[This exchange of letters appeared in the July/August 1995 issue of Conservative Review, pp. 38-40.] 

 

A friendly letter, and a response, probing some of the basic theory of a free society 

 

Editor’s note: We invite all readers to study with care the following letter and its response.  Both writers are proponents of a free society—but they voice very different conceptions of it.  The exchange captures in a brief span the gulf that often separates a “libertarian” from a broader “classical liberal” conception of individual liberty.

 

Dear Sir:

            I admire Dwight Murphey’s scholarship and intellectual integrity, but I have some serious reservations about his support of “blacklisting” (see his article “The Hollywood Blacklist—In Historical Context,” Mar/Apr 1994 issue of Conservative Review). [This is article A52 in the Web page collected writings.]  My objections to blacklisting relate, on the one hand, to the existence of pressure upon the private sector by way of a Congressional Committee and, on the other hand, to the ethical obligations of the officers of a for-profit corporation.

            I agree, for the most part, with Milton Friedman’s argument that the paramount duty of the managers of a corporation is to maximize the return to the shareholders.  They must, of course, act within the law in the course of this endeavor.  But if they allow themselves to be cowed, by some misguided notion of “business ethics” or by governmental pressures short of law, into deploying the assets of their shareholders in something other than the most productive manner available, then they have failed in their capacity as fiduciaries.

            I submit, for your consideration, that there is no principled distinction between General Motors (GM) and Metro-Goldwyn-Mayer (MGM) that might deflect the application of Friedman’s conclusion.  GM buys materials, patents, paints and steel, and it produces something of value, which it then puts into the market for sale.  Meanwhile, a movie company also buys materials, the labor of cast and crew, the use of a location or back-lot set, the rights to a script, and from these fashions something of value, which it then, just like the car company, must trust to the sometimes fickle world of market demand.

            Lovers of liberty should have been upset when the movie moguls, by function and whatever their personal convictions capitalists, caved in to blatant governmental pressure to the extent indicated by the Waldorf Statement [which, readers will remember, declared an intent by film producers not to hire Communists—editor].  Imagine the automotive parallel!  Imagine, that is, that the chief executives of General Motors, Ford, and Chrysler were to announce, contemporaneous with high-profile Congressional hearings, that they would no longer knowingly purchase patent rights from members of the Ku Klux Klan.  Should a classical liberal smell nothing fishy here?

            One would hope for auto executives with enough backbone to issue the following statement: “If anyone out there has invented a better transmission than those currently in use, he ought to bring it to our attention.  Any one of us will contract with any such inventor on the basis of our understanding of the market, and our reasonable expectation for shareholder return, utterly independent of government pressure.  We neither condemn nor condone the affiliations, beliefs, or for that matter conspiratorial activities of persons with whom we contract.  That is, quite literally, none of our business.  Making better cars is our business.”  Now that would have been a Waldorf Statement worthy of support and sympathy, and compared to that the actual Waldorf Statement seems positively craven.

            Were a movie studio executive, speaking simply as a human being and a citizen, to say “I detest the politics of Dashiell Hammett,” that statement would be perfectly sensible.

            But were the same executive, speaking now as an officer of a publicly traded corporation, as a trustee of the interests of untold numbers of other human beings, as the caretaker of nest eggs, to say “I will not sign any more contracts with Dashiell Hammett”—to say this of the man whose novels and scripts reinvigorated the detective genre—is irresponsible.  I would think it wise for Professor Murphey, as a classical liberal as well as a conscientious student of finance, to come back to the issues he has raised, and to look at them from the point of view of the responsibilities (public, private, and corporate) of the blacklisters themselves.

                                                               Christopher C. Faille

                                                               Enfield, CT 

 

Response

            Christopher Faille and I have been friends for a considerable time, and I should point out that he is the author of an excellent book on the history of modern philosophy and of a recent book on the Supreme Court which deals most specifically with the justices’ confirmation battles in the Senate.

            Our friendship is not the main reason, though, that I welcome this exchange of views.  It is because I believe his letter brings into bold relief a fundamental difference that has become pronounced in recent years among supporters—as both of us are—of limited government and a free market.  At issue is the very sufficiency of our theory of a free society.  As we see reflected in Chris’s letter, many who today call themselves “libertarians” propound a theory that consists of a few premises—of private property, freedom of contract, and a strict delineation of the functions of government—that are to be applied deductively with principled consistency.  A problem arises because the premises are far too narrow to constitute an adequate philosophy for a free society.

