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Published online by Cambridge University Press:  31 May 2011

N. Scott Arnold
Philosophy, University of Alabama at Birmingham


This paper answers the title question, “Yes,” on both counts. The first part of the paper argues that modern liberals are socialists, and the second part argues that they are also social democrats. The main idea behind the first argument is that the state has effectively taken control of the incidents of ownership through its taxation, spending, and regulatory policies. The main idea behind the second argument is that the institutions of social democracy are replicated by the institutions favored by modern American liberalism. Specifically, the takeover of the American healthcare system, Social Security, employers' mandatory contributions to unemployment insurance, and workers' compensation insurance replicate the institutions of social democracy.

Research Article
Copyright © Social Philosophy and Policy Foundation 2011

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1 Rawls, John, A Theory of Justice (Cambridge, MA: Belknap Press of Harvard University Press, 1971)Google Scholar; Rawls, John, Justice as Fairness: A Restatement, ed. Kelley, Erin (Cambridge, MA: Belknap Press of Harvard University Press, 2001)Google Scholar.

2 See, e.g., Dworkin, Ronald, “What is Equality? Part II: Equality of Resources,” Philosophy and Public Affairs 10, no. 4 (Fall 1981): 283345Google Scholar.

3 Ackerman, Bruce A., Social Justice in the Liberal State (New Haven, CT: Yale University Press, 1980)Google Scholar.

4 See Arnold, N. Scott, The Philosophy and Economics of Market Socialism (New York: Oxford University Press, 1994)Google Scholar, for a specification of one form of market socialism that is compatible with a market economy. One of the burdens of the present essay is to argue that modern liberalism is another form of social ownership of the means of production.

5 Grossman, Sanford J. and Hart, Oliver D., “The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration,” The Journal of Political Economy 94, no. 4 (August 1986): 691719CrossRefGoogle Scholar.

6 Honoré, A. M., “Ownership,” in Oxford Essays in Jurisprudence, ed. Guest, A. G. (Oxford: Oxford University Press, 1961), 107–40Google Scholar. The list to which this note is appended is adapted from Becker, Lawrence, Property Rights (London: Routledge and Kegan Paul, 1977), 19Google Scholar.

7 See Wagner, Richard E., To Promote the General Welfare (San Francisco: Pacific Research Institute for Public Policy, 1989), 7288Google Scholar, for an elaboration on this point.

8 The argument for this proposition is given in McCaffery, Edward J., “The Uneasy Case for Wealth Transfer Taxation,” Yale Law Journal 104 (1994): 283365CrossRefGoogle Scholar. See also McCaffery, , “The Political Liberal Case Against the Estate Tax,” Philosophy and Public Affairs 23 (Fall 1994): 281312CrossRefGoogle Scholar. All societies allow for inter vivos transfers of wealth (currently in the U.S., the limit on tax-free transfers is $10,000 per year), and indeed it would be hard to prevent such transfers. McCaffery's argument is buttressed by the fact that the main form of inheritance these days concerns human capital formation.

9 The benefits of tax shielding do not accrue entirely to consumers of medical care and education. Providers capture some of the benefits by raising prices. When tax shielding for certain categories of goods or services is instituted, the demand curve shifts to the right, since consumers are paying for these goods or services with cheaper dollars. The public choice analysis is that provider groups are the driving force behind all, or nearly all, forms of tax shielding.

10 Viscusi, W. Kip, Smoke-Filled Rooms: A Post-Mortem on the Tobacco Deal (Chicago: University of Chicago Press, 2002), 73, 171CrossRefGoogle Scholar.

11 Caplan, Arthur, Am I My Brother's Keeper? (Bloomington: Indiana University Press, 1997), 7Google Scholar.

12 Rawls, A Theory of Justice, 4.

13 Nozick, Robert, Anarchy, State, and Utopia (New York: Basic Books, 1974), 149Google Scholar.

14 Dworkin, “What Is Equality? Part II: Equality of Resources,” 285–90.

15 Ackerman, Social Justice in the Liberal State, 31–68.

16 The takings clause of the Fifth Amendment states: “nor shall private property be taken for public use without just compensation.” U.S. Constitution, amend. V. See also United States v. Causby, 328 U.S. 256 (1946)Google Scholar (military take offs and landings near a farm ruled a taking); and Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982)Google Scholar (granting an easement to install cable television boxes on the roofs of buildings ruled a taking). In Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992)Google Scholar, the Supreme Court held that depriving a property owner of virtually all economically beneficial uses of his land constituted a taking for which compensation was owed.

17 Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978)Google Scholar.

18 See Agins v. Tiburon, 447 U.S. 255 (1980)Google Scholar; Babbitt v. Sweet Home Chapter of Communities for a Great Oregon, 515 U.S. 687 (1995)Google Scholar; and Palazzolo v. Rhode Island, 533 U.S. 606 (2001)Google Scholar.

19 Thomas Nagel describes this as the impersonal standpoint. See Nagel, Thomas, Equality and Partiality (Oxford: Oxford University Press, 1991), 1020Google Scholar.

