On Hobhouse (with some mention of Adam Smith, Ingrid Robeyns, Pareto and Rawls)

These principles may appear very abstract, remote from practical life, and valueless for concrete teaching. But this remoteness is of the nature of first principles when taken without the connecting links that bind them to the details of experience. To find some of these links let us take up again our old Liberal principles, and see how they look in the light of the organic, or, as we may now call it, the harmonic conception. We shall readily see, to begin with, that the old idea of equality has its place. For the common good includes every individual. It is founded on personality, and postulates free scope for the development of personality in each member of the community. This is the foundation not only of equal rights before the law, but also of what is called equality of opportunity. It does not] necessarily imply actual equality of treatment for all persons any more than it implies original equality of powers. It does, I think, imply that whatever inequality of actual treatment, of income, rank, office, consideration, there be in a good social system, it would rest, not on the interest of the favoured individual as such, but on the common good. If the existence of millionaires on the one hand and of paupers on the other is just, it must be because such contrasts are the result of an economic system which upon the whole works out for the common good, the good of the pauper being included therein as well as the good of the millionaire; that is to say, that when we have well weighed the good and the evil of all parties concerned we can find no alternative open to us which could do better for the good of all. I am not for the moment either attacking or defending any economic system. I point out only that this is the position which according to the organic or harmonic view of society must be made good by any rational defence of grave inequality in the distribution of wealth. In relation to equality, indeed, it appears, oddly enough, that the harmonic principle can adopt wholesale, and even expand, one of the "Rights of Man" as formulated in 1789���"Social distinctions can only be founded upon common utility." If it is really just that A should be superior to B in wealth or power or position, it is only because when the good of all concerned is considered, among whom B is one, it turns out that there is a net gain in the arrangement as compared with any alternative that we can devise.--L.T. Hobhouse (1911) Liberalism, Chapter VI ("The Heart of Liberalism")

The other day, I remarked that while he goes unmentioned by them, Hobhouse anticipates (mediated by Herkner) Ordoliberal ideas in some key respects known as 'social market economy.' So, it is very tempting to understand Hobhouse as a synthesizing transitional figure between English radicalism and twentieth century social and ordoliberalism. This is especially so because (inspired by T.H. Green) he draws on an organic metaphysics (see the quote above) that many tried to discard through the twentieth century. And because my own interest is, in fact, motivated by his historical role, I thought it would be neat to pause and look at some of his distinctive philosophical moves (since he tends to be neglected in contemporary political philosophy except by Gauss and his students and those interested in the history of social liberalism).

That "whatever inequality of actual treatment, of income, rank, office, consideration, there be in a good social system, it would rest, not on the interest of the favoured individual as such, but on the common good" is a culminating claim of the social theory of the Enlightenment. It is, as he notes, explicitl articulated in the first Article of The Declaration of the Rights of Man and of the Citizen (D��claration des droits de l'homme et du citoyen) of 1789. But Hobhouse's operationalization or precification of the principle breaths the air of then modern social science.

For, on Hobhouse's views considerable economic inequalities are only justified if they meet two social conditions: first, they are conducive to the public or common good. And by this he means not just a summation of individual welfare (a view he associates with the Benthamites), but qualities of collective life. As he puts it, in a passage just before the one quoted at the top of this post, while appealing to a Smithian "impartial spectator" and Green's philosophy, "the common good to which each man's rights are subordinate is a good in which each man has a share." I should note by the way, that while this all seems to be gendered quite male, Hobhouse is a feminist (although the details of his feminism are worth exploring some other time). The common good is, thus, not just the provision of collective services, but also features that are constitutive of common life (such as law, language, the arts and sciences, etc.) 

What this notion of a 'share' is supposed to reveal is that there is no fundamental trade-off between individual rights and the common good. This is not a bug, but a feature of the organic or harmonic view of Hobhouse. Again, for many, this is a central feature of a kind of Stoic harmony view that is often attributed to eighteenth century social theory (not me, by the way) in which the invisible hand represents a providential harmony of ends. Hobhouse admits that, in practice, this may seem unrealistic, but the harmonic view is a kind of normative goal not descriptive reality. Even so, this is not a liberalism that expects fundamental value conflict or irreconcilable pluralism.

