Getting Tough or Rolling Back the State? Why Neoliberals Disagreed on a Guaranteed Minimum Income

This article explores why neoliberals associated with the Mont Pelerin Society disagreed on the legitimacy of a guaranteed income in the 1960s and 1970s in the United States. Participants in this debate are categorized along a spectrum between “libertarians” like Milton Friedman and George Stigler, who favoured a minimum-income plan, and “paternalists” like Henry Hazlitt, who opposed one in any form. While these figures were united in their desire to roll back the welfare state, the two means they advocated to achieve this task were in stark contradiction in their assumptions. Divisions over a guaranteed income commonly reflected wider disagreements on economic methodology, consumer choice, citizenship, policing, and the moral implications of dependency. Previous analysts have tended to emphasize unity amongst neoliberals on the model of the “paternalist” paradigm. By recovering the origins of the libertarian paradigm, this article demonstrates instead that there was never an orthodox neoliberal approach to welfare reform. “What does neoliberal welfare reform do?” is shown to be a question requiring more complex answers than have been recognized in the literature.

and Loïc Wacquant, amongst others, have carefully reconstructed how the contraction of social-policy goals was combined with an expansion of the penal state since the 1970s. 9 In welfare policy, a blurring of boundaries occurred between provision and policing through heightened surveillance, drug testing, restrictions on consumer choice, integrated criminal databases and strict categorization of recipients at the state level. 10 Many neoliberals of the "paternalist" paradigm actively supported this emphasis on policing and the stigmatization of claimants. They employed the language of criminality to describe large sections of this population, overlapping with racialized narratives that emphasized fraud, cheating, "chiselling," and the assumption that freely available cash would be used for alcoholism, gambling, drug use, and other illegal activities.
Milton Friedman, the archetypal "libertarian" within this debate, instead saw one of the central advantages of a minimum income to be its eradication of these policing activities. 11 Friedman instead sought to remove government presence entirely from those on the economic margins, extending the libertarian justifications of choice to welfare recipients: consumer choice through cash payments, political choice through equal voting rights, and personal choice through the removal of restrictions on their activities. For Anderson, Hazlitt, Burns, and indeed Ronald Reagan, these privileges were to be more strictly reserved for those who maintained economic self-sufficiency, and thus deserved the full status of citizenship. "Choice" was the last thing those on welfare either needed or deserved, and a wholly different face of the state was to be employed in dealing with them. Hazlitt, for example, argued that recipients should be required to work by law; that redistribution should occur in kind to remove their opportunity to spend taxpayer money on frivolities and vices; that recipients should be disenfranchized until they had repaid their assistance; and that there should be a strict, enforced separation between the "deserving" and "undeserving" poor on normative behavioural principles.
Thus even amongst members of the MPS, disagreement over a guaranteed income was more than a disagreement over the policy incarnation of a shared ideology. It represented fundamental disagreements on the meanings and obligations of citizenship; on whether the libertarian principles of consumer choice, privacy, and political freedom were to be extended to economic dependents; and on whether the state should treat citizens differently to ensure behavioural compliance. The importance of this division is reinforced by the fact that guaranteed-income plans became the most prominent reform strategy by the late 1960s, inciting fierce disagreements across the political spectrum. 12 While Michael Harrington described a guaranteed income as "the most radical idea since the New Deal," Moynihan went further in arguing that a minimum floor would embody "one of the half-dozen or dozen most important pieces of social legislation in American history." 13 What debates over a guaranteed income reveal is a reformulated spectrum of neoliberal thinkers along ethical and political as well as economic lines.
Naturally, any grouping of theorists does not fully incorporate the idiosyncrasies of their thought as individuals. It is fruitful therefore to consider these paradigms of "paternalist" and "libertarian" as correlations along a continuum rather than impenetrable binary categories. A number of factors determined positions on a guaranteed income, including differences in methodological training, readings of classical liberalism and libertarianism, views on practicability, and whether redistribution in itself was desirable. The negative income tax (NIT) was unprecedented and often obscure in its implications. Some onlookers straightforwardly failed to comprehend the program, some changed their minds on the issue, and some were conflicted over its contradictions. The MPS member W. Allen Wallis, for example, equivocated in his debate with the NIT advocate James Tobin in 1967, "While I am sympathetic and favourably disposed toward it, I am not really convinced. I am disappointed that Tobin has not helped me to clarify my mind on the issue and come to a firmer position." 14 While favouring freedom of choice and the preferability of redistribution in cash, guaranteeing an income without work requirements often struck neoliberal thinkers as an unusual if not wholly unethical proposition. Given that both these paradigms were employed towards the ideal of shrinking the welfare state, some were content to overlook their different implications entirely to back whichever mechanism best achieved this task. As we shall see, even Henry Hazlitt, who became the fiercest opponent of Friedman's NIT by the 1960s, had briefly been warm to a comparable proposal in the 1930s before changing his mind. The tensions and ambiguities of libertarian thought thus existed within as well as between the minds of its philosophical advocates.
Though a guaranteed income had receded from the political agenda by the end of the Carter administration, the debates it aroused within the neoliberal network marked just one episode of a longer historical narrative. Whilst Friedman conceded in 1980 that the enactment of an NIT had become unrealistic by that time, he reminded his readers that "what is not politically feasible today may become politically feasible tomorrow." 15 In the past quarter-century, neoliberal support for a guaranteed income has been reignited. James Buchanan reiterated his support for a universal basic income in 2005 following previous references. 16 Charles Murray, who became an MPS member in the new millennium, similarly committed himself to a guaranteed income as the most beneficial realistic alternative to the welfare state. 17  neoliberalism in the US remain divided on a guaranteed income, while Sam Bowman, the former head of the Adam Smith Institute in the UK, has consistently supported Friedman's NIT. 18 The divorce of work from income during the COVID-19 pandemic, and its potential to evolve the so-called "neoliberal era," has only heightened the significance of this lineage. 19 The debate outlined here is thus representative of a wider arc in the intellectual history of neoliberalism, rather than the flashpoint of a single, historically contingent event.
