June 3, 2019

Commercial Republicanism: A New Center-Right Governing Philosophy

The 2016 elections transformed the Republican Party—and not for the better. A party that had been deeply committed since Goldwater and Reagan to the open society, limited government, and global leadership to promote liberal-democratic values was now the party of xenophobia, trade protectionism, crony capitalism, and isolationism. Donald Trump’s corruption of the Republican Party—and the republic itself—can only be cured through repeated, humiliating electoral defeats. I hope these are coming, and coming soon. In the meantime, though, those of us on the center-right need to begin thinking about how to rebuild the ideological foundations of the party. As Brink Lindsey has suggested, republicanism is an appropriate and promising candidate philosophy. But what kind of republicanism?

I would recommend the long tradition of commercial republicanism, which has its roots in the political writings of Johan and Pieter de la Court and reaches its fullest form in those of Kant, Alexander Hamilton, and especially Adam Smith. These great thinkers saw commercial society in general and competitive markets in particular as means for constraining arbitrary power, ones that depended more on good institutional design than a virtuous citizenry.

The republican tradition more broadly has focused on limiting domination of some citizens by others—be they private or public agents—through various political tools, including participatory ones (e.g., democratic contestation via elections, protests, etc.) and constitutional ones (e.g., the checks and balances associated with the separation of powers, bicameralism, federalism, and international legalism). This approach to limiting the exercise of arbitrary power can be traced through the Florentine and Atlantic strands of classical republicanism, including thinkers such as Machiavelli, Milton, Harrington, Sidney, Blackstone, and several of the American Founders. Contemporary republicans like Philip Pettit and Quentin Skinner have emphasized that what ties all of these thinkers together is a commitment to freedom as non-domination, i.e., immunity from arbitrary power, which can be distinguished from the weaker, liberal commitment to freedom as mere non-interference. A slave, for example, may not be interfered with by a benevolent master, but he is still vulnerable to such interference and is therefore unfree in the republican sense.

Republicanism so understood is a rich and varied tradition.  As is also the case with liberalism, one of the principal cleavages within the republican tradition concerns the extent to which markets and commercial freedom either complement or conflict with political liberty. Unlike classical republicans such as Rousseau, who regarded the “hustle and bustle of commerce” as a prelude to slavery, Adam Smith considered competitive markets to be a source of liberation from feudal dependence: the modern “tradesman or artificer,” he noticed, “derives his subsistence from the employment, not of one, but of a hundred or a thousand different customers. Though in some measure obliged to them all, therefore, he is not absolutely dependent upon any one of them.” Whereas Rousseau deemed the market order to be a deadly threat to republican values, Smith and other commercial republicans regarded it as an essential tool for their realization, one that required not only state support in the form of stable property rules, the enforcement of contracts, and the provision of public goods but also state refusal to micromanage the economy for the benefit of privileged rent-seeking insiders.

In my recent book Exit Left: Markets and Mobility in Republican Thought, I have aimed to revive and revise this commercial-republican tradition by offering a new political model, one that checks arbitrary power and protects the most vulnerable through the use of market mechanisms. It focuses on resourcing exit from dominating relationships and encouraging competition across the spheres of family, market, and state by facilitating different kinds of competitive markets in each: dating and spousal markets in the domestic sphere, labor and product markets in the economic sphere, and residential markets in the political sphere.

What links these domain-specific markets together is a single, powerful idea: namely, that the effective ability to pick and choose among a variety of potential partner-providers—to exit relationships and re-enter the marketplace, if and when those relationships prove unsatisfactory—is the best way to protect participants from arbitrary power. Extensive, empowered choice in the service of non-domination is the strategy at the heart of my model of republicanism. Commercial republicanism harnesses pro-market economics to the distinctively political goal of freedom as non-domination, i.e., immunity from arbitrary power.

To see this model at work, consider labor markets. Employment relationships are possible sites of domination, with (potentially) abusive owners and their managers exercising arbitrary power over workers. Certainly one protection workers have from such abuse is a formal right of exit (e.g., employment at will). Such a right can sometimes disadvantage workers, though, by allowing employers to (threaten to) fire especially vulnerable employees. Consequently, a more substantive right of exit needs to be reached via the two routes mentioned above.

First, we should encourage competition in labor markets by using antitrust law to break up labor monopsonies and oligopsonies. Recent revelations that Google, Apple, Intel, and Adobe colluded in a scheme not to solicit one another’s employees are a case in point; the resulting class-action suit led to an antitrust settlement of hundreds of millions of dollars for the exploited engineers.

Second, we must resource exit from abusive and exploitative employment relationships with travel and relocation vouchers, basic-income schemes, and even “capitalist” demogrants, i.e., seed money to aid accumulation of physical, financial, and human capital, whether in the form of small-business awards, start-up cash for playing the stock market or buying an annuity to subsidize a low-paying but rewarding career (e.g., topiary gardening), or educational vouchers. By giving workers a way to exit labor markets and even become capitalists themselves, we improve their bargaining position within these markets and thereby reduce opportunities for domination. Labor markets are free in a republican sense only when they have been purged of arbitrary power.

