By C.M. Hoy
Joseph E. Stiglitz, a recipient of the Nobel Prize in economics, is a professor of economics at Columbia University, and he is very concerned that there is far too much inequality of income in the United States. He believes that this inequality is the source of many problems in our country and that the government must take strong action to lower this disparity in income. He states his views in an article, “Inequality is Holding Back the Recovery,” and his book, The Price of Inequality. I am concerned by several aspects of his analysis and one aspect in particular as I will make clear in the ensuing paragraphs.
There is so much inequality in the U.S., that, says Stiglitz, “Tocqueville, who in the 1830s found the egalitarian impulse to be the essence of the American character, is rolling in his grave.” This remark is very misleading. Alexis de Tocqueville unequivocally indicated that equality was the wave of the future; however, he was not an egalitarian or a proponent of equality as this statement might lead you to believe. To conclude that Tocqueville was an egalitarian because he announced that egalitarianism was in our future, is like concluding that when Paul Revere shouted the British are coming, he was a supporter of the British invasion.
Tocqueville believes that liberty and equality do not mix and that equality could be inimical to liberty. He places liberty above equality.
Neither in his article nor his book does Stiglitz indicate that there is tension between equality and liberty. He misrepresents what the foremost problem for Tocqueville is, how to preserve individual freedom in an age of equality. For theorists other than Tocqueville, equality versus freedom is the major issue in the debate over equality. Stiglitz though appears to be ignorant of any literature contrasting equality and freedom. This is a major gap in his argument and knowledge. Since he cites Tocqueville as an authority, we will demonstrate that this authority is not a proponent of equality but liberty. This will set the record straight on Tocqueville and, perhaps, this will elevate the debate over inequality, to include a concern for liberty, which Tocqueville believes trumps equality.
Gita May, who has published widely on the French Enlightenment, states: “It was Tocqueville’s conviction that the particular quest for equality can only end up in servitude; that there is tension-and, not a concordance-between liberty and equality, and that egalitarianism can all too easily lead to the worst kind of tyranny… and can lead to questioning of the legitimacy of private property, this last bulwark of the individual against the state… He was keenly aware of the dangers presented to individual liberty.” Instead of referring to Tocqueville as an egalitarian, May instead refers to him “as a political libertarian.”
Tocqueville would unequivocally oppose the use of coercion to promote material equality.
The Pulitzer Prize-winning historian Arthur Schlesinger, Jr. writes of Tocqueville that “The revolution of equality, he believed, was irresistible.” Schlesinger adds: “Tocqueville’s consuming passion was liberty; the challenge before a western man in his mind was to devise ways of securing liberty in the era of equality. He was vividly aware of the perils in the new dispensation. It was no simple thing to reconcile liberty and equality.”
Primrose Pratt Tisham tells us that “Tocqueville worried continuously that liberty was especially threatened in France where the passion for equality subsumed the desire for freedom.”
George Wilson Pierson describes Tocqueville as the “foreboding prophet of equality.”
These authors indicate that Tocqueville is not an egalitarian and they indicate that Tocqueville perceives a problem between equality and freedom, a problem that Stiglitz is either unaware of or simply ignores.
In the preface to the second volume of Democracy in America Tocqueville writes,” I believe that many persons would take it upon themselves to inform men of the benefits which they might hope to receive from the establishment of equality, while very few would venture to point out from afar the dangers which it would be attended. It is principally of these dangers, therefore, that I directed my gaze; and, believing that I had discerned what they are, it would have been cowardice to say nothing about them.”
In book 2, chapter 1, Tocqueville says, “that political freedom in its excesses may compromise the tranquility, the property, the lives of individuals are obvious even to narrow and unthinking minds. On the contrary, none but attentive and clear-sighted men perceive the perils with which equality threatens us, and they commonly avoid pointing them out. They know that the calamities they apprehend are remote and flatter themselves that they will only fall upon future generations, for which the present generation takes but little thought. The evils that freedom sometimes brings with it are immediate; they are apparent to all, and all are more or less affected by them. The evils that extreme equality may produce are slowly disclosed; they creep gradually into the social frame; they are seen only in intervals; and at the moment at which they become the most violent, habit already causes them to be no longer felt.”
Tocqueville further says, “I think that Democratic communities have a natural taste for freedom; left to themselves, they will seek it, cherish it, and view any privation of it with regret. But for equality their passion is ardent, insatiable, incessant, and invincible; they call for equality in freedom; if they cannot obtain that, they still call for equality in slavery.”
Please note that for Tocqueville equality and slavery are not mutually exclusive.
In book 2 chapter 4, he says, “but I contend that to combat the evils which equality may produce, there is only one effectual remedy: namely, political freedom.”