Neoliberal Social Policy Social policy concerned the neoliberal network from its foundation. Much of what inaugurated "neoliberalism" as an innovation of the laissez-faire principles of the nineteenth century was the recognized need to consider reformed solutions to poverty, unemployment, and the mass disaffection with market capitalism that had arisen in the 1930s. Fascism, communist expansion, New Deal liberalism, and Keynesian social democracy were varying shades of collectivism that had resulted from these ills, and a spectrum of opinion existed within the MPS on how much concession should be granted to state mechanisms for redistribution.
As exemplary thinkers within this network, Milton Friedman and Friedrich Hayek did not argue that those earning higher incomes and wealth were necessarily morally deserving of their position. Nor did they argue that the poor were at fault for theirs. For Hayek, the market operated as a morally neutral information processor, allocating resources through the price mechanism by signaling relative scarcities. No single person, group, or government could map these scarcities as efficiently as the price mechanism, and the market was therefore defined by risk. 20 Even the most conscientious labourers, entrepreneurs, or producers could find themselves immiserated by unforeseen structural shifts, the shortage of a vital resource, or changes in the preferences of consumers. Hayek therefore conceded that the market's determination of rewards would yield "strokes of misfortune which those hit have not deserved." 21 By the 1970s, he lamented that "especially in the USA, popular writers like Samuel Smiles and Horatio Alger, and later the sociologist W. G. Sumner, have defended free enterprise on the ground that it regularly rewards the deserving." Such justifications could not be guaranteed, and thus "bode ill for the future of the market order." 22 The market was justified by its economic efficiency, its protection of individual freedom, and the more serious defects of its alternatives, rather than by its rewarding of the good. Friedman used a "lottery" as his analogy for distribution patterns 18 Guinevere in his 1962 work Capitalism and Freedom, accepting that unearned inequalities abounded as a result of birth, education, inherited capacities, and luck. "Most differences of status or position or wealth can be regarded as the product of chance at a far enough remove," Friedman argued, and "the goddess of chance, as of justice, is blind." 23 This indiscriminate neutrality of the market extended also to its satisfaction of consumer demands. As a British president of the MPS, Ralph Harris, argued, "the market will supply what consumers want, from prayer books and communion wine to pornography and hard liquor." 24 The correlation between material well-being and moral action was not assured. Neoliberals thus regularly conceded that market exchange, despite its vast preferability to other systems, could yield undesirable consequences.
On the question of short-run poverty and unemployment as examples of these side effects, neoliberals were united in opposing the policy solutions of full employment, minimum-wage laws, and collective bargaining, as these measures seized up the productive change driven by competitive markets. 25 A dynamic economy was instead one in which structural shifts happened regularly in response to changing technology, resource endowments, and consumer demands, provided inflation remained low and the state did not intervene in private agreements. The neoliberals theorized that minimum-wage laws increased unemployment by pricing submarginal workers out of the labour market, while full-employment drives caused rigidities that boosted uncompetitive economic practice. 26 The abandonment of these interventionist solutions obligated alternative methods for the alleviation of poverty to be explored.
The axiomatic assumption of the neoliberal network in this context was that free-market policies would eliminate poverty in a comprehensive and systematic manner in the long term. This approach rested on a reading of history that posited the market as the greatest liberator of human beings from material want. As Friedman argued, market capitalism "has freed the masses from backbreaking toil and has made available to them products and services that were formerly the monopoly of the upper classes." 27 A system built on the principles of private property, competitive markets, individualism, and the rule of law created abundance where it was permitted to grow. One of the most important principles in this regard was that the income one gained through the market could be used howsoever its earner desired.
The conundrum came in how to provide for those who were not self-sufficient. Michel Foucault argued that part of the neoliberal attraction to a guaranteed income was its promise to prevent dependents from exiting the "game" of 23 Friedman, Capitalism and Freedom, 165-6. competition and consumption. 28 For a number of neoliberals, therefore, some form of minimum provision by the state formed a necessary exception to the market's general rules of operation. Proposals of this kind were crafted in the earliest neoliberal texts by Henry Simons, Walter Lippmann, W. H. Hutt, Friedrich Hayek, George Stigler, and Lionel Robbins. 29 The most innovative, and subsequently most influential, however, was Milton Friedman's negative income tax. The division it inspired at the first meeting of the Mont Pelerin Society set the terms of debate in neoliberal circles for the following decades, reflected in one of its six founding aims as "the possibility of establishing minimum standards by means not inimical to initiative and the functioning of the free market." 30 Friedman's Proposal at Mont Pèlerin Friedman's NIT was inspired by his interest in tax fluctuations for earners of an irregular income in the 1930s. 31 Individuals earning a consistent wage over tax cycles were advantaged over those earning in consecutive periods of higher income and no earnings at all. The individual on a fluctuating income would pay high tax sums for their earning period, but would receive no rebate when they earned nothing, thus often owing higher tax dues overall than the consistent earner despite receiving the same pre-tax income. The NIT's origin in this sense was an attempt to combat a technical problem largely shorn of broader ideological claims.
Friedman repackaged this problem for welfare purposes in conversation with economists at the US Treasury during the early 1940s, where he helped to reform the federal fiscal system through the creation of a withholding tax. 32 Friedman had already spent time researching household consumer spending during the 1930s, and had formulated a calculation of minimum subsistence by 1939. 33 The consideration of these problems was broader than Friedman's own theorization, and he later argued that the British politician Juliet Rhys-Williams's "social-contract" version of a guaranteed income, outlined in 1943, was largely identical to his own in emphasizing work incentives and the fusion of tax and social policy. 34 He was similarly aware of proposals like Abba Lerner's "social dividend" as another variant of a guaranteed income during the war. Friedman presented a prototype of his NIT at the first meeting of the Mont Pelerin Society in 1947 as a system of "negative taxation," granting cash payments to all who fell below a "national minimum" income determined by the electorate. Work incentives would be maintained by recipients keeping a portion of their benefits in work, taxed at a specified rate until income surpassed an exemption point. There would be no means test apart from income, and no supervised work requirements. "If a man earned nothing, he would be given something by the state." 36 Friedman clarified that his proposal was consistent with liberal principles, as "even in a completely competitive order, we would still have the problem of poverty." 37 To overcome the market-crippling inefficiencies of price fixing, protectionism, social security, and collective bargaining, a system of negative taxation was the best alternative. While an NIT attacked poverty directly by giving cash to the very poorest, these programs were not fulfilling their purpose precisely because they did not do this. Friedman's ideal was that they would be replaced by his scheme, supplemented by charitable aid for special cases of hardship.
