Takings, Liability, and Externalities:
The Appropriate Balance in Classical Liberalism
Jarrett L. Hale
Graduate, Belmont University, 1999
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Contemporary Liberalism contravenes its foundations with the misunderstanding and misapplication of public goods theory. In a strict liberal framework, the foundational principle of liberty must greatly confine the role of government, protecting individual rights and narrowly defining public goods. In this paper, I will demonstrate that one may develop an effective balance which provides public needs while still protecting private rights.
Game theory illustrations will be used throughout this essay to exemplify the many aspects of public goods theory. With each, I will seek solutions consistent with the protection of individual liberty balanced against the need for government, utilizing strict liability and just compensation as legal strategies. I will also demonstrate that this approach is applicable to both economic issues and questions of civil liberty.Introduction
On the surface, there seems to be a untenable contradiction between the foundational principle of individual rights and the necessity of government empowerment in liberalism. While private and autonomous liberty and collective authority appear to be diametrically opposed, they are both inherent and indispensable within the liberal system. The challenge for liberal theory, then, is to find the appropriate balance in which both of these characteristics can function properly within the model, without compromising one another. Unfortunately, in practice, modern liberalism has contravened its earlier classical liberal foundations by gradually empowering the state at the expense of individual liberty. Consequently, this expansion of government power threatens core values within the liberal system.
On the other extreme, however, unchecked liberty can soon become license, creating a society void of the authority and order essential in sustaining this same liberty. The ultimate effectiveness of the liberal model relies on the appropriate balance between individual liberty and governmental authority, using one as a constant check against the potential dysfunctional extremes of the other. Individual liberty ensures that government will remain within the prescribed boundaries of the system, while government enforces the principles of the model to ensure license is not the result of liberty. The two essentially work together to create a political construct which provides public goods while protecting private rights.
The production of public goods in a system which protects private rights is accomplished through a delicate structure of liberal principles. In this essay, I argue that such a balance is tenable in both theory and practice. The liberal model is adequately equipped with legal strategies with which to achieve this appropriate balance. However, should any of these important principle be forgotten, ignored, or misunderstood, the liberal model begins to metamorphosize into a completely separate political framework. The purpose of this paper is to develop and examine these strategies so as to demonstrate the proper balance between public goods production and individual liberty.
The essay begins with a more thorough analysis of the liberal model. A firm understanding of the essential characteristics must be grasped, exploring both the origins and the intentions of the model. The examination of the model will provide the boundaries within which the following arguments must remain. The relationship between the individual and the state, as defined by the liberal contract, will be explained in detail, carefully defining the rights and responsibilities of each. The examination of the model will be followed with an examination of property rights, which will serve as a springboard for the public goods dilemma. Both problems and solutions within the public goods dilemma will be addressed, utilizing such principles as strict liability, risk assumption, unacceptable risk, assurance contracts, and privatization. The discussion of these principles will be followed by an examination of the eminent domain power, defining its function in a system protecting the right of property. Finally, all of these principles will be drawn together and applied to situations involving civil rights, attempting to draw correlation between these rights and the right of property.The Liberal Model
The liberal model from which I will be presenting my arguments is founded upon two key principles: individual liberty and consent. Both individual liberty and the consent to be governed must be present in a liberal model. Both of these defining qualifications can theoretically exist outside one another, depending upon which model one chooses to employ, except in one instance which will be described below. The fundamental characteristic of a liberal framework, however, is that both of these qualifications exist to complement one another.
Individual liberties could certainly exist without consent in a purely anarchistic model. Pure anarchy provides unlimited individual liberty without the constraints of consenting to be governed by any external authority. While liberty is at a maximum, however, the absence of constraint can lead to the exercising of liberty to the point of threatening others. While the liberty to impose self - restraint to certain principles may certainly be achieved, it is not required under the anarchistic model.
Consent can not exist without the pre - existing requirement of liberty. Consent denotes a contractual framework which, at the very least, requires the liberty to freely enter a contract. The contract can consist, however, of principles which deny the previously held individual liberties in the name of public order. For example, ten people who live on an island may all possess liberty to do as they please. These people, however, constantly fight with one another over the limited food on the island. The ten people can use their liberty to enter a contract which grants one of the individuals the power to make and enforce the rules they will all live by. These individuals have essentially contracted away a portion of their liberty for the sake of survival, creating a situation in which consent exists in the absence of liberty.
