On the Pre-history of neoliberal, radical anti-corporate power: Oakeshott on Simons, but also Foucault, ORDOs, and Sam Bagg

In 1949, Oakeshott ‘reviewed’ Henry C. Simons’ Economic Policy for a Free Society (hereafter Economic Policy) in Cambridge Review as “the Political Economy of Freedom.” I have been unable to find a copy of it (but there is a later reprint here for as long as that lasts); what follows is based on the expanded Liberty Fund edition of Rationalism in Politics and Other essay. My regular readers probably know who Simons (1899-1946) is (recall these posts, for example, here; here.) Even to use ‘Chicago economics’ is a bit misleading, however, because in lots of ways his credo is nothing like the caricatures of Chicago that later circulated.

Now Oakeshott’s essay is not a standard review. It doesn’t go through the papers of Economic Policy one by one or highlight just a few. It also doesn’t really offer a critical evaluation of Simons’ credo. Rather, it is a kind of immanent re-telling for an English “general reader” (384) of what matters in Simons’ position (as mediated by Oakeshott). If you read the essay as a free-standing work (even if you are very familiar with both Simons and Oakeshott) it is, thus, incredibly difficult to tell where Simons ends and Oakeshott starts (and vice versa).

Oakeshott grants at once that Simons is neither “a brilliant nor a popular writer.” Oakeshott stakes his claim on Simons’ behalf because he (that is, Simons) “offers not only a lucid, if fragmentary, account of his own [policy] preferences, but also a profound insight into the compatibility or incompatibility of different economic expedients with different forms of social integration.” (385) By ‘form of social integration’ Oakeshott here means “type of society” (that are captured by short-hands like “collectivism” and “free-enterprise” [Simons and Oakeshott use “libertarian”] or “syndicalist.”)

That is to say, Oakeshott admires Simons for making visible relatively large-scale social trade-offs toward which particular policy practices contribute. (An idea worth returning to.) As one reads Oakeshott’s essay, one cannot help but feel that another reason for Oakeshott’s attraction to Simons is that he is a useful tool to help debunk some of then more common and popular claims of the “collectivist” and “syndicalist” and also the ways in which they converge with each other (when they combine against libertarianism), but also are at tension with each other.

Okay, so much for set up. There is a passage I want to quote (again in it Oakeshott is kind of immanently conveying Simons’ significance). I’ll explain why after I have quoted it:

The present condition of our society is exceedingly complex; but, from the point of view of the libertarian, three main elements may be distinguished, There is, first, a widespread and deplorable ignorance of the nature of the libertarian tradition itself, a confusion of mind in respect of the kind of society we have inherited and the nature of its strength and weakness. With eyes focused upon distant horizons and minds clouded with foreign clap-trap, the impatient and sophisticated generation now in the saddle has dissolved its partnership with its past and is careful of everything except its liberty. Secondly, owing to the negligence of past generations, there is an accumulated mass of maladjustment, of undispersed concentrations of power, which the libertarian will wish to correct because it threatens liberty, and which others also may wish to correct for less cogent reasons. Thirdly, there is the contemporary mess, sprung from the attempts of men ignorant of the nature of their society to correct its maladjustments by means of expedients which, because they are not inspired by a love of liberty, are a threat to freedom both in failure and in success.—pp. 397-398.

Again, the ‘libertarian’ is what we would call a kind of liberal (in the sense in which Adam Smith, J.S. Mill, Milton Friedman, and Rawls are all liberals). Second, “foreign clap-trap” is unmistakably Oakeshott and not Simons. (Oakeshott loves “claptrap;” “high falutin” etc.) Simons is also less likely to make claims about partnerships with the past, and even the language of ‘maladjustment’ does not strike me as Simons’ while it does show up elsewhere in Oakeshott.

However, there is a core idea that is really in Simons and which he shares, I think, with the first generation of Ordoliberalism — and it is precisely the idea that Foucault clearly found attractive in early neoliberalism — that “undispersed concentrations of power” is dangerous to freedom; that it needs to be diagnosed and analyzed, and combatted. When I am not writing qua historian, but qua theorist I will cite Sam Bagg’s work (in which themes on dispersion of power, and concentrated power figures largely) to convey the significance of this underlying idea.

Oakeshott here, thus, discerns what I take to be the root of the first generation of neoliberals, that is, those who had been galvanized by Lippmann’s The Good Society. In Simons the existence of undispersed or concentrated power is not merely or exclusively remedied by the market (for it can also exist in the market). A key plank of Simons’ credo that Oakeshott overlooks (presumably because he doesn’t think it applicable to Great Britain) is federalism (again this united him with the ORDOs and Lippmann), which is understood here not as a form of political hierarchy, but as a mechanism to disperse and deflect political power by not only creating multiple levels and units of power and legitimacy and different only partially overlapping constituencies, but also to create mechanisms that their elections are dispersed in time and that the structure itself facilitates both competition and collaboration among and between the units.

That is to say, Simons and the ORDOs are not dogmatic about the site of concentrations of power. Monopoly is a problem in politics, economics, and society. (Oakeshott’s wider essays do note that the monopoly on violence and effective authority for law may be presupposed here.) How to remedy or (when unavoidable) to mitigate concentrated power is ad hoc. This requires understanding of the (legal, social, political, economic, etc.) circumstances that generate it. So, for example, after briefly criticizing union powers, Oakeshott writes:

There is simply no excuse,' says Simons, 'except with a narrow and specialized class of enterprise, for allowing corporations to hold stock in other corporations - and no reasonable excuse (the utilities apart) for hundred-million-dollar corporations, no matter what form their property may take. Even if the much advertised economies of gigantic financial combinations were real, sound policy would wisely sacrifice these economies to preservation of more economic freedom and equality.' The corporation is a socially useful device for organising ownership and control in operating companies of size sufficient to obtain the real economies of large-scale production under unified management; but the corporation law which has allowed this device to work for the impediment of freedom is long overdue for reform.—pp. 404-405

Even if we make due allowance for inflation, the underlying point would count as quite radical (and, in an age of some massive corporate entities, highly salient) today: this is an argument against giant corporations and the system of property rights, patents, and copy-rights that support them; and an implied argument for a rather robust anti-trust policy to prevent dangerous merges and acquisitions. Simons is, in fact, not alone in this stance. We find in one of Foucault's other favorites of the age, Röpke (who I tend to think of as a rather conservative liberal in the 1940s before he became a reactionary), also a decided aversion against large corporations.

I am unsure if Oakeshott ever returned to this theme of corporate power. There is a much larger story to be told (see for a start this piece by Biebricher) about the eventual divergences within the evolution of neoliberalism, and how this potential vision of anti-trust and restrictions on corporate power was undermined within Chicago economics. But that’s for another time.