20 Hobhouse, L. T., Liberalism (1911; Oxford: Oxford University Press, 1964), 99Google Scholar.

21 Ibid., 98.

22 Grossman, Sanford J. and Hart, Oliver D., “The Costs and Benefits of Ownership,” The Journal of Political Economy 94, no. 4 (August 1986): 691719CrossRefGoogle Scholar.

23 Ibid., 692.

24 See “Wage and Price Controls,” The Columbia Encyclopedia, 6th ed. (2010). Scholar.

25 This is the theme of chapter 1 of Friedman, Milton's Capitalism and Freedom (Chicago: University of Chicago Press, 1962)Google Scholar.

26 For the EPA, see U.S.C. 42 U.S.C. sec. 7401(b) and sec. 7401(c). For the FWS, see 16 U.S.C. sec. 742a.

27 Bernstein, Eduard, Evolutionary Socialism: A Criticism and Affirmation, trans. Harvey, Edith C., introduction by Sidney Hook (New York: Schocken Books, 1964), xxivxxvGoogle Scholar. Bernstein actually did some statistical work on the question of the number of firms under capitalism at the end of the nineteenth century in Germany, as well as on the diffusion of ownership of capital. He found that, contrary to Marx's predictions, the number of firms had actually increased over time, and that the ownership of capital had become more diffuse. See ibid., 54–73.

28 This is suggested, though not explicitly stated, in a number of places in Bernstein's Evolutionary Socialism. See, e.g., p. 139. Perhaps Bernstein was not more explicit about this because of Marx's criticisms of the Gotha program, which objected to similar ideas offered by Ferdinand Lassalle. But this is speculative. See Marx, Karl, Critique of the Gotha Programme (Moscow: Progress Publishers, 1971)Google Scholar. See also Steger, Manfred, The Quest for Evolutionary Socialism (Cambridge: Cambridge University Press, 1997), 135CrossRefGoogle Scholar; Steger takes this belief of Bernstein's to be obvious and uncontroversial.

29 Bernstein, Evolutionary Socialism, xxvi.

30 See CIA World Factbook, for the figures given below.

33 This assumes that the political philosophers of modern liberalism are attempting to justify an idealized version of the modern welfare state. This is not true of John Rawls. Although in A Theory of Justice he said that the choice of an economic system was something about which he had nothing to say, toward the end of his life he changed his mind and said that only a “property-owning democracy” or a form of liberal socialism could characterize the economic system of a just society. A “property-owning democracy” is described in Meade, J. E.'s Efficiency, Equality, and the Ownership of Property (Cambridge, MA: Harvard University Press, 1965)Google Scholar. Unfortunately, Meade does not specify how property rights would be configured in the system he favors, nor does Rawls. This is an important omission. See Rawls, Justice as Fairness, 135–40.

34 This characterization of liberalism follows Gray, John, Liberalism, 2d ed. (Minneapolis: University of Minnesota Press, 1995), 4555Google Scholar.

35 See Rates quoted are as of 2003.

36 Figures cited are as of 2008. See “Taxation Trends in the European Union: Data from EU Member States and Norway,” 2009 edition (Luxembourg: Office for Official Publications of the European Communities, 2009), 81. Available online at Scholar.

37 Wilensky, Harold L., The Welfare State and Equality (Berkeley and Los Angeles: University of California Press, 1975)Google Scholar.

38 Hage, Jerald, Hanneman, Robert, and Gargan, Edward T., State Responsiveness and State Activism (London: Unwin and Hyman, 1989), 104Google Scholar.

39 His two most important books are Esping-Andersen, Gøsta, Politics Against Markets: The Social Democratic Road to Power (Princeton, NJ: Princeton University Press, 1985)Google Scholar, and Anderson, , The Three Worlds of Welfare Capitalism (Princeton, NJ: Princeton University Press, 1990)Google Scholar. The typology of welfare states that follows in the text is discussed extensively in The Three Worlds of Welfare Capitalism.

40 In this type of system, health care is financed by the government through tax payments. Most hospitals and clinics are owned by the government, and doctors are generally government employees.

41 Recent changes in compulsory social insurance programs are discussed in Bonoli, Giuliano, George, Vic, and Taylor-Gooby, Peter, European Welfare Futures: Towards a Theory of Retrenchment (Cambridge: Polity Press, 2000), 2949Google Scholar.

42 I have argued elsewhere that modern liberalism, as well as classical liberalism, should be conceived of as rules of thumb, heuristic devices, or even as expressions of attitudes about the proper role of government. See Arnold, N. Scott, Imposing Values (New York: Oxford University Press, 2009), 78CrossRefGoogle Scholar.

43 Esping-Andersen, Politics Against Markets, 148.

44 Esping-Andersen, The Three Worlds of Welfare Capitalism, 48, 49.

45 Bonoli, Giuliano, “New Social Risks and the Politics of Post-Industrial Social Policies,” in The Politics of Post-Industrial Welfare States: Adapting Post-War Social Policies to New Social Risks, ed. Armingeon, Klaus and Bonoli, Guiliano (London and New York: Taylor and Francis Routledge, 2006), 326Google Scholar.

46 Ibid., 6.