Friedman framed his proposal as an alternative to the Poor Law tradition, which implied case-by-case inspection of claimants to filter out the undeserving on nonfinancial criteria, as well as supervised work requirements. Not only was this system inefficient and invasive, but also it bore unnecessary costs of administration and was not fit for the circumstances of the modern world. 38 Friedman here set down the distinction that would emerge into the libertarian and paternalist paradigms of neoliberal debates for the following decades.
Friedman's "libertarian" approach was shared by the contingent associated with the University of Chicago at the conference, including George Stigler and Aaron Director. Though Friedman was its originator in the format presented, Stigler was the first to propose a negative tax in his critique of minimum wage laws in 1946. 39 Like Friedman, Stigler argued that relief should be granted on the "objective" grounds of declared income alone, and not on the subjective "merits" of particular cases. 40 At the MPS conference, Director contended, parallel to Friedman and Stigler, that "desperate poverty and excessive inequality of income" could not be left entirely to the market, and a system of "subsidy payments to those with low incomes" should be provided while "leaving a margin for incentive to work. A guaranteed minimum income along these lines will meet our humanitarian objectives far more effectively than the proliferation of ad hoc interventions on behalf of special groups." 41 The Chicago contingent here were largely operating on axioms set down by the economist Henry Simons, who had died the previous year. Friedman credited Simons as the intellectual source of "neo-liberalism" in the United States, with Stigler, Director, and Hayek paying similar tributes. 42 In contrast to more radical 36 "Mont Pèlerin Conference: Income and Taxation," 8 April 1947, MPS Papers, Hoover Archives, 5/13, 3. 37 Ibid., 3-4. 38 Ibid., 1-3. 39 Stigler, "The Economics of Minimum Wage Legislation," 365. 40 Ibid., 364. views at the MPS meeting, Simons had supported government measures to temper inequality within a market system. Acknowledging the need for careful consideration of work incentives, he nonetheless embraced a conception of "distributive justice" that was divorced from market earnings, favouring tax mechanisms to discrete government projects in combating income poverty. 43 Price fixing, subsidies, tariffs, licensing, or sector-specific supports distorted the price signals of the market and, like Hayek and Friedman, Simons therefore argued that any minimum countenanced should be universal. 44 Simons's death provided a powerful sense of purpose amongst the Chicago contingent, and Friedman's justifications for his guaranteed income were heavily influenced by the principles he set down.
Most of the reaction to Friedman's proposal at Mont Pèlerin was hostile, however, and objections came primarily from those operating on alternative assumptions to the Chicago group. Stanley Dennison and John Jewkes pointed out that Friedman's plan had no fixed principle to determine payment levels, and thus could be bid up into a dangerous level of expansion. 45 Administrative difficulties in accurately determining incomes were raised by Bertrand de Jouvenel and Karl Brandt, and the latter stressed that a universal minimum was a flawed solution for agricultural poverty, where even a basic guarantee would dissuade labourers from taking more productive work in industry. 46 Ludwig von Mises and William Rappard went further in rejecting Friedman's proposal as unethical. Rappard called it "anti-social" for its tendency to increase dependency. "Professor Friedman's scheme has the worst possible psychological effects," Rappard is reported to have contributed, in that "the good citizen, who pays his taxes, has to pay for the poor." 47 Mises, whom Simons had called "fanatically extreme" for his robust opposition to redistribution, was hostile to the implied separation between earnings and income, questioning why an industrially advanced nation should provide any minimum at all. 48 Unlike most MPS members, Mises had dismissed the possibility of a middle way between laissez-faire capitalism and centralized planning in his work. Not only against Friedman's NIT, Mises was opposed to government redistribution of any kind, reportedly condemning conferees at the meeting as "a bunch of socialists." 49 Friedrich Hayek, though more open to mechanisms for redistribution, criticized Friedman's plan on similar grounds. Hayek was particularly skeptical that provision should be made in cash and on the criteria of income alone, fearing that these features promoted a "freedom not to work." 50 Friedman agreed that payment levels 43 Henry Simons, Personal Income Taxation (Chicago, 1938), 1-40; Simons, Economic Policy for a Free Society (Chicago, 1948) 4, 7, 28, 65-8, 317 n. 44 Simons, Economic Policy, 127-8. 45 "Income and Taxation," MPS Papers, 3-4. 46 Ibid., 6-7. 47 Ibid., emphasis in original. 48 Henry Simons to Walter Lippmann, 5 Oct. 1937, Simons Papers, 4/18, University of Chicago Library Archives; "Income and Taxation," 7. were crucial in maintaining incentives. But Hayek more fundamentally argued that the Poor Law tradition Friedman had sidelined was the preferable model, recommending a labour force "under semi-military conditions" to ensure it. "You can refuse to enter this service," Hayek is reported as arguing, "if you prefer to live on a pittance." 51 With a certain measure of ambivalence, Hayek thus assented to the tradition of the workhouse in opposition to cash minimums. Karl Popper followed by arguing that Friedman's plan was an "attractive alternative to socialism," while the miserly paternalism involved in Hayek's was not. 52 In one sense, Hayek's opposition to Friedman was surprising. He had argued in his Road to Serfdom that government could provide "the certainty of a given minimum of sustenance for all." 53 Reiterating this point in Chicago the following year, Hayek would repeat this commitment for decades, citing John Rawls by the 1970s that "a social minimum is simply a form of rational insurance and prudence." 54 The division of Hayek's followers on his advocacy for a minimum income is a reflection of the fact that he offered these solutions ambiguously, primarily justified on pragmatic grounds rather than as serious policy commitments. At the MPS conference, Hayek was hesitant to justify any minimum conditional on economic need alone and which relied purely on incentives to induce work. Unlike Friedman, this led him to justify the alternative model of work requirements, stricter conditionality of payments, and the use of the disciplinary arm of the state. In doing so, Hayek had outlined the basic core of the paternalist paradigm of neoliberal welfare ideology.