The liberal model I seek to define encompasses both individual liberty and consent. These two principles serve to support one another in the prevention of the extinction of the other. Individual liberties, or rights, are not required to be defined as natural in the Lockeian sense, which is a difficult argument to defend and define, for much debate arises over the ontological and/or epistemological status of these rights. The liberal model, rather, does not protect rights due to an innate presence, but because these rights are the foundational principles of the initial social contract. Liberty is preeminent in the liberal social contract so that individualism may flourish, thereby providing society with diversity and progressive thought. The liberal model is designed in the belief that society can only function to its full potential when man is free.
The liberal model does not adhere to protection of individual liberty based solely upon the assumption of innate natural rights, but requires a framework which protects liberty based on the superior effectiveness and efficiency of this model to achieve the objectives of an organized societal structure. Public order and the preservation of the human race are the underlying principles of justification for any society, with the liberal model being no exception. The liberal model, however, seeks to preserve order through mutual respect and understanding of individual rights, rather than instituting powerful central authority structures which are inherent in many other political constructs.
Individual liberty without consent, as described above, is prone to the principle of "survival of the fittest", creating a society which is constantly in conflict and destroying itself if no agreed upon principles of preservation are reached. Under such a framework, the ten people on the aforementioned island are under no obligation to respect one another, leading to possible hostility and violence. Should these people contract away their liberty, however, the ruler chosen by the group can effectively and justifiably enforce rules which lead to survival of only the ruler or those he has chosen, for no arrangements were made in the contract which protect the rights of all. The liberal model, then, is a balanced mixture of the two principles, allowing the ten people on the island to contract a system which allows all to seek survival, while not at the expense of each other.
The core of the liberal model is individual liberty, for liberty must precede consent, and consent must be present in the model. Any government instituted within a liberal framework, then, is subject to examination on three fronts. First, the evolution of the government must be examined to determine if the power attained by the government was legitimately attained under a contractual framework which was freely entered. Second, the contract itself must come under scrutiny to determine whether or not the contract retains the preeminence of individual liberty. Third, the government must be effective in enforcing the conditions of the social contract, for a impotent government cannot serve in the capacity it was intended. If any of these three conditions are not met, then a truly liberal model is not created, and the benefits of a liberal model cannot be attained.
Two kinds of justification may be used when examining the legitimacy of a government. These two methods, teleological and emergent justification, utilize two very different techniques with which to assess governmental activity (Schmidtz, 1991). The teleological approach is a strictly pragmatic measurement which justifies governments based upon the achievement of specified goals. The emergent justification approach justifies governments based upon how they evolve into being, and the constraints against the institution in the process. While both of these approaches are important when evaluating the liberal framework, the emergent justification is primary because of the liberal emphasis on individual rights, for stated goals achieved at the expense of individual rights are still incompatible with the liberal model.
The pragmatic teleological approach examines government activity based upon the levels of success in achieving stated goals. For example, suppose the ten islanders fought continuously over the limited coconuts on the island. One night, under the cover of darkness, the biggest islander takes all the remaining coconuts and stores them in his hut. He then constructs a weapon with which to defend them and tells the other nine islanders that he will grant the coconuts based upon need as he sees fit, and any conduct he deems inappropriate will result in the loss of coconuts for all. Should the objective be to stop the fighting on the island, the means are teleologically justified. Emergent justification, however, cannot be attained, for the means by which the power was attained is seen as illegitimate in the liberal model. This is due to the loss of individual liberty on the part of the other nine islanders. The liberal model in this situation must seek attainment of the goal through a process of consent which maintains the protection of rights and liberty for all involved.
Emergent justification is the key principle for governmental authority within the liberal framework. The liberal model may surely possess a degree of teleological justification, for there is a goal of rights protection which will be achieved. The emergent principle is primary, however, for the emergent deals with the process which eventually leads to the liberal model. The teleological takes only into account pragmatic achievement of goals, but the emergent principle in the liberal model must take into account the costs incurred for this achievement. For example, the controller of the coconuts can easily teleologically justify the situation, while the islander who starves to death unable to seek the favor of the controller would likely disagree with how the goal was attained.
The emergent justification principle, then, essentially serves to ensure teleological justification among all involved parties as individuals making free choices. Should all the islanders agree to only eat one coconut a day, then the situation is emergently justified within the liberal model and teleologically justified by all of the individuals. Emphasis on the emergent approach, or the evolution of the system, allows for teleological justification among all parties. Governmental institutions in a liberal model, then, must be emergently justified by how they came about, as must the policies that are implemented. Individual liberty holds precedent over all other decisions within this framework.
