Quarterly essays (in English and French) on the theme
"Querying Economic Orthodoxy"

No. 59 - March 2013

Friend or Stranger?


I believe it to be true that, if men were perfectly virtuous, they would have no friends...to confine one's heart to a certain number of friends is to turn one's heart away from everyone else.
Montesquieu,1 Mes Pensées, no. 604 in Oeuvres complètes, éd. Roger Cailloux (Gallimard, Paris, 1949).

Equality is meaningless except between persons of equivalent status; no-one demands, for example, that in the name of equality children should be allowed to vote.
Nathalie Heinich, sociologist and director of research at the Centre National de la Recherche Scientifique, Mariage gay: halte aux sophismes in Le Monde (Paris), 27 January 2013.

Universalism and particularism

The concept of universalism recognises a fundamental equality between all human beings, in the sense that there is a duty to treat them all impartially and without discrimination; and also in the sense that there is a basic similarity or comparability between all human beings. This concept goes back to ancient times. It is implied by the biblical allegory of the Creation, according to which all men and women are descended from one couple, Adam and Eve, thus forming a single big family. It is explicit in the commandment (Leviticus 19, vv 33-34), an alien...shall be treated as a native born among you, and you shall love him as a man like yourself.

Nevertheless, since the time of Moses, universalism has lived side by side with particularism, that is to say the need to treat certain persons differently from others. The Jewish race is, according to God's word, my chosen people (Isaiah 43, v 20), differentiated from others; thus, for example, (Deuteronomy 23, vv 19-20): you shall not charge interest on anything you lend to a fellow-countryman...you may charge interest on a loan to a foreigner. Since the diaspora (dispersion) of the Jews after 70 AD, their need for solidarity among themselves has become even greater.

Particularism is necessary, since we clearly cannot treat our near relatives and friends exactly like everyone else; if we did, we would have neither relatives nor friends, as Montesquieu noted in the striking remark quoted above. If a man treats all women like his wife, he is an imitator of Don Giovanni with his grand total of 2,966 ephemeral concubines, including his wife Donna Elvira and his famous 1,003 Spanish mistresses. He has no real intimacy with any of them.

A double necessity

On the one hand, we have the obligation to love all others like ourselves; to treat all others, in certain respects, on an equal footing, in order to avoid the horrible  consequences of exclusive and intolerant tribalisms, racisms or sectarianisms. On the other hand, we need friendships, intimacies, fraternities, solidarities; and this means that we need to give special treatment to certain persons.  

This particularism is not restricted to our close relatives; it extends normally to include our friendship and loyalty to professional or sporting colleagues, to our near neighbours, to our brothers and sisters in all manner of associations, indeed to those with whom we share our village, our city, our country and its civilisation...

By contrast, universalism highlights our duties to other people in general, rather than our duties to members of a restricted group. It thus tends to disfavour solidarities. If we were totally universalist, like Montesquieu's imaginary 'perfectly virtuous man', we would have no friendships, intimacies or loyalties; we would be isolated individuals. But, according to the libertarians, we would then be 'free' individuals, in that we would be free from the constraints of life in society. That is a very negative and inadequate notion of freedom.

Thus, we may say that particularism is loyalist, while universalism in individualist.

Abuses of universalism

Unfortunately, abuses of the doctrine of universalism have become a serious philosophical and practical problem. For since the eighteenth century, the age of the Enlightenment, Western thought has not only exalted universalism as an ideal; it has too often neglected and even despised particularism. According to the famous American sociologist Talcott Parsons, if a single keynote of the main trend of the development of modern civilisation could be selected, I think it would be the trend towards cultural universalism.2 One consequence has been the replacement of varied local architectural traditions by the placeless, characterless, colourless 'international style' of Le Corbusier and his innumerable followers, that since the early twentieth century has so painfully disfigured our world.

Rabbi Jonathan Sacks, in his excellent book The Politics of Hope, complains that in the philosophical literature from Hobbes3 onwards, there is little sense that families, friendships or loyalties might play an autonomous role within the moral life...Particularist loyalties had neither right nor reason to exist other than as private arrangements between individuals. Thus the stage was set for the assault on the family and the community. Their conceptual integrity, their metaphysical space, had been destroyed.4   

Certain thinkers, rejecting this neglect of solidarity, called instead for a perverted form of particularism, namely the virulent nationalism of the late nineteenth century which, continuing and strengthening in the twentieth, wrought such appalling damage.

Then the horrors of nazism and fascism provoked reaction towards more and more extreme universalism. Thus the libertarian economist Friedrich von Hayek preached a grossly exaggerated individualism; in his ideal free-market society, we gain by not treating one another as neighbours.5 To become more prosperous, let us renounce all particularisms. Let us no longer buy British, American or European products; let us buy more cheaply from unknown faraway manufacturers, often working under horrible, but therefore low-cost, conditions.

Thus, by neglecting or denigrating good and necessary particularisms, post-Enlightenment thought allowed a very nasty kind of particularism to grow, namely nationalist extremism. That provoked in its turn a perverted universalism - our veneration of the global free market - whose consequences we now suffer.

Natural inequalities

One has to recognise that the concept of human equality, though very important, is a strictly limited concept. We are equal in having certain fundamental human rights that are common to us all.