Friedman's Proposal in Maturity: The Poor are Free to Choose The idea of a guaranteed income remained isolated from policy discussions following the conference. Friedman referred to his proposal in passing over the next decade, while the likes of Director continued to emphasize cash guarantees as a preferable form of redistribution. 55 Friedman again referred to his negative tax at Wabash College in 1956. 56 Here Friedman made a broader case for government's role by defining the alleviation of poverty as bearing the non-excludability characteristic of a classic public good. Eradicating the most dire poverty held positive "neighbourhood effects" in reducing visible misery and could therefore invite government intervention on principle. As Friedman argued, "I am distressed by the sight of poverty; I am benefited by its alleviation; but I am benefited equally whether I or someone else pays for its alleviation; thus the benefits of other people's 51 Ibid. 52 Ibid., 7. 53 Hayek, The Road to Serfdom, 124. charity partly accrue to me." 57 Gordon Tullock later argued that Friedman had here "produced the first really intellectually respectable argument for government charity." 58 But in doing so, Friedman's stance was much closer to the neoclassical tradition of Alfred Marshall and A. C. Pigou on government correction of externalities than it was to the stricter methodological individualism of Mises or the Austrians within the MPS, accepting that redistribution could produce measurable social benefits, even if Friedman himself concluded that this could only be done to a lean minimum.
Friedman finally published an exposition of his NIT in Capitalism and Freedom in 1962. Up to this point, he had considered the proposal as a sound but peripheral policy to his broader program, and it was not until the circumstances of the 1960s popularized the idea of a guaranteed income that it rocketed up the political agenda in the United States. 59 It was for reasons wholly unrelated to Friedman and the neoliberal network that this occurred.
Growing perceptions had by this time emerged in the United States of structural unemployment immune to the general remedy of economic growth. The commentators and social scientists Michael Harrington, John Kenneth Galbraith, Dwight MacDonald, Frances Fox Piven, and Richard Cloward brought invigorated attention from policy makers to the parallel lives Americans were leading, as riots in the nation's inner cities by the mid-1960s focused particular attention on the interdependencies of urban decline, poverty, and race. 60 President Johnson's initially color-blind, service-based strategy of legal aid, civil rights, job training, and education in his War on Poverty had fallen out of favour by the second half of the 1960s, as liberals, student radicals, and civil rights organizations sought more lasting social victories. 61 The rapid expansion of welfare rolls, female-headed households, and illegitimate births provided the primary social corollaries critiqued by the right. 62 In response to these trends, policy makers redirected the focus of poverty programs from employment, education, and job training towards direct income transfers. 63 Meanwhile, the rise of a new strain of "commercial Keynesianism" emphasizing protection of the price mechanism and encouraging private investment through tax cuts rather than government expenditure and work programs brought auspicious circumstances for Friedman's NIT. Key advisers to Democratic administrations in Walter Heller and James Tobin, who were amongst its gurus, were supportive of an NIT scheme in its utilization of tax mechanisms for social-policy goals within this framework. A new focus on financial incentives gained ground in welfare reform debates, and Friedman's proposal was taken up by figures from across the political spectrum, alongside more generous iterations of a guaranteed income 57 Ibid., 10. exemplified by the Ad Hoc Committee on the Triple Revolution in 1964. 64 Reflecting on the newfound popularity of his NIT, Friedman admitted as early as 1966 that he was "astounded at the amount of interest which it has generated." 65 Friedman had soft-pedaled some of his arguments for the NIT by this time, including his egalitarian justifications and, reflecting his move away from Keynesian assumptions, a side argument that the NIT held positive "anti-cyclical effects." 66 In its maturity, Friedman presented his plan as a system of payments to all below an established threshold of income, with a marginal tax rate of up to 50 per cent on earnings until an exemption point. If the rate was 50 per cent, the exemption would be double the minimum income. 67 This would provide greater financial incentives to work than Aid to Families With Dependent Children (AFDC) or alternative guarantees which "topped up" income to a defined level with no marginal tax rate. 68 Friedman's guaranteed income was specifically neoliberal in its low minimum at approximately half the federal poverty line, and its justification as a market-conforming measure, rather than as a solution to technologically driven unemployment, the affirmation of a right to communal resources, or a need to supplement the welfare state. 69 Friedman remained committed to the principle of no eligibility rules other than income. No distinctions would be made on behaviour, work, age, disability, or gender. Nor would they be made on the sexual, marriage, or dating preferences of recipients, unlike "man-in-the-house" laws. 70 As well as disincentivizing family breakup, Friedman saw this feature as extending the liberal principle of neutral government. It was not for government officers to implement moralized eligibility guidelines open to interpretation and abuse, and Friedman's distaste for these powers was magnified as he fused left critiques with his own perspective that they undermined the rule of law. 71 The NIT would abolish this welfare bureaucracy, operating instead through the Internal Revenue Service via W-2 tax forms. 72 Checks would be mailed to the poor 64 by the same institution that received the taxes of the rich, and the abolition of welfare bureaucracies would free up experts for the voluntary sector where they could aid those unable to supplement their guarantee. 73 This feature attracted Nixon and Moynihan within the federal government in wiping out a social-work profession seen to be expensive, inefficient, and counterproductive. 74 Without this supervision, recipients would be free to spend their own money, rather than having it allocated in kind through food stamps, public housing, or rent payments. Arthur Kemp praised the NIT in this regard as being "not conducive to more paternalism but rather less" at the Tokyo MPS meeting in 1966. 75 Recipients would be treated as responsible adult consumers. 76 Community action programs in the War on Poverty had attempted to include the poor themselves within the decision making of poverty programs. As this approach lost confidence, advocates of guaranteed income sought the same goal by alternative means in funneling cash to them directly. Friedman's centering of recipient choice thus provided an auspicious neoliberal strain of the wider policy zeitgeist. 77 Since Mont Pèlerin, Friedman had favoured a centralized NIT to combat geographical concentrations of poverty. 78 His advocacy for federal centralization nonetheless stands out from his wider political thought. Dispersing government power was consistently supported by neoliberal thinkers, including Friedman. This commitment cultivated competition between governments themselves, allowing consumers to elude state monopolies and coercive legislation as well as corporations to escape debilitating tax regimes. As For the NIT, however, Friedman pitched this argument on its head. While consumers and corporations should be empowered to choose between regulatory regimes, welfare recipients should not be encouraged to do the same. This approach complemented the "migration thesis" in contemporary debates that generous provisions attracted claimants across state lines. Joseph Mitchell, for example, infamously attacked newcomers to the city of Newburgh, New York, in the early 1960s as the "never-ending pilgrimage from North Carolina." 80 But this theory was taken up by progressives too, including the Leadership Conference on Civil Rights. 81 Proponents across the political spectrum saw the vast inequality of payments between states as unjust in itself. The NIT would supposedly create an equitable system that dissuaded migration and eradicated AFDC, which relied on states 73 Friedman, Capitalism and Freedom, 186. determining rules for eligibility and remuneration. 82 The elimination of complex administration allowed Friedman to reconcile his advocacy for centralization with a belief that the role of the federal government would nonetheless be diminished. 83 Centralizing welfare permitted the taming of one bureaucracy, rather than fifty.
