members of the society, Wilhelm Röpke argued that the state was necessary to sustain the institutional infrastructure of a market economy. The state should serve as a rule-maker, enforcer of competition, and provider of basic social security. Röpke’s ideas were highly influential for those laying the foundations of the post war West German economy.

While they received a more sympathy from Hayek, Ludwig Mises regarded Röpke’s views as “outright interventionist”. Mises once became so frustrated with these ongoing arguments in favour of a major role for the state that he stormed out of a Mont Pèlerin Society meeting shouting: “You’re all a bunch of socialists.”

The rise of Milton Friedman

Angus Burgin’s history of the society shows how its early period of relative inclusivity was followed by schisms, departures, and a narrowing of opinion. People like Polanyi and Röpke became inactive. Eventually the primary locus of the Mont Pèlerin Society shifted to the US, with greatly increased corporate funding under the rising intellectual leadership of Milton Friedman.

Milton Friedman

Hence the Mont Pèlerin Society evolved from a broad liberal forum to one focused on promoting a narrow version of liberalism that is more redolent of Herbert Spencer than of Adam Smith, Thomas Paine or John Stuart Mill.

This ultra-individualist liberalism entailed a narrow definition of liberty as the absence of coercion, it relegated the goal of democracy, it neglected economic inequality, it overlooked the limits to markets, it saw very limited grounds for state welfare provision and intervention in financial markets, and it stressed self-interest rather than moral motivation.

Perhaps Friedman was a neoliberal. Perhaps Hayek too. But if we add Lenin, Tito, Deng or Trump to the list, then we are in the realms of absurdity – the term becomes useless.


1 June 2018

This book elaborates on the issues raised in this blog:
Published by University of Chicago Press in January 2018



Bockman, Johanna (2011) Markets in the Name of Socialism: The Left-Wing Origins of Neoliberalism (Stanford: Stanford University Press).
Burgin, Angus (2012) The Great Persuasion: Reinventing Free Markets since the Depression (Cambridge MA: Harvard University Press). See esp. pp. 57, 80-86, 116, 121.
Cahill, Damien and Konings, Martijn (2017) Neoliberalism (Cambridge UK and Medford MA: Polity Press). See esp. pp. 144-5.
Harvey, David (2005) A Brief History of Neoliberalism (Oxford and New York: Oxford University Press). See esp. pp. 1-3, 120-22.
Hodgson, Geoffrey M. (2015) Conceptualizing Capitalism: Institutions, Evolution, Future (Chicago: University of Chicago Press).
Hodgson, Geoffrey M. (2018) Wrong Turnings: How the Left Got Lost (Chicago: University of Chicago Press).
Jacobs, Struan and Mullins, Phil (2016) ‘Friedrich Hayek and Michael Polanyi in Correspondence’, History of European Ideas, 42(1), pp. 107-30.
Mirowski, Philip (2013) Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown (London and New York: Verso). See esp. pp. 29, 71.
Mirowski, Philip and Plehwe, Dieter (eds) (2009) The Road from Mont Pèlerin: The Making of the Neoliberal Thought Collective (Cambridge MA: Harvard University Press). See esp. p. xvii.
Pantsov, Alexander and Levine, Steven I. (2015) Deng Xiaoping: A Revolutionary Life (Oxford and New York: Oxford University Press). See esp. p. 373.
Polanyi, Michael (1940) The Contempt of Freedom: The Russian Experiment and After (London: Watts). See esp. pp. 35 ff., 57-58.
Ravallion, Martin, and Shaohua Chen (2005) ‘China’s (Uneven) Progress against Poverty’, Journal of Development Economics, 82(1), pp. 1-42.


Posted in Donald Trump, Left politics, Lenin, Liberalism, Markets, Michael Polanyi, Neoliberalism, Philip Mirowski, Private enterprise, Right politics, Soviet Union, Tony Blair, Uncategorized

May 5th, 2018 by geoffhodgson1946

Geoffrey M. Hodgson


Karl Marx was born on 5 May 1818. He was one of the greatest social scientists in human history. The intellectual structure of his thought has affected our understanding of history, of economic development and of political power. All modern scholars of significance have to define their position in relation to Marx’s monumental achievement.

Many of Marx’s predictions were wrong. He was mistaken, for example, about the general deskilling of the working class. On the contrary, although many remain unskilled, average skill levels have increased. Furthermore, although many remain desperately poor, the average standard of living of the working class has vastly increased since his time.

On the other hand, some of Marx’s predictions have been vindicated. He characterized the nature of the capitalist system more acutely than any of his predecessors and he predicted its spread over the entire world. He saw capitalism a dynamic system that broke down archaic institutions and barriers to trade.

Marx also focused on the generation of inequality under capitalism, which has increased and is recognized as a serious problem.

Marx got some forecasts wrong and some right. Prediction is far from everything in social science. What towers above all is his contribution to our understanding of the inner dynamics of capitalism. With all its shortcomings and theoretical flaws, it remains a huge achievement.

Was Marx the author of the Marxist tragedy?

Let us turn from Marx the social scientist to Marx the politician. Remarkably, from 1917 to the present day, a number of regimes have been set up by revolutionary activists who have claimed to be Marxists. All of these turned sour: these totalitarian regimes led to millions of deaths. Estimates vary. 90 million is on the conservative side, with about 65 million in Mao’s China alone.

Marxism has various ideological immune systems to deal with these brutal facts. One gambit is to blame it on the hostile interventions of foreign powers. But it is implausible that these alone are responsible for the outcomes. No foreign intervention prompted Mao’s Great Leap Forward of his Cultural Revolution, for example, which together led to about 40 million deaths.

Leon Trotsky

Another argument – due to Leon Trotsky – is to blame it on the creation by tyrannical leaders such as Stalin of a bureaucratic caste that denied the working class any democratic power. But this implausibly assumes that a huge nationwide bureaucracy can somehow be run on the basis of meaningful votes on every important decision. No-one with any practical experience of a large organization would entertain such a fantasy.

A more colourful recent excuse is due to Yanis Varoufakis, the influential Greek academic and politician. He argued that the Marxist texts were too powerful. As a result they attracted devious opportunists who rode the Marxist rhetoric for “their own advantage.”

With it, they might abuse other comrades, build their own power base, gain positions of influence, bed impressionable students, take control of the politburo and imprison anyone who resists them.

The problem, it seems, was that Karl Marx and Frederick Engels were too powerful with their prose. If only they had written more turgid texts – then millions would have been saved from the famines and the Gulags.

Seriously, though, the greater problem is not the power of the language, but what it says and what it empowers and enables. Marxism creates a sense of historical destiny, where the creation of socialism is a seemingly obvious solution to the ills of the world, which will defied only by the rich, whose resistance must be crushed.

Marx bears some responsibility for the murdered millions

At least two major aspects of Marx’s thought removed protections of human rights and paved the way for brutal totalitarianism.

The first was his doctrine of class struggle. Analytically, this may have some value and it is subject to academic debate. But it was also a normative doctrine, about the working class seizing power and ending the rule of the capitalists.

Marx and Engels argued that the current aims and desires of the proletariat were less important than its historical destiny to abolish capitalism and become the ruling class. They wrote:

It is not a question of what this or that proletarian, or even the whole proletariat, at the moment regards as its aim. It is a question of what the proletariat is, and what, in accordance with this being, it will historically be compelled to do.

This is the first totalitarian impulse. Marxist revolutionaries are deemed to know better what is in the interests of the working class than the working class itself. Democracy becomes an impediment to the realization of those true interests, about which the masses are not fully aware.

The normative doctrine of class struggle has another outcome. It means that the rights of one social class are privileged over another. Universal individual rights are no more. As Engels put it, legal and individual rights are “nothing more than the idealized kingdom of the bourgeoisie.”

Their normative arguments in favour of socialism are not based on any alleged rights. Instead, socialism is seen as historic destiny. Marx tried to show that crises within capitalism are recurrent and inevitable, and that capitalism digs its own grave by enlarging and empowering the working class.

The consequence of this class deprivation of human rights was enshrined in law under Marxist-socialist regimes. The 1918 Constitution of the young Soviet regime distinguished between the rights of the workers and the rights of others. The Soviet state also announced that it

deprives all individuals and groups of rights which could be utilized by them to the detriment of the socialist revolution.”

A major problem here was that the criteria used to decide what was detrimental were unspecified, opening the door to arbitrary repression by the authorities. This is exactly what happened.

A regime that denies rights to some, especially with malleable criteria concerning who is denied those rights, ends up denying rights to everyone. These are the consequences of Marx’s “dictatorship of the proletariat”.

A full concentration of economic power leads to totalitarianism

A second aspect of Marx’s thought that promoted totalitarianism concerns the economy.

Marx and Engels advocated the abolition of private property and markets, and the concentration of all economic power in the hands of the state. They welcomed efforts “to centralize all instruments of production in the hands of the state” and looked forward to a time when “all production has been concentrated in the hands of a vast association of the whole nation”.