Owners and managers, however, are not the only potential sources of domination in labor markets. For example, “closed-shop” unionism and related “for-cause” dismissal clauses in labor contracts create market power for workers, making it far harder for employers to hire and replace workers at competitive wages and discouraging hiring. A move to right-to-work laws and universal at-will employment would reduce these labor-market frictions. To be sure, a sharp attack on union privilege without the policies that I outlined above to limit employer collusion and enhance labor mobility may just make workers more vulnerable to the market power of capitalists. We must always bear in mind that deregulation and liberalization can be spurred as much by rent-seeking behavior as regulation and protection can. This fact is not an argument for maintaining anti-competitive practices but rather a reminder that as we approach these tasks we ought to keep a wary eye on what Jeremy Bentham referred to as “sinister interests.”

Also, although private-sector union power has waned markedly since World War II, it has been replaced by an equally anti-competitive proliferation of occupational licensing rules: in the 1950s, a mere 5% of workers required state licenses, but now 25% do; by cartelizing professions ranging from hairdressing and cosmetology to horse massaging and bartending, licensing has made possible the exclusion of competitors, the exploitation of consumers, and wage rates 18% higher ceteris paribus than those in the unlicensed professions.

One example of the kind of exploitation and domination that licensing rules enable is the relationship between dentists and dental hygienists: state licensing regimes that require dental hygienists to be employed and supervised by dentists just lead to higher earnings for dentists and lower earnings (and employment) for hygienists compared to markets where hygienists can work independently. Shifting from licensing to less exclusionary job screening (e.g., state certification) would retain most of the health and safety benefits of licensing without undermining labor-market competition.

Finally, public-sector unions retain many of their privileges, facilitating the abuse of taxpayers and public-service consumers. Consider the case of public, non-tertiary education. Here, a vast number of individual school districts compete for an educated and relatively mobile teacher population; hence, the employer side is reasonably competitive. The employee side, on the other hand, has oligopolistic characteristics: teachers’ unions are organized at the local, state, and even national levels (under the umbrellas of both the National Education Association and the American Federation of Teachers) and coordinate their activities across school districts and states. If there is market power here, it is mostly on the educator side—an advantage made possible in large part by collective-bargaining rights for public employees.

The last several paragraphs might strike some readers as schizophrenic: in our current political climate, after all, one must be on the side of either employees or employers, as they are mutually exclusive political constituencies. Commercial republicanism, however, aims to protect the liberty of both employees and employers by leveling the playing fields of labor markets, whether they are tilted towards labor or capital in any given context. In its skepticism of unions and certain labor-market regulations, it rejects leftist dogmas; in its support for antitrust law and mobility-enhancing state redistribution, it rejects libertarian ones.

A celebratory attitude toward markets does not imply a commitment to laissez-faire policies. Market freedom demands effective competition, and only the state can secure many of its regulatory and institutional preconditions. In fact, my commercial republicanism resembles a modified version of a common European social model, viz. the Nordic model, which combines flexible labor markets (including ease of hiring and firing), free trade, and bracing competition with high levels of social support in the form of generous welfare benefits and job retraining; the Danish variant of this model is sometimes called “flexicurity.”

One problem with this model, however, is that it tolerates both strong unions and employers’ associations, then depends upon their mutual restraint—grace in the exercise of their economic power—to preserve flexible labor markets. As I have argued, this tolerance is inconsistent with republicanism, which demands an aggressive, Anglo-Saxon approach to competition policy across all markets, including labor markets; republican economics rejects the halfway house of “reciprocal power” in favor of purging power from economic relations. The resulting hybrid, which one might call the “Anglo-Nordic” model, is key to realizing freedom as non-domination in economic exchange.

Rebuilding a center-right political party requires a repudiation of Trump’s ethno-nationalist populism of walls and “purity,” but it also means rethinking some of the small-government tenets of an earlier period. Rising economic inequality both here and abroad has fueled the very populist movements of the right that threaten the functioning and even survival of open, tolerant, and plural societies. A successful Republican Party must confront this inequality for reasons both moral and prudential, and commercial republicanism points the way forward.

While sensitive to the threat of rent-seeking regulatory capture and thus skeptical of expansive and expensive state bureaucracies, this republican model can level the playing fields of economic and political competition and equip all citizens with the resources they need to avoid domination. It would mark a return to Abraham Lincoln’s original Republican philosophy of free labor and social mobility, but under dramatically different socio-economic conditions.

The frontier has closed, and economic independence for the American worker therefore requires a different source of stakes, ones that will have to be provided by a pro-market but redistributionist state. Some Never-Trump Republicans may see this as simply a different kind of betrayal of the legacies of Goldwater and Reagan, but they would do well to recall the words of Lincoln in his 1862 Message to Congress:

The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew and act anew. We must disenthrall ourselves, and then we shall save our country.

Robert S. Taylor is Professor of Political Science at the University of California, Davis. He is the author of Reconstructing Rawls: The Kantian Foundations of Justice as Fairness (Penn State UP, 2011) and Exit Left: Markets and Mobility in Republican Thought (Oxford UP, 2017). Copies of his various writings can be found at his PhilPeople page.