But we are unequal in our physical or intellectual capacities, in our psychological dispositions, in our desires and ambitions, in our talents or practical abilities.

We are unequal in the circumstances of our birth, and those circumstances are not merely consequences of our social systems; they relate also to our geographical place of birth. The Chinese can produce much more coal per miner than the Japanese, simply because China has many thick coal seams close to the surface, while in Japan most seams are thin and deep.

Freedom of contract, a misunderstanding of universalism

Universalist economists and lawyers have long argued that basic human equality implies the right of any person to enter into any contract whatever with any other person, provided the contract is voluntary on both sides. As Lord Denning, a famous English judge, put it, judges still had before them the idol, 'freedom of contract'. They still bowed down and worshipped it.6 This dogma is the bedrock of the economic doctrine of laisser faire.

But it is a false argument, because it very often happens that the contracting parties are not of equal status. For example, in a contract of employment, bargaining powers are often far from equal, even if both parties are individuals, as in the time of Adam Smith, when most employers were individual entrepreneurs.

Not much equality of bargaining  power between a rich city industrialist and a poor worker newly come from the country to seek a humble employment in the factory.

Today, when the employer is often a large corporation, the inequalities between employer and employee are even more glaring.  But this does not discourage the obstinate defenders of the free labour market. Hear for example the American professor Edward Younkins:

Legislators and judges should refrain from substituting their own judgements in cases where they believe there is unequal bargaining power or where they think that contracts are not in the 'public interest'. Contract sanctity is paramount.7

This very American dogma presents two major problems. First, differences in bargaining powers often lead to unjust, exploitative contracts. Second, 'freely' agreed' contracts are often contrary to the public interest; think of the notorious sub-prime mortgages! But the libertarians do not care. For them, with their contempt for all government, free-market decisions are infallibly better than those of any authority.

All frontiers open?

The doctrine of freedom of contract leads directly to the doctrine of universal free trade, with all frontiers open. Each of us has the right to contract freely with anyone else; so it makes no sense to deny, simply on the ground that I am a French resident and you live elsewhere, my right to buy whatever I like from you. Hence, international free trade is oligatory.

The same goes for international capital movements. Any restraint on these transactions offends against the principle of freedom of contract.

However, the economists Carmen Reinhart (University of Maryland) and Kenneth Rogoff (Harvard), in a fascinating overview of the worldwide history of defaults, have concluded that countries experiencing sudden large capital inflows are at high risk of having a debt crisis and that periods of high international capital mobility have repeatedly produced international banking crises.8 Even the IMF, normally in favour of free markets, has recently affirmed that there should be no presumption...that full liberalisation [of capital flows] is an appropriate goal for all countries at all times...in certain circumstances, measures that are designed to limit capital flows can be useful and appropriate.9

As for free international trade, we are all fed up, are we not, with watching our industries disappear under competition from countries where rates of pay are tiny and where respect for the rights of workers, or for the environment, is  barely visible.

The law of Moses, that an alien...shall be treated as a native born among you, is taken to mean that we must be permitted to engage in transactions with foreigners as freely as with our own countrymen. But Moses did not say that. He said simply that we should love foreigners as our countrymen. He even prescribed (in a rule that we can no longer interpret literally) a zero interest rate on loans to fellow-countrymen, while authorising higher rates on loans to foreigners.   

In political economy, abuse of the principle of universalism has led us astray. For in fact we need two basic principles: universalism and particularism. These may seem to contradict each other; yet both are indispensable, so we have to reconcile them. The first calls for the democracy of one peron one vote (rather than one dollar one vote) and rules out racial or religious discrimination. The second makes it possible to preserve, in each country or region (such as the Britain or the United States or the European Union) a balanced and diversified economy, together with solidarity among workers.

ANGUS SIBLEY (postmaster@equilibrium-economicum.net) est l'auteur de The 'poisoned spring' of economic libertarianism (PAX ROMANA, 2011); voir link.

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1 Charles-Louis de Secondat, baron de Montesquieu (1689 - 1755), political philosopher.

2 Talcott Parsons (1902 - 1979), Action Theory and the Human Condition (Free Press, New York, 1978), chap. 14 (page 345).  

3 Thomas Hobbes (1588 - 1679), English political philosopher of liberal and rationalist views.

4 Jonathan Sacks (né en 1948), The Politics of Hope (Jonathan Cape, London, 1997), ch. 9. The author is Chief Rabbi of the British Orthodox synagogues.

5 Friedrich von Hayek, The Fatal Conceit (Routledge, London, 1988), chap. 1 (page 13). 

6 Lord Denning (1899 - 1999), in George Mitchell (Chesterhall) Ltd. v. Finney Lock Seeds Ltd. (Court of Appeal, 1982).

7 Edward Younkins, Freedom to Contract (June 2000), see www.quebecoislibre.org.younkins25.html. The author is professor of Accountancy and Business Administration at Wheeling Jesuit University, West Virginia.

8  Carmen Reinhart and Kenneth Rogoff, This TIme is Different (avril 2008), see www.economics.harvard.edu/faculty/rogoff/files/This_Time_Is_Different.pdf, page 7.

9 IMF, Public Information Notice no. 12/137 (December 2012).