But as subsequent experiences from Russia to Venezuela illustrate, such a massive concentration of economic power requires for its enforcement, and sustains as an outcome, a massive concentration of political power that is intolerant of democracy. The good intentions or democratic inclinations of leaders are not enough. Those most hungry for power, and least affected by moral qualms in exercising it, will eventually rise to the top.

There is a widespread opinion among non-Marxist social scientists (including Barrington Moore, Douglass North and Francis Fukuyama) that democracy requires countervailing political and economic power to have a chance of survival. In Marxist terms, if the economic “base” determines the “superstructure”, then a pluralist polity requires a pluralist (or mixed) economy, not one that is overshadowed by a massive state.

A complete concentration of political and economic power in the hands of the state, which Marx and Engels advocated with enthusiasm as well as eloquence, always requires and enables a despotic political regime. There are no exceptions.

Leszek Kolakowski

Over forty years ago, Leszek Kolakowski was an Eastern European dissident and a perceptive critic of Marxism. He wrote:

“My suspicion is that this was both Marx’s anticipation of perfect unity of mankind and his mythology of the historically privileged proletarian consciousness which were responsible for his theory being eventually turned into an ideology of the totalitarian movement: not because he conceived of it in such terms, but because its basic values could hardly be materialized otherwise.”

Kolakowski was right. Many have still to learn the tragic lessons of Marxist failure in practice, as well as of its partial but flawed analytical success.

Critics will say that giving Marx some blame for the atrocities of the twentieth century is like trying to blame Jesus for the atrocities of the Spanish Inquisition. They are wrong, Jesus never advocated class war or a concentration of economic power in the hands of the state, both of which create the conditions for tyranny.

5 May 2018

Minor edits – 6 May 2018


This book elaborates on the issues raised in this blog:

Published by University of Chicago Press in January 2018


Courtois, Stéphane, Werth, Nicolas, Panné, Jean-Louis, Packowski, Andrzej, Bartošek, and Margolin, Jean-Louis (1999) The Black Book of Communism: Crimes, Terror, Repression (Cambridge MA: Harvard University Press).

Fukuyama, Francis (2011) The Origins of Political Order: From Prehuman Times to the French Revolution (London and New York: Profile Books and Farrar, Straus and Giroux).

Hodgson, Geoffrey M. (2006) Economics in the Shadows of Darwin and Marx: Essays on Institutional and Evolutionary Themes (Cheltenham: Edward Elgar).

Hodgson, Geoffrey M. (2015) Conceptualizing Capitalism: Institutions, Evolution, Future (Chicago: University of Chicago Press).

Hodgson, Geoffrey M. (2018) Wrong Turnings: How the Left Got Lost (Chicago: University of Chicago Press).

Kolakowski, Leszek (1977) ‘Marxist Roots of Stalinism’, in Robert C. Tucker (ed.) (1977) Stalinism: Essays in Historical Interpretation (New York: Norton), pp. 283-98.

Moore, Barrington, Jr (1966) Social Origins of Dictatorship and Democracy: Lord and Peasant in the Making of the Modern World (London: Allen Lane).

North, Douglass C., Wallis, John Joseph and Weingast, Barry R. (2009) Violence and Social Orders: A Conceptual Framework for Interpreting Recorded Human History (Cambridge and New York: Cambridge University Press).

Posted in Common ownership, Democracy, Karl Marx, Labour Party, Left politics, Lenin, Leszek Kolakowski, Liberalism, Mao Zedong, Markets, Nationalization, Politics, Private enterprise, Property, Robert Owen, Socialism, Uncategorized

July 2nd, 2017 by geoffhodgson1946


Geoffrey M. Hodgson


Socialism and individualism, as defined here, are both outdated creeds, unsuited to the complexities of modern socio-economic organisation and technology. Yet these ideologies have captured the UK Labour and Conservative parties respectively, and are driving them both over the Brexit cliff.

In 1827 the word “socialist” first appeared in English, in a magazine published by followers of Robert Owen. The word “individualism” was coined at about the same time. “Socialism” and “individualism” were then widely adopted as antonyms of each other.

Robert Owen

Owen defined socialism as “the abolition of private property”. The same definition was adopted by Karl Marx. Criticism of private ownership has marked the UK Labour Party from Kier Hardie to Jeremy Corbyn.

For example, Clement Attlee wrote in 1937 of the “evils” of capitalism: their “cause is the private ownership of the means of life; the remedy is public ownership.” Attlee approvingly quoted the words of Bertrand Russell:

“Socialism means the common ownership of land and capital … It involves the abolition of all unearned wealth and of all private control over the means of livelihood of the workers.”

In an interview in 2000, Corbyn’s mentor Tony Benn favourably quoted Attlee: “If you look around the world, what are the problems? They’re all caused by the private ownership of the means of production, distribution, and exchange.” Corbyn has followed this, as A-B-C.

Individualism has several different meanings. I take it here to be a libertarian political doctrine, promoting an economy dominated by individual entrepreneurs and their private property. Individuals trade with each other on competitive markets, with a small state intervening minimally in economic affairs.

Milton Friedman

Although this ideology goes back centuries, versions of it are associated more recently with Milton Friedman, Friedrich Hayek, Keith Joseph and Margaret Thatcher, plus many living Tories such as Daniel Hannan and David Davis.

Classical socialists, including Jeremy Corby, John McDonnell and Diane Abbott, now control the Labour Party. The Conservative Party is dominated by a nationalist-individualist ideologues that support Brexit.

Despite their obvious differences, classical socialism and individualism have much in common, and not simply in terms of some shared basic assumptions. I explore why below.

Individualism and its limitations

Individualism assumes that the individual is generally the best judge of his or her own interests. For this to be meaningful, the individual must have sufficient information about, and understanding of, the choices involved and their implications. Individualists are aware that such information and understanding are sometimes in short supply, but insist that the ultimate responsibility must lie with the individual rather than with the “nanny state”.

Another problem for individualism is externalities, where our consumption may adversely affect others. For example, driving cars leads to congestion, noise and pollution. Individualists argue that those affect could sue those responsible for the adverse effects, but such externalities are now so commonplace that it is difficult to see how individual litigation could feasibly deal with such problems.

Individualist policies face additional difficulties as capitalism becomes ever-more complex, knowledge-intensive and globally inter-connected. They become increasingly anachronistic. When commodities become more complex and heterogeneous, market prices cannot be relied upon alone to signal information about demand and supply.

Highly complex technologies have invaded our lives. When people buy smartphones, do they know enough about them to make an informed choice between, say, a Samsung Galaxy S8, a OnePlus 5 or a Google Pixel? In making such choices, over technologies that we poorly understand, we depend on the recommendations of others. We have to rely to a degree on trust, rather than purely on the specifications of a contract.

Complex interconnections lead to unforeseen outcomes. Much of our consumption leads to emissions that can adversely affect the climate. But few people are qualified to understand climate science. Alarmingly many people defy the consensus among scientific experts and deny that such emissions will lead to deleterious climate change. Individuals do not always choose that which is best for themselves, or for humankind.

In sum, old fashioned individualism assumes an economy with relatively simple physical commodities, that can be readily controlled or owned, and whose effects are well understood.

How the complex information economy challenges individualism

In modern capitalism, information has become a major commodity. We are no longer in a world where trade was dominated by bulk commodities like steel and coal. Information is a peculiar commodity. You do not know what you are buying until you have bought it. But the information is known to the seller after it passes to the buyer. It can often be readily copied at very low cost. Ownership of information is often problematic.

Of course, incentives must be in place (such as patents) for the private development of knowledge, but a market economy would grind to a halt if every piece of information was privately owned and had a price. The benefits of private and contractual provision of some information may be much less than the overall opportunity costs of charging a price for its use. A healthy market system itself depends on the incompleteness of markets for information; some crucial data must be unowned and available freely.

In the early 1990s, CERN (the European Organization for Nuclear Research) developed key elements of the Internet infrastructure. They were released to the public for free, to ensure that the information technology would become widespread. Similarly, many software programs and even operating systems are available free of charge. The Internet has vastly stimulated markets, but not all its components or enablers were marketed.

If it were suited to the world of 200 years ago, classic individualism is ill-suited to the modern complex world. Yet this anachronistic individualism has made headway since the 1970s, particularly in the UK Conservative Party and among Tea Party Republicans in the USA.

Socialism and its limitations

One reason why classical individualism has made progress is the failure of classical socialism, including in the USSR, China and elsewhere. While moderate social democracy has made advances by reforming capitalism and developing welfare states (particularly in northern Europe) the Tweedledum and Tweedledee politics of socialism versus individualism have prevailed.

Cooperation can work in small groups, based on close, inter-personal interactions. Humans have co-operated in families and tribal units for many thousands of years. Hence classical socialism might work on a small scale. In small-scale communities, participants may monitor each other, to ensure that necessary tasks are carried out and that the interests of the community are served.