Newer members of the neoliberal network who supported Friedman's program by the late 1960s included Paul McCracken, Arthur Kemp, Arthur Seldon, and George Shultz. By this time, Hayek had left the United States and remained isolated from these policy debates, and Mises was in his late eighties. The primary critique of Friedman's plan came instead from the economic journalist Henry Hazlitt. Hazlitt had been in Friedman's audience at Mont Pèlerin, and it was he more than any other MPS member who mustered and complemented the criticisms heard there for a public audience in the 1960s, making it his personal mission to sink the idea on the American right. By 1974, the MPS economist Alan Reynolds could dub Hazlitt as "the most persuasive of critics of the negative income tax," while Murray Rothbard praised his arguments as "the best available refutation of the potentially disastrous Milton Friedman proposal." 84

Henry Hazlitt's Challenge: Beggars Can't be Choosers
In 1966, Friedman accepted an offer from Newsweek to replace Hazlitt as the economic columnist for the right-wing point of view-a position Hazlitt had held for twenty years before moving to the LA Times. In the same year, both figures were invited to a Symposium organized by the Chamber of Commerce to debate a guaranteed income, alongside the left-leaning futurist Robert Theobald, the liberal economist James Tobin, and the Republican representative Thomas Curtis. Hazlitt was uncompromising at this event in his criticism both of Theobald's more generous universal grants and of Tobin and Friedman's support for an NIT. Any variety of guaranteed income, he argued, was "morally indefensible." 85 Hazlitt publicized his reservations on Friedman's plan for several years following this debate. In the year Nixon announced his introduction of an NIT in August 1969, Hazlitt consolidated his attacks in Man versus the Welfare State, and subsequently in The Conquest of Poverty, published after Nixon's plan was dropped by the Senate Finance Committee. 86  marshalled." 87 When Friedman and Hazlitt again came face to face at a meeting of the Philadelphia Society three years later, Hazlitt's wife Frances joked that there should be "no physical violence." 88 Hazlitt's most significant influence in economic thought was Ludwig von Mises, and, like Mises, Hazlitt was unwilling to concede an income guarantee divorced from market earnings. Both these figures were distant from Friedman's qualified theoretical justification of redistribution for "neighbourhood effects," as well as his broader use of statistics in economic reasoning. At the Symposium debate, Hazlitt argued that the NIT embraced a wider fallacy of interventionism that money could be easily separated from production and thus redistributed as purchasing power. 89 The technocratic engineering of tax incentives by Friedman had merely created a mathematical "gadget" which drained the poverty problem of its more fundamental moral and economic contexts. 90 While Hazlitt accepted that those genuinely unable to earn required support, a significant proportion of claimants did not fall into this category. The best means of shrinking the welfare state was therefore to scythe current programs through stricter categorization, rather than to introduce a program of universal cash guarantees that could be justified neither in pragmatism nor in principle.
Hazlitt fielded a number of objections that were merely practical. First, he suggested that federal payments would squeeze markets into a single Procrustean box. 91 "The practical effect of this would be to reduce the present high level of relief payments in the big cities hardly at all, but to increase enormously the relief paid in the poorer States and in the country districts." 92 Particularly in the latter, unpleasant jobs would be abandoned by those who preferred a subsistence income from the state. 93 Second, Hazlitt believed that setting the NIT at a low minimum, and ideally as a replacement for all social programs, was naively ignorant of the political process. Jewkes and Dennison had offered the same critique at Mont Pèlerin. 94 In the first place, the NIT encountered a mathematical dilemma: one either had to guarantee an amount below the federal poverty line, as Friedman prescribed, or provide higher guarantees which, when added to the tapering of income for incentives, would berth a costly scheme paying well-off units in the higher brackets. 95  the latter iteration that the policy would inevitably become in a democratic system. 96 Hazlitt argued that its bidding up would likely lead to universal payments for every family, "including the Hazlitts, the Friedmans, the Gettys and the Rockefellers," thus enabling the European model of universal provision, so long resisted, to complete its domination of American political economy. 97 Though recognizing these as valid concerns, Friedman fired back. First, even if the NIT only replaced AFDC, this would still be desirable if labourers kept at least half their earned income. Second, the NIT was a federal minimum upon which states with the highest wage markets-especially Illinois, California, and New York-could supplement their own NITs if needed. Finally, Friedman argued that "bidding up" was a much smaller risk than with contemporary programs, as direct payments made costs explicit to the taxpayer. 98 But Friedman mistakenly took these practical reservations to be Hazlitt's only real objections. In March 1967, he responded to an editorial in National Review: Mr. Hazlitt does not in any way whatsoever "demolish," as you put it, my arguments for the negative income tax … He rejects the negative income tax on very different grounds: that it is not politically feasible [because] it will be converted to a wholly different proposal that I oppose as fully as he does … It is most uncharacteristic of both Mr. Hazlitt and National Review to give up a fight on grounds of political feasibility. 99 Not for the last time, Friedman here overlooked that Hazlitt's opposition was grounded as much in a sense of ethical repulsion as in a skepticism of the measure's practicability.