In book 4 chapter 1 he says: “I am convinced however that anarchy is not the principle of evil that democratic ages have to fear, but the least. For the principle of equality begets two tendencies: the one leads men straight to independence and may suddenly drive them into anarchy the other conducts them by a longer, more secret, more certain road to servitude. Nations readily discern the former tendency and are prepared to resist it; they are led away by the latter without receiving its drift hence it is peculiarly important to point it out.”
In a note in Tocqueville’s diary titled “My Instincts, My Opinions,” he writes “Liberty is the first of my passions. That is the plain truth.”
Obviously, equality is not his prime mover.
In Tocqueville’s Essay on American Government and Religion, he states: “we are ourselves going, my dear friend, toward a democratie [an equality] without limits. I do not say that it is a good thing…”
What would truly make Tocqueville roll over in his grave is someone representing him as a votary of egalitarianism rather than liberty.
In addition to Tocqueville, last century, there were at least four major writers who critically examined the relationship between equality (equality of condition or outcome) and concluded that liberty and equality were often in conflict with each other. And they came down on the side of liberty. The four that I have in mind is the sociologist Ralf Dahrendorf, the philosopher Robert Nozick, and the economists F. A. Hayek, and Milton Friedman.
In his book and his article, Stiglitz never so much as mentions the first three authors though he does discuss Friedman. However, his discussion of Friedman is rather odd. Though Friedman has written on the issues of equality, inequality, and individual liberty, Stiglitz never discusses Friedman’s ideas on these issues. Though the subject of Stiglitz book and article ostensibly is equality and inequality, he ignores Friedman’s treatment of these issues and wandering far afield, rather criticizes Friedman for not recognizing the imperfections of markets, such as asymmetric information, externalities, and public goods. He also criticizes Friedman’s view of the cause of the Great Depression. He is offended that Friedman argues that government was the cause of the Great Depression. He criticizes Friedman on many grounds but never discusses Friedman’s argument on the central topic of his (Stiglitz’s) book and article, on which Friedman has written so profoundly.
Browsing through the index to his book, neither the word liberty or freedom is ever mentioned. The lack of any discussion of the dilemma between liberty and equality is a major shortcoming of any discussion of equality of outcome, and it is thus a major shortcoming in Stiglitz as well.
By ignoring the incisive writings of Dahrendorf, Nozick, Hayek, Friedman, and Tocqueville, on the relationship between freedom and egalitarianism, Stiglitz provides an astonishingly shallow analysis.
In addition to the main problem in Stiglitz’s analysis, the complete absence of any discussion of the effects of egalitarianism on liberty, there are three other aspects of his analysis that we will briefly note.
In The Price of Inequality, he refers to “the alleged inequality- inefficiency trade-off, ” and he says that it “may not exist.” This trade-off shows, if true, that inequality is conducive to greater output and greater productivity than is equality. Though here he seems to think that the trade-off does not exist, in his textbook, Economics, he refers to an “incentive – equality trade-off, ” and he draws a graph with equality on the vertical axis and output on the horizontal axis showing that as equality increases output decreases. He says, “One of the basic questions facing members of society in their choice of tax rates and welfare systems is, how much would incentives be diminished by an increase in tax rates to finance a better welfare system and thus reduce inequality? What would be the results of those reduced incentives?”
No wonder there is an “alleged inequality-inefficiency trade-off.” Professor Stiglitz has been teaching it to generations of economics students.
Again, in The Price of Inequality, Stiglitz indicates that unions are essential for increasing wages in general and lessening inequality. But this is not what he is teaching economic students in his textbook. In Economics, he shows that as unions raise the wages of some workers “firms will employ fewer workers.” Even union employees that benefit in the short run could lose in the long run as employers do not replace the expiring capital and “jobs decrease.” Also, the unions gain pay increases for some workers by “the reduced employment of workers in the unionized sector” increasing “the supply of labor in the nonunionized sector, driving down wages there.” And finally, “the higher wages [of unionized workers] may well be passed on to consumers in the form of higher prices.”
Higher prices, increased unemployment in the union sector, and lower wages in the nonunionized sector do not seem likely to lower inequality, and they most certainly will not improve living conditions. There is a significant discrepancy between what Stiglitz teaches economic students and what he teaches the general public.
Finally, and again wandering rather far afield from his topic, Stiglitz is upset that industries such as the airlines have been deregulated. It appears that he would like to reregulate these industries. And he believes that further government regulations are in the general interest.
However, perhaps we should proceed cautiously. Additional regulations could prove onerous to producers, and this might concern Stiglitz. For example, the government might force authors to recall their defective products from the market. As the adage goes, be careful what you wish for, you just may get it.
“I have a PhD from Columbia University. I am a Professor of Economics at the County College of Morris in New Jersey. I have written many articles on individual freedom in regard to speech, equality, and the marketplace. I am the author of A Philosophy Of Individual Freedom: The Political Thought of F. A. Hayek published by Greenwood Press.” – C.M. Hoy