But big problems emerge when we move from tribal to large-scale societies, where face-to-face, trust-based mechanisms to sustain cooperation are relatively less effective. They have to be supplement by other incentives and constraints.

Large-scale socialism assumes that comprehensive planning agencies can bring most resources under unified control and that the planners can gather together all the relevant knowledge concerning the nature, use and effects of those resources. Such a mobilisation of resources is only possible with simpler goods that are relatively homogeneous and relatively few in varieties.

Large-scale socialism thus assumes an economy with relatively simple physical commodities, that can be readily counted, mobilized, controlled or owned, and whose effects are well understood.

Large-scale socialism creates incentive problems. Socialist experiments typically involved collectivisation. But when thousands of people are brought together, and rewards are shared, then there is less incentive to make the extra effort, because the rewards from that additional work would be hugely diluted.

Socialism and the challenges of complexity and scale

Central planners face the problems of dispersed knowledge and uncertainty in all large-scale economies. These problems are progressively exacerbated as technologies, processes and commodities become ever-more complex. Consequently, less and less can be planned from the top.

Economic history teaches us that modern dynamic economies depend on markets, competition and a large private sector, as well as on an effective state.

The survival of democracy depends on a dispersion of real economic and political power. A healthy, pluralist polity depends on a pluralist economy, with multiple centres of autonomous decision-making. This means a system of private enterprise, as well as a political system with checks, balances and power that can be held to account. The state can and must also play a vital role in the economy, but not to the extent that it smothers private enterprise and initiative.

Large-scale socialism cannot work effectively and democratically. This analytical conclusion is corroborated by the historical experience of stagnation in innovation in Soviet-style regimes.

The Soviet Union under Joseph Stalin succeeded – albeit at great human cost – in developing an industrial system concentrating on basic outputs such as coal, steel and electricity. But by the 1970s the Soviet Union was losing the technological race against the West. Without a strong private sector there was less capacity to experiment and innovate.

Consequently, Soviet-style socialism was defeated by the every-growing complexity of technology and of consumer wants. Its planning system could not deal adequately with rapidly-growing amounts of complex information.

Classical individualism has failed for uncannily similar reasons. Both individualism and socialism are unsuited to the modern complex world. They yearn back to an era of simpler and less varied commodities, which can be easily understood by the consumer, readily priced in competitive markets, or readily aggregated and computed by central planners.

How capitalism has evolved to deal with greater complexity

Both planning and effective market competition operate with least difficulty when there are large numbers of commodities of a very similar type. But those days are gone. The service sector has grown immensely in importance and wealth creation. Modern developed economies are dominated by highly-varied services, and many physical commodities are exceedingly complex.

The delivery of each service varies through time and context, sometimes to a large degree. Consider the detailed and responsive services of a household carer or a hospital nurse, or the diverse and varying contents of newspapers or books.

In a complex, non-widget economy, extensive detailed planning from the centre of such services is impossible. But also, while market competition may remain a spur for efficiency and innovation, it cannot readily minimise prices as standard textbooks suggest. These complexities have opened up a major additional role for the state, not in central planning but in setting standards and regulating markets.

Accordingly, we live in an era of increasingly regulated capitalism. The ill-defined rhetoric of “neoliberalism” masks all this. Modern capitalism is not a rebirth of free-market liberalism associated with the nineteenth century. Modern capitalism is marked by a copious and engrossing regulatory state.

Of course, there has been a concerted drive by classical individualists to minimize the size of the state. Their outdated ideology has created havoc for the poor, but it has not succeeded in reducing the scale of taxation or state expenditure. The extensions of market competition and privatisation mean more regulation, not less.

It has also been recognized that some privatizations have improved efficiency and some may have been necessary to deal with the expanding problem of regulating increasingly complex industries or technologies. It is difficult and even dangerous for the state to regulate everything. Some privatizations could be motivated less by neoliberal ideology and more by the practical needs of detailed and delegated regulation.

Although individualists and socialists judge this as a matter of ideology, in reality we have to be pragmatic and experimental, to see what works best. Of course, regulatory agencies often fail. But so too do markets and state bureaucracies.

With the growing complexity of modern, large-scale economies there is little alternative than an extensive apparatus of market regulation. Regulatory agencies have to deal with matters such as consumer safety and the protection of the environment. Regulations have to deal with health and safety laws, packaging standards, emissions limits and much more.

Effective regulatory procedures require specialists and experts who understand the technologies and can appraise the social, environmental and economic outcomes.

Modern trade requires regulatory cooperation with other nation states

Researchers such as Jacint Jordana, and David Levi-Faur have shown that market regulation within capitalist systems has grown enormously since 1990, and systems of regulatory supervision have been copied and spread globally among developed economies.

When the UK joined the Common Market in 1973, capitalism was simpler and less-regulated. The UK is now enmeshed in a vast number of EU and other market regulations, which have been developed in response to the growing complexities of global capitalism.

While flexibility and experimentation remain paramount, there are large bureaucratic economies of scale in regulatory agencies. Smaller nation states that rely on trade with others have little option but to cooperate internationally in terms of regulations and standards. Otherwise their access to wider markets is limited, costly and cumbersome.

The regulatory regime that Britain has shared with the European Union has brought huge benefits, albeit sometimes with glitches and difficulties. It would be impossible to tear free of these regulatory arrangements without doing huge damage to the British economy and to its level of international trade.

Conclusion: two cars driving off a cliff

Yet, despite all this, the two largest UK parties are presently determined to tear free of the EU. The Conservative Party has been held hostage by individualist ideologues since the 1990s. The Labour Party is now controlled by a determined faction of classical socialists who would rather follow China, Cuba or Venezuela than the welfare states of the capitalist West.

These socialists and individualists are blind to the problems of ripping the UK apart from the European Union. This is because both their ideologies are two hundred years out of date.

Individualism is more suited to a world of small-scale traders, who could not reap the economies of scale that are facilitated by much larger corporations. Individualism does not understand the growing need for regulation in a complex market economy. They understand tariffs, because they apply to a world of homogenous goods. But they do not appreciate that access to markets in modern complex capitalism involves shared regulatory standards that belittle tariffs in importance.

Stalinist socialism can expand the production of steel, coal or munitions, but only under dictatorship and with immense human suffering. Such nationalistic socialism calls dogmatically for public ownership as an economic remedy, seemingly unaware that large-scale comprehensive planning is viable only when commodities are simple and readily measurable.

Outdated socialists argue as if the UK is still dominated by manufacturing. But services account for about 80% of the UK economy and 40% of UK exports to the EU. Many services are highly complex and require detailed regulation and monitoring.

Neither individualists nor classical socialists appreciate the burgeoning complexity of the world in which we live, and the need for UK to share in the task of developing a common regulatory framework with our partners in international trade. For Britain there is no partner more important or useful in this regard than the European Union.


2 July 2017

In memory of my mother – born 2 July 1925, died 2 July 2009 – an enthusiast for Europe and for the EU.

Minor edits: 4-5, 20 July, 18 December 2017.

This book elaborates on some of the political issues raised in this blog:

Wrong Turnings: How the Left Got Lost

Published by University of Chicago Press in January 2018




Dunt, Ian (2016) Brexit: What the Hell Happens Now? (London: Canbury Press).

Hayek, Friedrich A. (1944) The Road to Serfdom (London: George Routledge).

Heller, Michael A. (2008) The Gridlock Economy: How Too Much Ownership Wrecks Markets, Stops Innovation, and Costs Lives (New York: Basic Books).

Hodgson, Geoffrey M. (2015) Conceptualizing Capitalism: Institutions, Evolution, Future (Chicago: University of Chicago Press).

Hodgson, Geoffrey M. (2018) Wrong Turnings: How the Left Got Lost (Chicago: University of Chicago Press, forthcoming).

Jordana, Jacint, Levi-Faur, David and i Marin, Xavier Fernández (2011) ‘The Global Diffusion of Regulatory Agencies: Channels of Transfer and Stages of Diffusion’, Comparative Political Studies, 44(10), October, pp. 1343–1369.

Levi-Faur, David (ed) (2011) Handbook on the Politics of Regulation (Cheltenham UK and Northampton MA: Edward Elgar).

Lukes, Steven (1973) Individualism (Oxford: Basil Blackwell).

Pagano, Ugo (2014) ‘The Crisis of Intellectual Monopoly Capitalism’, Cambridge Journal of Economics, 38(6), November, pp. 1409-29.

Vogel, Steven K. (1996) Freer Markets, More Rules: Regulatory Reform in Advanced Industrial Countries (Ithaca, NY: Cornell University Press).

Posted in Uncategorized

May 21st, 2017 by geoffhodgson1946


Geoffrey M. Hodgson


Although the two biggest UK political parties are very different in important respects, Labour under Jeremy Corbyn and the Conservatives under Theresa May have each converged on different forms of pro-Brexit, economic nationalism.