            A free society needs much more, and only a philosophy that takes all of its needs into account will be sufficient, both theoretically and in terms of its acceptability to people in general.  Even more than that, the theory must take into account everything that is important not just to personal freedom but to advanced civilization.  Classical liberalism as best conceived, in my opinion, must be the philosophy that seeks to spell out the prerequisites of such a civilization, doing so in a way that gives a central role to personal freedom.  Individual liberty will be seen as both a highly desirable end in itself and the primary means to this end.  The theory must amount to a philosophy that is fully adequate to the maintenance and perpetuation of such a society.

            Seen in this light, the perspective that Chris and many libertarians propound is too narrow both in the role that it assigns to government and in its understanding of the principles of a market economy.  The narrowness produces altogether too pinched a theory.  I would hope that someday they will come to see that individual liberty is not best served by it.

            Specifically, his criticism of my article has made two points: that a Congressional committee goes beyond the legitimate functions of government when it focuses publicity on Communists; and that for-profit corporations have an obligation to their investors to seek profit-maximization exclusively, so long as they act within the law.  Let’s look at these points in that order:

            1.  We must take it, I think, that a necessary postulate of a fully adequate philosophy of freedom will allow the society adequate means to protect itself against an organized totalitarian ideology.  To say otherwise would be to argue, in effect, that liberty was best served in Germany when the Weimar Republic allowed itself to succumb to the organized violence of the Brown Shirts and Communists.  The end is the preservation of freedom—and the means must be adequate to that end.  Any theory that says less is necessarily inadequate.

            Of all the things that a free society might do to protect itself against an organized totalitarian movement, the light of publicity, brought to bear by the elected representatives of the people, is perhaps the mildest.  I have a hard time joining any condemnation of it as “blatant governmental pressure.”

            2.  The argument that a for-profit corporation is obligated by its fiduciary duty to its investors to do anything within the law to make profits raises a point that has been disputed within classical liberal thought for over a century and a half.  Richard Cobden was, along with John Bright, the leader of the Manchester School that successfully fought the tariff on grains in 1820-1830s England.  No one was more emphatically pro-free market than he was.  But here is what he had to say on the need to infuse market activity with moral responsibility:

            “I was told that a man had a right to lend his money without inquiring what it was wanted for.  But if he knew it was wanted for a vile purpose had he a right of so lending it?  I put this question to a City man: ‘Somebody asks you to lend money to build houses with, and you know it is wanted for the purpose of building infamous houses: would you be justified in lending the money?’  He replied, ‘I would.’  I rejoined, ‘Then I am not going to argue with you—you are a man for the police magistrate to look after; for if you would lend money to build infamous houses, you would very likely keep one yourself, if you could get ten percent by it.’”

            Cobden was right, and a libertarian should be among the first to see it.  A free society, wanting to keep government and the police power in check, is precisely the society that must depend most on moral sensibility and a culture of responsibility.  There are obligations far beyond “not doing what the law forbids.”  Each free individual is a citizen of a free society, and has all of the duties—personal, familial, and civic—of that citizenship.  (We see, then, how far this freedom is removed from the “do-your-own-thing conception of freedom advanced a few years ago by the leftist counter-culture.)  It is with these things in mind that classical liberals have spoken of “the philosophy of ordered liberty.”

            In this context, is there a moral responsibility for profit-seekers, such as the Hollywood producers in the late 1940s, to desist from doing business with those whose very purpose is to destroy a free society?  Every bit as much, in my opinion, as to refrain from lending money to construct a house of prostitution.

            I have long been among the critics of the literature that calls upon business to “accept its social responsibilities,” when that has meant business’ undertaking a number of social welfare functions dictated by a “social democratic” worldview.  But my opposition to that has not meant my abandonment of the ethical foundation that must underlie a society predicated on individual liberty.

            Once we open up this question of moral obligation, and see as well the need for a more ample recognition of the needed functions of government, we enter areas that a too narrowly defined “libertarian” conception seeks to ignore, inconsistently with the imperatives of the very type of society they wish to promote.  I would urge my libertarian friends, including Christopher Faille, to broaden their methodology—and to pose for themselves the following question: “What all is necessary or useful to include in our theory if we are adequately to state the prerequisites of an advanced civilization based on freedom?”                                                                                                                                                                                                               Dwight D. Murphey

                                                              Wichita, KS