At the Philadelphia Society debate, Hazlitt emphasized that an NIT should be "rejected in principle," as it rested on "a false idea of liberty." 100 Consumer sovereignty of choice defined neoliberal thought throughout the twentieth century-even for thinkers as different as Henry Simons and Ludwig von Mises-but whether this principle extended to those supported by the state was debatable. While Friedman argued that consumer choice should be made universal, Hazlitt more strictly defined this principle as freedom to spend one's own earnings from the market. Extending choice over money to welfare recipients only meant sacrificing the choice of its earners to see that it was spent to their tastes. Friedman and Stigler were thus foolish to have adopted the "spurious libertarian argument" that recipients should be free to spend money that did not belong to them. Far from treating claimants alike, Hazlitt sought to accentuate the old Victorian distinction between the "deserving" and the "undeserving" poor. People today are justifiably reluctant to state the distinction in moral terms. Nevertheless, the distinction between those who are trying to cure 96 Ibid., 33-4. 97 Hazlitt, "Consequences of Income Guarantees," 8-9. remains compelling to modern historians. But even when making it, many conceded that the figures were the reverse amongst racial minorities. 117 Many liberal and left proponents of a guaranteed income embraced this support in their arguments. Tobin believed that a primary compulsion for an NIT was "the new sense of human equality that the Negro civil rights movement has brought to America." 118 The welfare rights activist Johnnie Tillmon similarly argued that a guaranteed income was a birthright for black women who had forever had their labour as workers and mothers exploited and degraded. 119 While black feminist activists in the National Welfare Rights Organization (NWRO) came to oppose Nixon's NIT, this was due to its low payment level and not to the principle of a guaranteed income itself. 120 Federal payments to black residents had formed a visceral fear of racially oriented politicians since the Reconstruction era. One of the most important tools for maintaining racial hierarchy in the South had been state control over eligibility rules for poverty programs, and this "southern cage" had permitted the reconciliation of a racial caste system with the founding moment of the American welfare state. 121 A federally guaranteed income threatened to destroy this architecture completely. Vee and Vincent Burke argued that Nixon's iteration would have "transformed the lives of poor black families in the South, giving them undreamed of economic security and its corollary, political power." 122 Even Friedman's comparably meagre federal minimum would have more than doubled the average benefit of a family with no earnings in a state like Mississippi, as well as removing eligibility restrictions and the power of administrators to employ them. Christopher Green estimated in correspondence with Friedman that his scheme would increase payments immediately in nine states, the vast majority of which were in the South. 123 At the Symposium in 1966, Friedman attempted to stress the racial benefits of a libertarian NIT, reflecting on his conversation with the welfare specialist Herbert Krosney: In effect, he said to me, "You classical liberals are always talking about how big government interferes with personal freedom. The examples you give are always about things that matter to people like you and me … The people whose freedom is really being interfered with are the poor in Harlem, who are on relief. A government official tells them how much they may spend for food, rent, and clothing … Mothers receiving aid for dependent children may have their male visitors checked on by government investigators at any "And surely, he is right," Friedman continued: No doubt, the taxpayer who pays the bill to support people on relief may feel that he has the moral as well as legal right to see to it that the money is spent for designated purposes. But whether he has the right is irrelevant. Even if he has, it seems to me neither prudent nor noble for him to exercise it. The major effect of doing so is to weaken the self-reliance of the recipients [and] diminish their humanity. 124 Here was a no-man's-land of neoliberal thought in which Friedman and Hazlitt came to polar opposite conclusions. Both saw the payment of taxes as fundamental to citizenship. But whereas Hazlitt prescribed that those who relied on taxpayer money should be denied its privileges, Friedman sought to extend citizenship status through the tax system. Writing to George H. W. Bush in July 1968, Friedman highlighted that a "great virtue of a coherent positive-negative income tax structure is that it treats all citizens alike and does not divide them into two classes to whom different means tests are applied." 125 He repeated this notion to the House Ways and Means Committee the following autumn, arguing that the NIT would end "the present demeaning division of our population into two classes-people on welfare and the rest of us." 126 Many liberal commentators supported an NIT for the same reason: all would fill out the same tax forms as equal citizens through the same fiscal infrastructure.
In Hazlitt and Friedman we thus find figures representative of the division between a variety of neoliberal welfare policy that sought to reprogram the bureaucracies of the state to exclude, surveil, and categorize, and a variety that instead advocated complete withdrawal beyond minimum payments. Friedman sought the abolition of welfare inspectors' role as "policemen and detectives," while Hazlitt advocated a return to the "severity and niggardliness" of the nineteenth century. 127 Criminality, idleness, and fraudulent behaviour were rife in welfare, according to Hazlitt. "By neglecting the careful applicant-by-applicant investigation of needs and resources made by the ordinary relief system," a guaranteed income "would open the government to massive fraud, chiseling, and swindling." 128 It was time to intensify scrutiny of recipients rather than abandon it.
Hazlitt was nonetheless aware of the attraction of Friedman's NIT in its promise to streamline the welfare state. He emphasized his most surprising warning for its rejection at the Philadelphia Society meeting in 1970. 129  Milton Friedman, "Statement and Testimony on Family Assistance Programs," at https://miltonfriedman.hoover.org/internal/media/dispatcher/215159/full (accessed 1 Jan. 2021), 9. 127 Friedman, "Statement," 5-6; Hazlitt, Income without Work, 38. 128 Hazlitt, Income without Work, 32-3. 129 Though he had briefly included his point previously at the Symposium and his book of the previous year; Hazlitt, Welfare, 85. Hazlitt, "Income without Work," 2. insuperable flaws, he changed gear to surprise his audience. "Now at this point, I have a personal confession to make," Hazlitt announced. "I am the author of the negative income tax." More than thirty-one years previous in an article for the New York Times' Annalist in 1939, Hazlitt had floated the idea of a "tapering subsidy" for claimants, both in and out of work, set uncannily at a tax rate of fifty cents on the dollar up to a minimum income. When a fifth of the American workforce remained unemployed, Hazlitt had briefly argued for a system he had come fullcircle to oppose as a route out of the constellation of New Deal programs. 130 "Fortunately," Hazlitt reflected to an amused audience, "this had no impact whatever and I myself abandoned the idea a few weeks later." 131 As Hazlitt considered the scheme in detail, he concluded that its implications were unavoidably perverse. While there is no evidence that Friedman read Hazlitt's article, he replied with glee that he should claim alternative authorship of the NIT. "It just demonstrates that all reasonable, intelligent, rational people who look at the same problem come out with the same answers. I am sorry to see that his powers of rationality have declined with time. Having served on Eisenhower's Council of Economic Advisers, Burns acted as an adviser to Nixon before becoming chair of the Federal Reserve in 1970. Friedman had a deep relationship with Burns, reflecting in his memoirs that "save for my parents and my wife, no one has influenced my life more than Arthur." 137 He had taught Friedman as an undergraduate and they remained close friends until Burns died in 1987, when Friedman authored his obituary. The pair had significant disagreements on monetary policy, but were otherwise largely ideologically kin. 138 Anderson had joined the MPS in 1965 and lobbied to end the Vietnam draft with Friedman while Nixon's FAP was traveling through Congress. 139 Anderson and Burns, like Hazlitt, thus represented familiar faces to Friedman. When it came to the NIT, they were the best of enemies.