Economic nationalism prioritises national and statist solutions to economic problems. Although it does not shun them completely, it places less stress on global markets, international cooperation and the international mobility of capital or labour. It believes that the solutions to major economic, political and social problems lie within the competence of the national state.

Other countries have turned in the same direction, including the United States under Donald Trump and Russia under Vladimir Putin. Previously, both Soviet-style and fascist economies have embraced economic nationalism. China has continued along this road, even after its acceptance of private enterprise and a market economy.

Economic nationalism has been used successfully as a tool of economic development, by creating a state apparatus to build an institutional infrastructure and mobilise resources. But it brings severe dangers as well as some advantages. Its reliance on nationalist rhetoric can feed intolerance, racism and extremism.

Furthermore, as it concentrates economic and political power in the hands of the state, economic nationalism undermines vital checks and balances in the politico-economic architecture.

As numerous social scientists (from Barrington Moore to Douglass North) have shown, democracy and human rights cannot be safeguarded without a separation of powers, backed by powerful countervailing politico-economic forces that keep the state in check.

From Thatcherism to Mayhem: Tory economic nationalism

Margaret Thatcher

In the 1970s, Margaret Thatcher changed the Tory party from a paternalist party of the elite to a more radical, free-market and individualist force, embracing the ideologies of Friedrich Hayek and Milton Friedman.

A logical consequence of this market fundamentalism was to embrace the European Single Market, which her successor John Major did in the Maastricht Treaty of 1992. But this was too much for the Tory nationalists, who were already turning against the European Union and all its works.

The tension grew within the Tories between those that pursued international markets in the name of market fundamentalism, and those who worried that global trade and the free movement of labour were undermining the powers of the British nation state.

A compromise option – widely touted during the June 2016 EU referendum – was to exit the EU but remain in the single market. But a major implication of this was that the free movement of labour to and from the EU would have to be retained. May became prime minister and declared that Britain would leave the single market as well as the EU.

This marks a major ideological shift within the Conservative Party. The pursuit of free markets, promoted so zealously by Thatcher, has moved down the Tory agenda, in favour of nationalism, increased state control, reduced parliamentary scrutiny, and lower immigration, whatever the economic costs.

Forward together: the new-old Toryism

This shift is signalled by a remarkable passage in the 2017 Conservative general election manifesto:

“We do not believe in untrammelled free markets. We reject the cult of selfish individualism.”

This could be interpreted as a cynical attempt to attract some Labour voters. Probably, in part, it is. But there is much more to it than that. It shows how all the whingeing about “neoliberalism” is now outdated and much off the mark.

Crucially, the Tory Party was traditionally opposed to “untrammelled free markets” and it worried about the destructive and corrosive effects of individualism and greed.

As Karl Polanyi pointed out in his classic book on The Great Transformation, the first fighters for factory and employment legislation, to protect workers from the results of reckless industrialization in the 1830s and 1840s, were from the ranks of the church and the Tory Party:

“The Ten Hours Bill of 1847, which Karl Marx hailed as the first victory of socialism, was the work of enlightened reactionaries.”1

Benjamin Disraeli

Tories like Anthony Ashley-Cooper, the Seventh Earl of Shaftesbury, were great nineteenth-century social reformers. The Tory Prime Minister Benjamin Disraeli railed against selfish individualism, particularly in his novels. For Disraeli, British imperialism was more important than unalloyed individualism.

May has brought the Tory party back to its pre-Thatcher roots. But, less enlightened than Shaftesbury or Disraeli, she has little appetite for protective legislation or constitutional reform. Instead, she celebrates her own powers of leadership and seeks a mandate to concentrate power in her hands.

She has little enthusiasm for democracy either. If it were not for the heroic efforts of Gina Miller and the decision of the Supreme Court, the triggering of Article 50 – to start the process of leaving the European Union – would have been taken by the executive without a parliamentary vote.

May and her ministers propose in the Great Repeal Bill to further circumvent parliamentary scrutiny over the details of legislation that must replace adopted elements of EU law.

The 2017 Tory manifesto is a maypole for nationalism. “Britain” is one of its most-used words. It says that immigration will be brought down, while existing powers by the British state to read emails and monitor your activity on the web will be increased. She will create an Internet that is controlled by the state. May is developing the infrastructure of an authoritarian nationalist regime.

Bringing the state back in: Labour’s new-old economic nationalism

At least on the surface, there are dramatic differences with Labour’s manifesto, which, for example, contains more measures targeted at the poor and elderly. Labour also gives much more verbal emphasis to human rights and democracy.

But at the core of Labour’s 2017 manifesto is a strong dose of economic nationalism, with Labour’s greatest commitment to public ownership since the “suicide note” manifesto of 1983. There are plans to bring the railways, energy, water and the Royal Mail all back into public ownership.

The 2017 manifesto declares: “Many basic goods and services have been taken out of democratic control through privatization.” But there is little explanation of what “democratic control” would mean under public ownership.

How would it work? Would parliament take decisions on everything? In reality these proposals – whatever their other merits – would enlarge state bureaucracy: there is no explanation how they would extend democracy.

The words “control” or “controls” appear 32 times in the 2017 manifesto. There is insignificant explanation of how “controls” work. The Labour manifesto envisions a concentration of economic power in the hands of the state, notwithstanding its verbal commitment to regional and local, as well as national, public management.

While there are commendable measures to enhance and enlarge an autonomous sector of worker-owned enterprises, there is little recognition of the importance of having a viable and dynamic private sector as well.

Corbyn’s Labour: forward to the past

As May has brought the Tories back to the pre-Thatcher years, Corbyn has brought Labour back to its traditional roots, before the leadership of Tony Blair.

With his 1995 changes to Clause Four of the Labour Party Constitution, Blair brought in an explicit commitment to a dynamic private sector. Labour stood for an economy where “the enterprise of the market and the rigour of competition are joined with the forces of partnership and co-operation”. Corbyn has returned to the spirit of Labour pre-1995 constitution, even if he has not yet changed the wording.

Corbyn has proposed that Britain can be “better off” outside the EU. He argued that EU rules block the kind of state-heavy industrial policy that he favours. But EU countries such as France and Germany already have strong interventionist policies for industrial and infrastructural development. In truth, Corbyn favours repeated doses of statist socialism in one country.

With some Stalinist exceptions in his coterie, Corbyn and his followers are mostly sincere in their commitment to democracy and human rights. But what they do not understand is that their proposed statist concentration of economic power will undermine countervailing politico-economic forces that can help to keep the state leviathan in check.

Jeremy Corbyn and Hugo Chávez

These countervailing and separated powers are vital. Especially in times of hardship or crisis, there will be a temptation by some in power (at the local or national level) to abuse rights and undermine democracy. Every single historical case shows this result.

It has been illustrated clearly by the failed socialist experiments of the twentieth century. Today, in Venezuela, the failure of such socialist ventures is being played out before our eyes.

Attempts “to take control of the economy”, even with measures of decentralization and local power, have led to restrictions on press freedom, arbitrary detentions, abuses of human rights, and even famine.

Forward together: economic nationalists take the helm

Further doses of economic nationalism may be possible in a country as large as the United States. In 2015, exports from the USA amount to about 13 per cent of GDP. Hence economic nationalists in the USA can reduce trade without too much contraction of the economy. It may turn further inwards, cut imports and still survive a loss of exports.

But the UK has become a globally-orientated, open economy, exporting 28 per cent of its GDP in 2015. About 45 per cent of these exports go to the European Union.

By exiting the EU Single Market, and by walking away from EU trade deals with non-EU countries that benefit EU member states, Labour and the Tories would threaten the UK economy with a massive downturn. The British economy would fall off a cliff.

In this crisis, rightist economic nationalists will blame foreigners and immigrants, and leftist economic nationalists will blame the rich.

It will be “the few” – designated by their ethnicity or by their assets – who will get the blame. Their rights will be under threat, as so will the liberties of all of us. Whatever variety is chosen, economic nationalism could severely undermine the viability of democracy in the UK.


21 May 2017

Minor edits – 23, 28 May, 29 June

This book elaborates on some of the political issues raised in this blog:

Wrong Turnings: How the Left Got Lost

Published by University of Chicago Press in January 2018




1. Polanyi was right about this and about several other things, but in other respects his analysis was flawed.



Hodgson, Geoffrey M. (2015) Conceptualizing Capitalism: Institutions, Evolution, Future (Chicago: University of Chicago Press).

Hodgson, Geoffrey M. (2017) Wrong Turnings: How the Left Got Lost (Chicago: University of Chicago Press, forthcoming).

Moore, Barrington, Jr (1966) Social Origins of Dictatorship and Democracy: Lord and Peasant in the Making of the Modern World (London: Allen Lane).