As an aside, when Hobhouse is confronted by competing claims ground in contradictory value commitments or needs, he does not offer a technocratic conflict resolution mechanism at all or formula's by which these competing interests can be harmonized. He recognizes that many conflicts have different ways of being pacified or resolved. But what this requires is a kind of good will and localized practical judgment familiar from Smith's The Theory of Moral Sentiments: "an impartial observer will not consider me alone. He will equally weigh the opposed claims of others. He will take us in relation to one another, that is to say, as individuals involved in a social relationship."

Second, the state of affairs instantiated by the inequality under discussion must have two characteristics: first, it must be overall better than possible alternatives under some metric of the common good. Admittedly, it is not obvious what this measure might be for Hobhouse. Nor is it obvious how we should think about the nature of the possibilities that can be devised by us. But the overall thrust of Hobhouse's philosophy makes clear that these characteristic are not meant to justify the status quo; we are on his view often quite capable of conceiving alternatives that allow us to criticize the status quo.  

In fact, an important strain of his general argument for all kinds of social programs and state intervention is that great inequalities of wealth undermine the bargaining power of economic actors such that many economic contracts do not reflect the marginal contributions but rather the arrangements of social power. He actually thinks this undermines economic efficiency. In fact, he is a key figure in the part of the liberal tradition that worries about the distorting effects of society to the marketplace.+ And so not unlike Adam Smith he favors a high wages strategy:

the price which naked labour without property can command in bargaining with employers who possess property is no measure at all of the addition which such labour can actually make to wealth. The bargain is unequal, and low remuneration is itself a cause of low efficiency which in turn tends to react unfavourably on remuneration. Conversely, a general improvement in the conditions of life reacts favourably on the productivity of labour. (Chapter VIII "Economic Liberalism")

In fact, Hobhouse is explicitly a limitarian (recall this post about Kramm & Robeyns; and this one about Spinoza) about income: we may take it that the principle of the super-tax is based on the conception that when we come to an income of some ��5,000 a year we approach the limit of the industrial value of the individual.[12] We are not likely to discourage any service of genuine social value by a rapidly increasing surtax on incomes above that amount. It is more likely that we shall quench the anti-social ardour for unmeasured wealth, for social power, and the vanity of display." And the accompanying footnote reads:

"It is true that so long as it remains possible for a certain order of ability to earn ��50,000 a year, the community will not obtain its services for ��5,000. But if things should be so altered by taxation and economic reorganization that ��5,000 became in practice the highest limit attainable, and remained attainable even for the ablest only by effort, there is no reason to doubt that that effort would be forthcoming. It is not the absolute amount of remuneration, but the increment of remuneration in proportion to the output of industrial or commercial capacity, which serves as the needed stimulus to energy.

Obviously, it is worth asking if empirically his assumptions are sound. But my interest here is not to defend his limitarianism, but to note that this limitarianism suggests something about the second condition that considerable economic inequalities must meet before they are  justified. And this is a kind of proto-difference principle: the net overall gain to the common good that is to be pursued from our unequal baseline may not hurt those (like B) who are in the weakest groups today (nor may they violate anyone's rights).

I don't mean to be suggesting that the two conditions instantiate a Rawlsian decision procedure or some kind of alternative to Paretian principles. Hobhouse is not trying to compete with economists' normative social choice theories. And I recognize that this this will be seen as a failure by many. 

Rather, what Hobhouse two conditions generate is the idea that almost no status quo we may find ourselves in is justified, and so it animates a reformist social spirit in which to "maintain the essence of [liberalism's] old ideas it must be through a process of adaptation and growth." And making this spirit of adaptation -- more  than any particular policy -- central to his understanding of liberalism is, I think, Hobhouse's seminal contribution to liberalism's self-understanding.