The pair blamed Friedman exclusively for making a guaranteed income palatable on the right. 140 McCracken described his approach as "Friedmanesque," and it was in large part thanks to Friedman's recommendation that Shultz came to Washington in the first place. 141 McCracken mimicked Friedman's choice principle for recipients, and in a meeting on the topic of claimants receiving cash directly, he asked, as Kemp had in Tokyo, "As to the question, will they use it wrong, I say, wrong to whom?" 142 Secretary of Labor Shultz similarly argued that earmarking payments as food stamps was merely infantilizing recipients by providing them with "funny money." Friedman wrote to Shultz to inform him, "I have stolen your 'funny money' phrase for food stamps. Wish you luck in getting this straightened out inside." 143 Shultz further embraced Friedman's prioritization of incentives. In a memo to the president in May 1969, he privileged the "principle of free choice with respect to labor force participation in order to avoid the dual evils of crushing work incentives and removing effective wage competition." 144 Building on Friedman's plan, Shultz advocated for an earnings disregard for recipients' initial wages to reinforce incentives.
As Friedman intended, making work pay became the central focus of the program. In his testimony to the House Ways and Means Committee in November, he welcomed Shultz's earnings disregard, stressing that "the most important need in welfare reform is to provide a strong incentive for persons receiving governmental assistance to become self-supporting." 145 In his own testimony, Shultz denied that their proposal permitted citizens to coast in comfort. "Work," Shultz clarified, "is a major feature of the program." 146 To assure this, payments would be kept low 137 Friedman and Friedman, Lucky People, xi. Pat Moynihan, who was one of Burns's adversaries within Nixon's circle, argued that his opposition reflected a "strong ideological distaste." 147 Burns was opposed to any innovation that did not reduce costs and enrolment numbers, warning that the working poor would "find it increasingly acceptable to stay on welfare rolls" in any NIT scheme. 148 This was a reincarnation of Hayek's critique that Friedman's plan promoted a freedom not to work. Like Anderson, Burns denied there was any real problem of poverty left in the United States, and welfare should therefore serve only those unavoidably out of work, insisting on enforced work requirements to filter the lazy from the needy. 149 Abandoning this approach meant risking "what may happen to the moral fibre of America when millions of people, many of whom do not consider themselves poor, are suddenly thrust by law onto the welfare rolls." 150 Burns and Anderson contended that an unconditional right to resources was inherent to an NIT. 151 Reflecting on these years, Anderson cited Hazlitt's contribution to the Symposium debate with Friedman as reflecting his own perspective at the time: If you claim a "right" to an income sufficient to live in dignity whether you are willing to work or not, what you are really claiming is a right to part of somebody else's earned income. What you are asserting is that this other person has a duty to earn more than he needs or wants to live on. This is an absolutely immoral proposition. 152 The MPS economist Peter Bauer later similarly rejected Friedman's NIT for its principle of "support without stigma [and] the right to an income regardless of performance, simply by being alive and poor." 153 Neoliberals universally rejected any definition of rights which obligated the redistribution of resources. 154 Such constructions conflicted with the principles of private property and the freedom to earn, save, and contract without undue state interference. Friedman, Stigler, and Kemp wholeheartedly agreed with this. But many advocates of a guaranteed income to Friedman's left did seek to enshrine a material standard of living as a legal right. While Friedman could distance himself from advocates like Theobald by distinguishing the NIT from larger payments bearing no marginal tax rate, liberal participants like Tobin, who also supported this argument, still framed their own iterations of an NIT as "a matter of right, not of charity." 155 Friedman and his supporters thus trod a fine line in reconciling their opposition to a legal right with an advocacy of a guaranteed income, whether or not they saw it as a potential platform for a market utopia devoid of a welfare state entirely. "I favour the negative income tax," Friedman clarified in 1972, "not because I believe anyone has a 'right' to be fed, clothed, and housed at someone else's expense, but because I want to join my fellow taxpayers in relieving distress and feel a special compulsion to do so." 156 Anderson and Burns, like Hazlitt, argued that there was no practical distinction between these positions. Claiming rights was inseparable from a guaranteed income, and once inaugurated it could facilitate mass idleness and bankrupt government coffers. Anderson used the analogy of the Speenhamland Law to make this point, which de jure guaranteed subsistence to agricultural labourers in England from 1795 until the New Poor Law of 1834, suggesting in a memo to Nixon that the outcome was "the pauperization of the masses, who almost loss their human shape in the process," leading with the words of George Santayana: "those who cannot remember the past are condemned to repeat it." 157 The source of this example was Karl Polanyi's Great Transformation, and it was included in the first major study of the NIT in 1967 by Christopher Green, who corresponded with Friedman for his research. 158 Hazlitt referred to the Speenhamland example two months prior to Anderson's note, and he even paired it with the same Santayana quotation in Human Events the following year, concluding that there "could be no faster way to impoverish the nation." 159 The MPS economist Arthur Seldon felt the need by 1971 to forestall the objection of "Speenhamland demoralisation" in his own writings to strengthen his case for an NIT in the United Kingdom. 160 Even without a Speenhamland-like dystopia, however, Anderson warned of an expansion in fraudulent behaviour under a guaranteed income, speculating by the 1970s that fraud nationally cost the taxpayer "hundreds of millions, probably billions, of dollars," and the solution to this could never be the abdication of recipient scrutiny. Anderson urged a shift away from an "automatic, check-mailing type of welfare operation to a more personalized, people-oriented kind of welfare administration that emphasizes both the authority and the responsibility of local government." 161 The libertarian approach was a non sequitur. "There is no reason," Anderson argued, why "people should be given financial incentives to do what they rightfully should be doing anyway." 162 155 He found his preferred model in Governor Reagan's reforms in California. 163 Reagan had consistently opposed any form of guaranteed income, including Friedman's and Nixon's. He telegrammed the chair of the Senate Finance Committee in May 1970 to demonstrate his opposition. He met with Nixon in July to voice his concerns, and withheld his support at the Republican Governors conference in December. Following his own Welfare Reform Act in California in 1971, Reagan devised an alternative road map intended for emulation at the national level. 164 Just as Nixon's plan was being jettisoned in Congress, Reagan proclaimed in June 1972 that his measures had enabled Sacramento, unlike Washington, "to slay the monster welfare was becoming in California." 165 What Anderson praised in this program were features wholly opposite to Friedman's NIT: non-financial categorization of those undeserving of aid, decentralization to the states, maintenance of local bureaucracies to assess work capabilities and detect fraud, redistribution in kind to preclude consumer choice, and heightened prosecution for those who abused the system. This approach of distinguishing "scroungers" from the "truly needy" allowed Reagan to boast by 1974 that the California model had removed 350,000 applicants from the rolls while "basic welfare grants to destitute families have gone up 41 percent." 166 Anderson highlighted this advantage in praising Reagan's model, privileging what Hazlitt had called the attention "case by case to the particular needs of each family." 167 Hazlitt, Anderson, and Reagan sought, contra Friedman, to employ strict conditionality of payments, the expansion of policing, and a fundamental rejection of the entitlement philosophy that they saw as inherent to a guaranteed income.