North, Douglass C., Wallis, John Joseph and Weingast, Barry R. (2009) Violence and Social Orders: A Conceptual Framework for Interpreting Recorded Human History (Cambridge and New York: Cambridge University Press).

Polanyi, Karl (1944) The Great Transformation: The Political and Economic Origins of Our Time (New York: Rinehart). See esp. pp. 165-66.


Posted in Brexit, Common ownership, Democracy, Donald Trump, Immigration, Jeremy Corbyn, Labour Party, Left politics, Liberalism, Markets, Nationalization, Politics, Populism, Private enterprise, Property, Right politics, Tony Blair, Tony Blair, Uncategorized, Venezuela

April 17th, 2017 by geoffhodgson1946



Geoffrey M. Hodgson


“Bliss was that dawn to be alive.” With Labour’s landslide victory under Tony Blair, the general election of 1st May 1997 ended eighteen years of Tory rule.

The new government set out to implement a series of major reforms, including establishing devolved assemblies in Scotland and Wales, setting a statutory minimum wage, and injecting much-needed money into the education system and the NHS.

After winning two further elections with large majorities – in 2001 and 2005 – Labour’s period of office came to an end on 5th May 2010, when the Conservatives became the biggest party in Parliament. The Liberal Democrats made the mistake of entering into a coalition with the Tories, and paid the price when they lost most of their MPs in 2015.

So began a period of Tory rule that now seems that it could last for decades. But the Tories rule with the support of less than 50 per cent of the voters. If Blair had implemented electoral reform, then what might have happened instead?

Ending “division among the radicals”

Until the day of polling in May 1997, when the scale of his majority became clear, Tony Blair had considered a coalition with the Liberal Democrats after the election, He had negotiated with Paddy Ashdown (the leader of the Liberal Democrats) with that possibility in mind. But once Blair’s overwhelming victory was apparent, a coalition with the Liberal Democrats seemed unnecessary.

But Blair still wanted to cooperate with the Liberal Democrats on several issues, including on electoral reform. He insisted that the two parties were natural allies, and they should not have gone their separate ways a hundred years earlier. In his first speech to a Labour conference after his landslide election victory, Blair declared:

“my heroes aren’t just Ernie Bevin, Nye Bevan and Attlee. They are also Keynes, Beveridge, Lloyd George. Division among radicals almost one hundred years ago resulted in a 20th century dominated by Conservatives. I want the 21st century to be the century of the radicals.”

By “division among the radicals” Blair referred to the 1900 decision to set up a party in parliament independent of the Liberals. Blair wished to reverse that mistake and install an enduring radical majority.

Labour’s 1997 promise of electoral reform

Blair wanted Labour and the Liberal Democrats to work together for progressive change, and, if possible, to exclude permanently the Tories from government, at least until they were forced to modernise and to abandon their reactionary, inward-looking nationalism.

A key part of this strategy was electoral reform. Tony Blair entered Downing Street in 1997 having promised in Labour’s manifesto to hold a referendum on changing the electoral system for the House of Commons. Labour’s 1997 Manifesto declared:

“We are committed to a referendum on the voting system for the House of Commons. An independent commission on voting systems will be appointed early to recommend a proportional alternative to the first-past-the-post system.”

After the election, Blair continued his secret talks with Ashdown on co-operation between their two parties, including on the issue of electoral reform.

But what voting system should be chosen?

One problem was that the two parties found it difficult to agree on what “a proportional alternative” might mean. But a possible compromise emerged with a top-up system called “AV+”.

AV+ would keep single-member constituencies but elect constituency representatives under the alternative vote (AV) system, where candidates are ranked numerically in order of preference, rather than marking the first preference only with a single cross. Under AV, candidates with the lowest number of first preferences are progressively eliminated, redistributing their other preferences to the remaining candidates, until one candidate gets more than half of the votes.

In addition, under AV+, each voter would get a second vote to elect a regional-level representative from a list of candidates for each party. An additional group of MPs would be elected via this route. This “top up” would ensure greater proportionality in Parliament.

Some people dislike AV+ because it creates two types of MP, with not all of them being responsible for a manageable constituency. In addition, AV+ does not satisfy purists who want a more proportional system.

Division of Labour

But the biggest problem with Blair’s strategy for long-term reform was Labour itself.

While leading figures in his Cabinet such as Robin Cook, Mo Mowlam, Clare Short and Peter Mandelson supported electoral reform, Blair faced the implacable opposition of Chancellor Gordon Brown, Deputy Prime Minister and Secretary of State John Prescott, Home Secretary Jack Straw, numerous trade union leaders and an energetic campaign against proportional representation from Labour’s ranks.

Reasons for this opposition to electoral reform within Labour were numerous. But perhaps the most enduring argument was that Labour saw itself as a party committed to radical change in favour of working people, which was bound to meet fierce opposition from rich vested interests and the reactionary press.

I can speak with a little authority here, because this was once my own major objection to proportional representation (PR). As loyal and active Labour party members, Peter Hain and I published a booklet in 1982 entitled Proportional Misrepresentation?

We argued that PR would favour parties of the centre, against parties like Labour who represented working people and were committed to radical change. The advantage of the existing system was that Labour could gain power and show piecemeal and in practice how socialist measures could work.

Although we were against PR, Peter and I argued for a change to the alternative vote (AV), without a top-up element. A few years’ later, Peter suggested that we develop our pamphlet into a book.

Thatcher in power

But this was after six years of Margaret Thatcher in power. Her Tory Party had won an overall majorities in 1979 and 1983, in both cases with less than 44 per cent of the vote. After 1983 I came to the view that Labour could not win the next election and the Tories could be power for about 15 years.1

Just as the existing electoral system might be used by a left party for radical reform, it was being used by a newly-radicalised Tory party to divide the country, to undermine the welfare state and to attack the rights of working people.

I had developed serious doubts about our 1982 arguments. So I declined Peter’s kind offer and he published the book in 1986 under his own name, fully acknowledging our previous joint arguments.

Others developed concerns similar to mine, especially as the years passed and the Tories remained in power with minority support. All this gave the impetus for Blair and others to push for PR in Labour’s 1997 manifesto.

But elements of Labour’s class-based tribalism remained strong, as did commitment to an ever-vague promise of something called “socialism” that only a majority Labour government could deliver. Hence Labour internally remained deeply divided on this issue, as it does to this day.

The Jenkins Commission

In December 1997, in line with the manifesto commitment, Blair set up a parliamentary commission under Lord Roy Jenkins, the former Labour minister and then Liberal Democrat peer. The Jenkins Commission would recommend which particular proportional system should be put before voters in a referendum.

The Jenkins Commission reported in September 1998 and suggested the alternative vote top-up (AV+) system. Blair immediately faced intense opposition, from within his own Cabinet, from a large number of Labour MPs, from a large section of the Labour Party in the country, and from several trade unions.

In 1997 Labour came to power with 43 per cent of the vote but won 63 per cent of the parliamentary seats. Any significant move toward greater proportionality would have deprived one hundred or more Labour MPs of their seats. Over one hundred turkeys would have to have voted for Christmas. The political barriers to this reform seemed unsurmountable. The recommendations of the Jenkins Commission were kicked into the long grass.

Several other attempts were taken to revive the project of electoral reform under the 1997-2010 Labour Government. Labour promised a review of the voting system in its 2001 manifesto. In 2003, talks were held between Labour and the Liberal Democrats on electoral reform.

But by 2010, under the new premiership of Gordon Brown, Labour retreated from its earlier promise of moving toward proportionality. Instead, Brown promised a referendum on the alternative vote (AV) without any top-up element. The Jenkins Commission had previously taken the view that such a minor change would not merit a referendum.

In fact, a referendum on AV was held in 2011, under the coalition government. The proposal was defeated by a large majority. This demonstrated the problem of convincing the public of the merit if a more complex system, which cannot be explained easily in one or two sentences. I raise this issue later below.

An alternative future

First we consider what might have happened if the more-proportional system of AV+ had been introduced sometime between 1997 and 2010.

In the 2010 election Tories got 36 per cent of the vote, Labour got 29 per cent and the Liberal Democrats 23 per cent. Under the existing voting system they got 306 seats, 258 seats, and 57 seats respectively. Under a more proportional system they would have got something like 255 seats, 204 seats and 162 seats respectively

Under the existing electoral system, a 2010 coalition between Labour and the Liberal Democrats would have had 315 seats, which is well short of an overall majority in a parliament of 650 seats. It would have been a minority coalition government, or other parties would have had to been involved. This was a significant obstacle, which played a part in scuppering any 2010 deal between Labour and the Liberal Democrats.

But if a more proportional system had been in place in 2010, then a coalition between Labour and the Liberal Democrats would have had something like 366 seats, which would have been a clear overall majority. The Tories could have been kept out of power.

Furthermore, Labour would have been obliged to cooperate with a centrist party, giving weight and prestige to its more moderate wing. Sure enough, there would have been protest on the left, led by a Jeremy Corbyn or a John McDonnell, but they would have probably been kept away from Labour’s levers of power.