Governmental institutions can only be erected through consent in a liberal model. This contractarian approach allows individuals to protect their liberty, while still benefiting from a structured society which can produce goods only a collective society can produce. While these goods are not always material, such as peace, they are relatively limited, as the public goods arguments will later reveal. The protection of liberty ensures the attainment of goods not produced by the collective whole, but desired by the individual.
The liberal model only permits entrance into social contracts which contain methods protecting individual liberty, one of which is the preservation of the nullification right. The liberal model is based upon a contract which must be adhered to by both parties, and should one party violate the agreements of the contract, the offended party has the right to nullify the contract and cease all obligations within. This right is retained by the individual as protection against the government he or she creates in contract. The contract will certainly protect individual liberty, and any violation of that liberty is grounds for the withdrawal of consent by the individual. This principle is unique to the liberal model, requiring the governed to adhere to the stipulations of the contract until violated, at which point the contract becomes illegitimate. This provision refrains the institution of government from ever becoming what it was not designed to be. The power of the government is derived from the contract, or the will of the individuals, which dissipates should government step beyond the contractual bounds. The social contract itself is never nullified, for the original contract contains no violation to individuals. Nullification occurs when actions are taken beyond the social contract, such as a decision to tax individuals for an unjust "good". This action would result in a nullification of the obligation to pay that tax, not a nullification of the original contract. The original social contract must never be nullified, for it is the foundation upon which the original claims of individual rights are legitimately made.
The emphasis on individual liberty, coupled with the nullification right of individuals, necessarily imposes severe limitations on governments created within a liberal model. The liberal model is designed to achieve such ends, for government which succeeds in misusing power deteriorates the liberty of individuals within the society. Several questions stem from this principle, however. First, what purpose can a government actually serve in a liberal model if such tight restrictions are placed on its operation? Secondly, is chaos not the result in a society which allows individuals to nullify contracts when they feel the other party has overstepped the agreements of the contract? The second question is directly related to the first, for if the first question is appropriately handled, the second should never become a major issue of contention.
The role of government in a liberal model is to protect the individual liberties of citizens in the society, enforce the contracts made between individuals, and provide actual public goods. The foremost responsibility of a government in a liberal model is the protection of individual liberty. The essential purpose of the social contract by those in the community is to avoid the dilemma mentioned previously, concerning the possibly disastrous results of no social guidelines. The government in this sense, then, is not an actual institution, but a set of principles agreed upon by those entering the contract that they will respect the individual liberties of one another. An institutional government, which is the physical manifestation of the contract, may or may not be constructed to oversee the implementation of these values. The institutional government, when implemented, serves as a collective actor of enforcement for the contract. The institution may only enforce what is explicitly defined within the contract, and it can only be called to action by and when an individual has been violated in a legitimate contract. Should one individual have liberty violated by another who has agreed to the contract, he or she may call upon the institutional government to address the issue with means stipulated in the contract. This maneuver is actually a plea to the many other members of the social contract for judgment, for the institutional government is only the extended will of the people involved in the contract. Other members of the contract, then, in a collective action, determine whether or not a true violation has occurred.
Public goods, which will be dealt with extensively in later portions of this paper, are the second role of government in a liberal model. Along with the benefits of rights protection, those in a liberal social contract seek the production of goods which are more efficiently produced by a collective effort than by individual means. As we will see later, these goods are narrowly defined, but certain goods are much more efficiently produced in a collective effort due to the benefits attached to these goods for all individuals.
Government is merely the enforcement of the collective contract. Power is granted by the people through a social contract, granting the government dominion over only what has been expressly granted it by the people. Contracts are entered due to the benefits they produce for those who enter, with the social contract being no exception. If the government remains within the bounds of the contract agreed upon by all members, all should be mutually benefiting and no need for nullification should arise. Nullification is the ultimate check against a government which seeks to step beyond the bounds of the contract, and nullification should not occur if the contract is respected. An important key to nullification, however, is a collective effort by individuals to counteract the government. Violation of the rights of one is indicative of a violation of all, creating the need for individuals to nullify governmental action collectively to protect individual liberty. Complex liberal models often possess several levels of government, ranging from local to federal, or county to state, etc. Nullification must follow a prescribed pattern within the liberal model, nullifying first the actions of the highest levels of government. Nullification of the highest level of government preserves the governing power of levels below that which is nullified, thereby retaining a governmental structure to maintain the social contract. Levels of government are nullified until the level of government adhering to the social contract is reached. Inappropriate actions are nullified in a collective effort of all individuals and institutions below the violating level. Nullification following the prescribed order is designed to re-establish equilibrium between liberty and governmental authority within the liberal framework without destroying all government institutions in the process.