Conclusion
Melinda Cooper has framed neoliberals as united in their desire to reinstate the principles of the Poor Law tradition, and specifically its emphasis on the family as the bearer of financial risk. 168 Cooper's profound scholarship has changed the way we think about neoliberal approaches to poverty, sexual politics, and the family. Even Cooper, however, inherits a broader oversight in the literature on neoliberal policy making of the contradiction between programs which defined recipients worthy of aid purely on the basis of income, and a Poor Law tradition that anchored itself as its polar opposite: an enforced normative distinction between the "deserving" and "undeserving" poor. If Clinton's reforms in the 1990s exemplify the triumph of neoliberal welfare ideology, its four main characteristics of nonfinancial means tests, work requirements, time limitation, and decentralization to the states were features wholly opposite to the libertarian framework of a 163 Ibid., 153-67. 164 guaranteed income. The neglect of this distinction has consistently led to narratives which universalize the paternalist paradigm, misaligning theorists like Friedman, Stigler, Kemp, and Seldon, who justified a guaranteed income as overturning, rather than reinforcing, this central core of the Poor Law tradition.
The libertarians recognized that they were striking at the heart of this inheritance. Friedman framed his NIT as a distinct alternative to the Poor Law tradition at Mont Pèlerin in 1947. 169 The welfare subcommittee of Nixon's Urban Affairs Council, on which Shultz played a significant role, similarly cast their approach as "the most significant departure yet made from the Poor Laws of Elizabethan England from which our present practices descended with all too little change." 170 The NIT was so revolutionary, Michel Foucault argued, because it specifically disavowed this tradition: "the famous distinction that Western governmentality has tried for so long to establish between the good and bad poor, between the voluntary and the involuntary unemployed, is not important … whether he is a drug addict or voluntarily unemployed is not important. Whatever the reasons, the only problem is whether he is above or below the threshold." 171 In Moynihan's words, the NIT "would put money in the hands of persons who all could agree needed money, whether or not they deserved it." 172 Within the neoliberal network, to be sure, both libertarian and paternalist means were employed towards the ideal of bringing recipients into reconciliation with the competitive market. Critics of free-market capitalism thus have good reason to oppose both these paradigms on the terms they were given. But they cannot be made equivalent. If neoliberals could agree that their utopia was a free-market system devoid of a welfare state, their disagreements on the means of achieving it were persistent precisely because they were irreconcilable. As they themselves were so fond of emphasizing in their critiques of interventionism, political means are as fundamental as political ends.
When Reagan addressed the Conservative Political Action Conference in his maiden year in the White House in 1981, he credited intellectual "leaders like Russell Kirk, Friedrich Hayek, Henry Hazlitt, Milton Friedman, James Burnham [and] Ludwig von Mises." 173 Reagan's election represented a triumph for the Mont Pelerin Society and the American conservative movement. But on the specific issue of an income guarantee, and with the president's position clear, Friedman conceded that Anderson's reenforced hostility to an NIT-like program as his domestic adviser was "likely to be very influential in the White House." 174 While Friedman's influence on Reagan was significant, exemplified by his winning the Presidential Medal of Freedom under his administration, Reagan's election banished Friedman's libertarian approach to welfare. If Hazlitt thought himself irrelevant by this time, this sense was punctured when Reagan wrote to him following his landslide reelection in 1984. "No one in this century has written more lucidly or 169 "Income and Taxation," 1-2. 170 Moynihan, Guaranteed Income, 160. 171 Foucault, Biopolitics, 204-5. 172 Moynihan, Guaranteed Income, 160. with greater common sense on the major issues of public policy, and few individuals have enjoyed an influence as far-ranging as yours … [Your] insights have guided my own thinking, and I am proud to count myself as one of your students." 175 Overjoyed, Hazlitt congratulated the president by highlighting his now "precious opportunity, free from any election fears, to propose slashes in our immense welfare spending." 176 With the accentuation of the Poor Law distinction between the deserving and undeserving poor, the paternalists within this debate sought to chisel away the welfare state with something known. With the negative income tax, the libertarians sought to destroy it completely with something new. As Arthur Kemp argued at the Tokyo meeting of the Mont Pelerin Society, if neoliberals could not assent to innovative new policies like the NIT, "the remark made that the liberals were dragged, screaming, into the twentieth century may prove to be more than a snide comment." 177 Beyond the turn to free-market policies in the 1980s, historical narratives have tended to document the triumph of neoliberal welfare ideology. With a fresh analysis of the decades preceding this turn, one sees instead the more nuanced picture of one paradigm of thought, that operated both within and beyond the neoliberal intellectual network, gaining the upper hand over the other.