As the years followed, all sorts of alternative scenarios might have then unfolded. But a referendum on Brexit would have been unlikely, or it would have taken place under conditions more favourable to the Remain campaign.

In short, if the electoral system had been changed in this way before 2010, then we would not be in this mess that we are now. We could still be on the road to a progressive future, rather than fighting a desperate battle against intolerant bigots and nationalists, who would drive the UK economy off a cliff to satisfy an anti-immigration sentiment fed by years of economic failure.

Winning the battle for electoral reform

Electoral reform is highly unlikely under a Tory government and hence the first objective must be to remove the Conservatives from power. This will require a progressive alliance of Labour, Liberal Democrats and Greens, which at present does not seem feasible. Also the Tories might remain in power for some time.

But a tiny consolation of this dismal entrapment is the time it gives us to debate the best system, which would offer something closer to proportionality, and would have a chance of convincing the electorate.

Some kind of top-up system based on 400-500 single-member constituencies, topped up with a further 100-200 MPs elected from party lists, seems the best way forward. It is a possible compromise that the parties involved can accept, and it is understandable by the public.

But I have now come to the view that the use of AV to elect the MPs for the single-member constituencies is both intrinsically flawed and difficult to explain to the electorate. A better and easier-to-explain alternative exists.

There were several reasons why the AV referendum was lost in 2011, including the fact that many prominent figures in the Labour Party openly opposed it. Another was the complexity of AV itself. As Tom Clark wrote in the Guardian:

“Leaflets from the electoral commission, which were designed to explain what the reform would mean to every household with meticulous neutrality, ended up making AV look horrendously complex. The blurb summed up first-past-the-post in just three sentences, while describing AV with an excessively complex example election, which required three diagrams and text that spilled over four pages.”

A further problem is that AV itself, even if it can be explained to the public, has serious intrinsic flaws.

Why AV is flawed

The alternative vote (AV) is widely criticised by experts on voting systems. We are concerned with systems designed to elect one person, from a list of candidates, to a single position or seat.

Consider an example of a mayoral election with three candidates Ms Left, Ms Centre and Ms Right. Both Ms Left and Ms Right are pretty extreme, and the electorate is polarised. An AV systems is employed and the candidates get the following first-preference votes: Left 33 per cent, Centre 31 per cent and Right 36 per cent. Under the AV system Ms Centre would be eliminated and her second preferences would be allocated to Left or Right. One of the more extreme candidates would win, in a run-off between Left and Right.

Nicolas de Condorcet

But imagine a local newspaper had run an extensive poll which showed that if there had been a run-off between Centre and Right, then Centre would have won. And if there had been a run-off between Centre and Left, then Centre again would have won. In other words, a majority in all cases preferred Ms Centre to any of the extremes.

Technically this is known as a Condorcet winner – a person who would win all two-candidate elections against each of the other candidates in turn.2 A serious problem with AV is that it can often eliminate a Condorcet winner. More generally, a major problem with AV is that it can often militate against strong and popular compromise candidates.

Why Approval Voting is better than AV

Many voting experts argue that Approval Voting is superior to AV.3 With Approval Voting there is no ranking of candidates. The electorate is simply asked to vote for those candidates of which they approve.

If there were (say) four candidates for a parliamentary seat, then the electors may vote (with crosses rather than numbers) for zero, one, two, three or four of the candidates. The votes for each candidate are added up, and the candidate with the highest number of votes is elected. Simple.

Of course, an elector voting for none or four of the candidates in this case would have no effect on the result, except he or she would be helping to give an overall indication of the overall level of approval (or lack of it) for each candidate.

As well as its technical superiority, a huge advantage of approval voting is that it is much easier to explain and to understand.

My proposal is for an approval voting system for single-member constituencies, plus a party-list top-up in regional units, to move closer to proportionality. I propose Approval+.

Alternatively, there are near-proportional versions of Approval Voting that apply to multi-member constituencies, hence removing the need for a top-up list. But these add some additional complexity.

High stakes

Rising above the technical details, a lot is at stake here. If a more proportional system had been introduced in 1997-2010 then we could have avoided the disastrous prospect of decades of Tory rule, elected each time on 40 per cent or less of the vote.

When asked, the UK public support a more proportional system. A 2015 poll showed that 57 per cent of the public agreed with the principle that “the number of seats a party gets should broadly reflect its proportion of the total votes cast” – compared to only 9 per cent who disagreed.

We need to think about the best and most persuasive system of electoral reform, and set about the task of building a progressive alliance to implement it.


17 April 2017

Minor edits – 18 April, 1, 13, 14 May, 6 June, 14 July, 12 August, 3 September 2017


1. I turned out to be too optimistic: the Tories were in power for 18 years. Using a statistical analysis, I developed my sceptical 1980s view of Labour’s chances while I was on the ruling council of the Labour Coordinating Committee. My assessment was unpopular among budding, ambitious Labour politicians.

2. Nicolas de Condorcet (1743-1794) was a French revolutionary, mathematician, advocate of female suffrage and friend of Thomas Paine.

3. This is a very useful but long video. To cut straight to Approval Voting, the first 36 minutes may be skipped.


Hain, Peter and Hodgson, Geoff (1982) Proportional Misrepresentation? (London and Nottingham: Tribune and Institute for Workers Control).

Hain, Peter (1986) Proportional Misrepresentation: The Case against PR in Britain (Guildford: Wildwood House).

Hodgson, Geoffrey M. (2018) Wrong Turnings: How the Left Got Lost (Chicago: University of Chicago Press).


Posted in Brexit, Jeremy Corbyn, Labour Party, Left politics, Liberalism, Tony Blair, Tony Blair, Uncategorized

April 5th, 2017 by geoffhodgson1946



Geoffrey M. Hodgson


I have proposed on Twitter that there is a case for regarding Marxism as right-wing rather than left-wing. The response by some has to been to question my academic credentials. These need no defence here. Instead I here make my case for re-labelling Marxism, in much more detail than I can in a 140-character tweet.

I have three major reasons for suggesting that we should describe Marxism as Right rather than Left. The first concerns the origins and original meanings of the terms Left and Right in the French Revolution of 1789. The second derives from a consideration of issues such as democracy, human rights and equality under the law, to which much of the Left has continued to serve lip-service. The third is based on how Marxist ideas played out in practice, particularly after the Russian Revolution of 1917 and the Maoist victory in China in 1949.

Leon Trotsky

In his Revolution Betrayed, Leon Trotsky claimed that that there was little difference between Stalinist Russia and fascism, apart from the nationalisation of the means of production. But for those who suffered famine, torture, death or deprivation of their rights, the dominant form of ownership made little different to their misery. There are more important criteria than legal forms of ownership for distinguishing Left from Right.

We should challenge the ideological conquest by Marxism of the territory labelled “Left”. Usages of terms can change. But some changes are more legitimate than others. The Marxist conquest of the Left did violence to its history, and to ideas and principles that many on the Left still cherish. It is time to reclaim the territory and undo the damage.

The original Left

During the French Revolution of 1789 those deputies most critical of the monarchy began to congregate on the seats to the left of the President’s chair in the National Constituent Assembly. Promoting liberty, equality and fraternity, they wished to limit the powers of the monarchy and to create a democratic republic. Conservative supporters of the aristocracy and the monarchy would congregate on the right side.

In August 1789 the Assembly published its Declaration of the Rights of Man and of the Citizen. It upheld freedom of thought, of worship, of assembly, and from arbitrary arrest; it enshrined equality under the law and hailed private property as a basic right.

This Declaration was inspired by Enlightenment thinkers who had advocated universal human rights, including Charles-Louis Montesquieu, Voltaire, Jean-Jacques Rousseau, Immanuel Kant and Thomas Paine. The Left promoted those universal human rights.

The Left leaders of the French Revolution advocated an individualistic, property-owning, market economy, just as the English Levellers had done in the 1640s and the American revolutionaries in the 1770s. Under the monarchy, the French revolutionaries had experienced the ill effects of state monopolies and other large agglomerations of economic power. They wanted none of them. As the Fabian socialist R. H. Tawney put it: “the dogma of the sanctity of private property was maintained as tenaciously by French Jacobins as by English Tories”.

Robert Owen

By contrast, the rising socialism in the nineteenth century put more emphasis on the levelling of income and wealth, and less on democracy and less on equal human rights under the law. This was true of “utopian socialists” such as Claude-Henri de Saint-Simon, Charles Fourier and Robert Owen. They emphasized fraternity, and the economic aspect of equality – but less so liberty, and less so equal rights. Owen in particular was hostile to democracy and to legal institutions.

Socialism was a child of the Enlightenment, but one that deserted much of its heritage. Legal and human rights were of a lesser concern. This was a major wrong turning. Instead, socialists lauded the scientific achievement of the Enlightenment, and wished to extend scientific principles to the analysis and government of human society. Science would determine what was good for society as a whole.

Enter Marxism

Marxism took this a number of steps further. The utopians had attempted to use the results of their version of science to design their perfect society. By contrast, Marxism postponed any detailed explanation of how the socialist future would work. Instead it concentrated on the “scientific” examination of the social and economic forces that supposedly would bring about the new social order.

Karl Marx

In his Socialism: Utopian and Scientific, Frederick Engels dismissed the principles and rights of the French Revolution as “nothing more than the idealized kingdom of the bourgeoisie”. These principles and rights were sacrificed at the altar of class emancipation. Marx and Engels joined their version of socialism to the predicted victory of the proletariat in the class struggle, and its expropriation of the capitalist ruling class. This was a second major wrong turning.

But the working class may not be aware of the historic destiny that Marx and Engels ascribed to them: “It is not a question of what … the … proletariat … regards as its aim. It is a question of what the proletariat is, and what, in accordance with this being, it will historically be compelled to do.” The presumed destiny of the proletariat became the great, teleological, organizing principle of Marxism.

Their normative arguments in favour of socialism were not based on any alleged rights. Instead, socialism was seen as historic destiny. Marx tried to show that crises within capitalism are recurrent and inevitable, and also capitalism digs its own grave by enlarging and empowering the working class.

Marx and Engels bypassed the issues of morality and justice by focusing on the real social forces allegedly leading to socialism. But neither the driving forces of history nor the supposed destiny of the working class make this socialist future just, or morally right. Even if Marx’s economic analysis of capitalism was broadly valid, and the working class was getting more agglomerated and powerful, then this would not itself show that socialism was morally superior to capitalism, by any suitable standards of ethics or justice.

The “dictatorship of the proletariat”

Following Marx, in his 1917 booklet The State and Revolution, Vladimir Ilyich Lenin saw “the dictatorship of the proletariat” as “the organisation of the vanguard of the oppressed as the ruling class for the purpose of crushing the oppressors”.

But for Lenin this class dictatorship meant “an immense expansion of democracy, which for the first time becomes democracy for the poor, democracy for the people, and not democracy for the money-bags”. Note the qualification: this “democracy” was not for all. It meant the “suppression by force, i.e. exclusion from democracy, of the exploiters and oppressors of the people.

In practice, the Marxist dogma of working-class rule faces unavoidable problems that impel it towards totalitarianism rather than democracy. The Marxist notion of class domination removes rights from major segments of the population. Gone is the original Left defence of universal rights. Removing rights from a segment of the population – whether it is to suppress a social class, an ethnic group, or followers of a particular religion – undermines universal rights and liberties that apply to everyone.

Furthermore, the Marxist idea of the proletariat having class interests and a historic destiny, of which it is not necessarily aware, provides a rationale for a party to substitute for that class, claiming to act in its interests. It would act to suppress its opponents. But without countervailing power, any political monopoly slides toward totalitarianism. Dissent from the party line can be suppressed by claims that the dissenters are undermining the revolution.

Without political checks and balances, such dissenters have no effective legal protection. The removal of rights from the bourgeoisie or their agents provides the precedent and excuse for their widespread suppression – of deemed “agents” and abetters of the bourgeoisie, as well as of people of property.

Marxism in Russia and China

The first Marxist government was established in Russia in 1917, and it quickly evolved into a one-party state. Purges and terror ensued. But many on the Left supported the Soviet Regime. This was yet another wrong turning. The Left label became associated with totalitarianism, with minimal human rights, sham trials, mass executions, limited freedom, and arbitrary confiscations of property. The original meaning of Left was turned upside down.

Following Marx and Lenin, declared rights in Soviet Russia were not universal. The 1918 constitution distinguished legally between the rights of the workers and the rights of others. The state announced that it “deprives all individuals and groups of rights which could be utilized by them to the detriment of the socialist revolution.” A major problem here was that the criteria used to decide what was detrimental were inadequately specified, opening the door to arbitrary repression by the authorities. This is exactly what happened.

Under such a system, it is inevitable that law becomes an instrument of politics and government, instead of helping to keep government accountable and in check. Simple acts, such as the buying and selling of small items of property, can be deemed “detrimental to socialism” or “counter-revolutionary”. In the Soviet Union such offenses were punishable by death.

Instead of a means of defending rights, the law became an instrument of oppression by the Communist Party. Joseph Stalin’s collectivisation of agriculture in 1928-1931, involving the forced deportations or deaths of millions of peasants, was carried out formally according to the letter of Soviet Law.

Of course, law has been abused as an instrument of politics in capitalist countries as well. But a wider distribution of power and ownership – which is feasible under capitalism but not under classical socialism – makes possible the development of countervailing power, which is essential to keep such abuses in check and to help defend the legal system from political manipulation. These countervailing mechanisms are much less effective when most property and economic power is concentrated in the hands of the state.

In many respects, Mao’s China was even worse than the Soviet Union. When Mao Zedong was in power, little effort was made to develop a legal system. Mao preferred that the Communist Party should rule without any legal restriction. This happened. The deadly consequences were the Great Leap Forward of 1958-1961 and the Cultural Revolution of 1966-1976.

More than ninety million deaths

The deaths and sufferings in Soviet Russia and Mao’s China were not accidental additions to a Marxist socialism that can be avoided in better circumstances. They are outcomes of Marxism’s doctrine of class struggle and its consequent termination of universal rights. They result from Marxism’s abandonment of key political principles of the Enlightenment

Published in 1999, the Black Book of Communism calculated the premature death toll under Communist regimes to be about 94 million. These estimated deaths include: 65 million in China under Mao, 20 million in the Soviet Union, and about two million in Cambodia under Pol Pot and his Khmer Rouge. Famines explain large numbers of these deaths, including an estimated toll of up to 45 million in the Great Leap Forward in China, and up to eight million in the Soviet Ukraine in 1932-1933. Some critics say that this figure 94 million is too much, others that it is too conservative an estimate. Either way, the toll of death and misery under Communist regimes is enormous.

Capitalism too can be lethal. For example, the African slave trade caused many millions of early deaths. European conquests of the Americas caused about 100 million Native American deaths, through combinations of disease and genocide, particularly in South America. The British rule of India led to about 60 million deaths, many of them through massacres and famines.

But we need to compare democratic regimes, enjoying substantial human rights, with regimes where democracy and human rights are absent or limited. Meaningful democracy – where it is legal and possible for an opposition to organize and vote to remove the incumbent party or elite – has not existed under any Communist regime. Human rights have also been highly limited under Communism.

The evidence suggests that the reduction of death and misery from famine and war is best pursued by opposition to all forms of totalitarianism, whether capitalist or Communist. The chances of war, famine and premature death can be diminished through societies with democratic institutions and universal human rights. At least so far, these have been found in developed capitalism only.


Marxism – which advocates class dictatorship and the abolition of private property – cannot offer a secure foundation for democratic institutions and human rights. At least for the present, the best options for humanity are those forms of welfare-state capitalism that have been able to sustain such institutions and rights, while keeping extreme economic inequality in check. The task is to reform capitalism rather to follow Marxism.

For the Left in 1789, the Right were supporters of a hereditary elite and their oppressive state machine. Under Marxist regimes the elite ceased to be hereditary, but the state vastly increased its power. There is good reason to see both forms of absolutism as right-wing.

The primary struggle of the twenty-first century is not between private and public ownership, whatever their merits in different contexts. It is between liberty, rights and democracy on the one hand, and authoritarian nationalism on the other. It is the age-old struggle for universal human rights, rather than the regressive struggle of one nation, ethnicity, religion or class against another.



5 April 2017


This book elaborates on some of the political issues raised in this blog:

Wrong Turnings: How the Left Got Lost

Published by University of Chicago Press in January 2018



Courtois, Stéphane, Werth, Nicolas, Panné, Jean-Louis, Packowski, Andrzej, Bartošek, and Margolin, Jean-Louis (1999) The Black Book of Communism: Crimes, Terror, Repression (Cambridge MA: Harvard University Press).
Hodgson, Geoffrey M. (2017) Wrong Turnings: How the Left Got Lost (Chicago: University of Chicago Press, forthcoming).
Polan, Anthony J. (1984) Lenin and the End of Politics (London: Methuen).
Tawney, Richard H. (1921) The Acquisitive Society (London: Bell), quoted from p. 56.
Trotsky, Leon D. (1937) The Revolution Betrayed: What is the Soviet Union and where is it Going? (London: Faber and Faber).

Posted in Uncategorized

February 21st, 2017 by geoffhodgson1946


Geoffrey M. Hodgson


Despite her previous opposition to Brexit, Prime Minister Theresa May tells us that the UK must quit the European Union because it is “the will of the people”. Despite aligning himself in the Remain campaign during the referendum, opposition leader Jeremy Corbyn says that we must pursue Brexit because it is “the will of the people”. Many Labour MPs, who are critical of Corbyn and believe that leaving the EU will be a disaster, voted to start the exit process, without any guarantees or conditions, because it is “the will of the people”.

This is now the dreadful state of our democracy. On crucial matters such as immigration and Brexit, we are governed by tabloid headlines, opinion polls and lie-infested referendums. The “will of the people” has become the catch-phrase of the cowering, lazy or unprincipled politician. No longer driven by truth or principle, many of them knowingly connive in disaster because it is regarded as the peoples’ will.

Where can following “the will of the people” lead?

Polls show that the use of torture has sometimes, even recently, received majority support from the US public. President Donald Trump was elected after expressing a desire to re-introduce torture. Torture is “the will of the American people” – as some might put it.

But the use of torture has been against the Eighth Amendment to the United States Constitution since 1791. The very role of a constitution is to help protect rights and freedoms, even if “the will of the people”, or of a deviant President or Prime Minister, would take them away. One of the limits to democracy is that it should not be able to overturn our human rights.

Dictators and populists are fond of referendums because they deploy “the will of the people” against constitutional safeguards. Hitler held a referendum in 1933, to garner mass support to withdraw from the League of Nations. In 1934 he held another referendum, which endorsed his bid for supreme power in Germany. Yet another referendum in 1936 ratified Hitler’s military occupation of the Rhineland and his one-party state. A fourth referendum in 1938 approved Hitler’s annexation of Austria. All propositions in these plebiscites received huge majorities.

The death penalty

In recent polls in the USA, 60 per cent of the adult population supported the death penalty for murder, despite 64 per cent also believing that it does not lower the murder rate and 59 per cent believing that innocent people had been wrongly executed in the previous five years.

In the UK in 1983, around 75 per cent of people were in favour of the death penalty. Although recent polls show a lower level of support, it is still close to 50 per cent.

Imagine that we had a referendum to re-introduce the death penalty in the UK. Thanks to some reactionary newspapers, it is possible that the proposal would gain majority support. But that does not justify its re-introduction, even if it was “the will of the people”. The morality of a law cannot be decided by popular vote.

Should homosexual acts be legal?

In some states of the USA there were laws prohibiting sodomy (between same-sex or different-sex couples) until 2003. As recently as 2004, the number of people polled in the USA who thought that homosexual acts should be illegal exceeded the number who thought they should be legal.

By these measures, according to “the will of the people” homosexual acts should not have been made legal in 2003 or 2004.

But opinions change. This is another major problem with being governed by “the will of the people”.

After 2004, support in the USA for the legality of homosexual acts rose steadily. By 2016, the number supporting legality exceeded the contrary view by 40 per cent.

in the UK, as recently as 1998, 50 per cent of respondents in a poll thought that homosexual acts were “always” or “mostly” wrong, compared with 31 per cent saying they were “rarely” or never wrong.

Since then, opinion has switched, largely because leading politicians in the Tory as well as other major parties (with the notable exception of UKIP) have countered a sizeable segment of public opinion and underlined gay rights as a matter of principle.

By 2012, only 28 per cent of respondents in the UK thought that homosexual acts were “always” or “mostly” wrong, compared with 57 per cent saying they were “rarely” or never wrong. The will of the people can change.

The “will of the people” can be wrong or immoral

Whatever the “will of the people”, homosexual acts are either morally admissible or immoral. Moral principles are not determined by referendums or opinion polls.

Instead, they must be the subject of ongoing, informed debate, guided by the need to minimise harm, alongside “an egalitarian conception of the good, focusing on equal opportunities for a worthwhile life” (as Philip Kitcher puts in his important book on The Ethical Project).

Consider another illustration. In 1984, 49 per cent of the UK public agreed “a man’s job is to earn money; a woman’s job is to look after the home and family”. But by 2012, only 13 per cent subscribed to this view.

Considerations of equal rights and equality of opportunity militate against such gendered attitudes and the discrimination that they sustain. While there is much more to be done, arguments have been won, opinions have changed and progress has been made. People can be persuaded that their previous opinions were wrong.

The need for experts

Just as votes cannot establish what is moral or immoral, they cannot determine what is scientifically valid and what is not. A majority of Americans would disregard claims concerning human-induced climate change. For many Americans, they are all part of a “hoax” to promote more intervention by the Federal Government.

Democratic votes cannot establish the veracity of scientific claims. Science proceeds through detailed scrutiny of claims by experts in a specialist field and a dialogue of different expert views. It thus creates an evolving consensus over what truths have been established and what research must be prioritised for further investigation.

In the case of climate change, there is a strong consensus that human activity is leading to global warming. Albeit imperfect, this is the best indication we have of scientific truth. It is not the opinion of the general public, most of whom do not understand climate science.

Another common fallacy, perpetrated by people who do not understand economics, is that we should treat the budgeting problems of a national economy in the same way that we treat our individual or household budgets. This is the “every housewife knows” economics of Margaret Thatcher and her ilk.

This mistaken view ignores the capacity of many sovereign states to issue money and sustain deficits: unlike individuals or firms, such states cannot go bankrupt. It ignores the fact that what may be true for an individual may not be true in the aggregate, as Keynesians and others have pointed out for decades.

Many economists (possibly most economists in the UK) accept this Keynesian argument. But it is difficult to get the point across to the general public, so that they elect governments that pursue austerity policies, which reduce aggregate demand and economic growth, leading to increased debt.

The role of democracy

If the behaviour of most British MPs over Brexit were taken as a guide, there would be no role for MPs at all. They blindly follow “the will of the people”, even when they know that it will lead to adverse economic and political outcomes.

If this were a valid guiding rule, then MPs would be redundant. They could be replaced by online opinion polls on every question. The public would be invited to vote over every piece of legislation and “the will of the people” could be upheld.

Before long we might be putting immigrants in sealed trains to remote or foreign destinations, and publicly flogging delinquents to teach them a lesson.

Democracy is vital not because it provides a means of implementing “the will of the people” on any specific proposal. The primary purpose of democracy is to legitimate government. It replaces unacceptable claims that rulers are legitimised by the “will of God” or by their family lineage.

There is a strong case for improving our democratic institutions, and the functioning of democracy itself. There are also forceful arguments for increasing participation in some local and workplace decisions, where we are intimately affected and have local knowledge. But there are severe practical and moral limits to the extension of democracy over all our affairs.

At least at the national level, in any large and complex socio-economic system, democracy must involve representatives rather than delegates. Representatives must be given some autonomy to seek expert advice and make judgments on complex issues. Extensive participatory democracy in such circumstances is both unfeasible and undesirable.

Members of Parliament receive a mandate from their electorates to represent their interests. Representing interests does not mean polling opinions: that is the lazy and irresponsible option. Instead it is a matter of exercising informed judgment. It is a question of deliberation and interpretation, involving the use of expert advice. We know that MPs often get things wrong. That is why their constituents have the opportunity to remove them at the next election.

The reactionary media are not solely to blame

The reactionary media and their malign influence on public opinion are not the sole cause of the current political malaise in Britain and the USA. Among others, one can blame the intellectually-lazy part of the Left, which trots out the mantra of “democratic control” whenever it sees a policy problem.

One can also blame the majority of economists, who have abandoned all moral considerations save for utility maximisation (or mere “satisfaction”) by “rational fools” (the term used by Nobel Laureate Amartya Sen).

Hence it is not just the reactionary media that are to blame. Many political activists have been intellectually lazy for too long. We need an enhanced and better-informed conversation concerning rights, morality and practical institutional design.

Armed with this knowledge, we need to hold our representatives to account, and expose the laziness and lack of principle of those who blindly follow “the will of the people”. If they see themselves as nothing more than unintelligent voting machines, then they should give up their positions to others, who would be guided by moral principles and offer greater dedication to the true interests of the people that they are supposed to serve.


21 February 2017

Minor edits – 28 February, 7 March, 4 May

This book elaborates on some of the political issues raised in this blog:

Wrong Turnings: How the Left Got Lost

Published by University of Chicago Press in January 2018


Hodgson, Geoffrey M. (2013) From Pleasure Machines to Moral Communities: An Evolutionary Economics without Homo Economicus (Chicago: University of Chicago Press).

Hodgson, Geoffrey M. (2017) Wrong Turnings: How the Left Got Lost (Chicago: University of Chicago Press, forthcoming).

Kitcher, Philip (1993) The Advancement of Science: Science without Legend, Objectivity without Illusions (Oxford and New York: Oxford University Press).

Kitcher, Philip (2011) The Ethical Project (Cambridge MA: Harvard University Press).

Sen, Amartya K. (1977) ‘Rational Fools: A Critique of the Behavioral Foundations of Economic Theory’, Philosophy and Public Affairs, 6(4), pp. 317-44.

Posted in Brexit, Democracy, Left politics, Liberalism, Nationalization, Property, Uncategorized