Liberalism After Socialism

Over the past century, many reformers and critics in the West have believed that liberal democratic capitalism was evolving, inexorably and appropriately, toward a socialist, planned economy. Liberalism even in its modern form has seemed to them transitional and incomplete, outdated in its individualism, unsatisfying in its conception of the good life and the good society, inadequate to the demands of justice. Socialism would take civilization to a higher stage; it would fulfill ideals that liberalism professed but failed to honor, as well as ideals that liberalism failed even to profess.

Those who have taken this view have not necessarily been Marxists. Most have been devoted to movements of reform rather than revolution and sought an alternative system that they hoped would achieve the best of both worlds, preserving the political freedoms of liberal democracy while introducing the economic planning, public ownership, and economic equality of socialism. This is the synthesis that many European socialists and American progressives have held up as an ideal -- liberal democracy reconstructed into a benign and democratic socialism, a "third way" between communism and capitalism.

This vision has exerted a wide influence, even among liberals, who have been, I believe, all too ready to accept the critics' indictment of liberalism and give up on the possibilities of their own tradition. Early in the twentieth century, a synthesis of liberalism and socialism understandably seemed exciting, even promising. Around the world, socialist ideas were just beginning to be put into practice. The idea that democracy was advancing from one sphere to the next -- from the civil to the political, then to the social and the economic -- had an unquestionable appeal. During the 1930s, the Depression graphically demonstrated the havoc the market could wreak; to many, the accomplishments of the New Deal and of wartime planning in the 1940s demonstrated that socialism would work in practice.

The Cold War and rapid economic growth in the Western economies in the 1950s and 1960s did not put an end to the hopes of a third way. On the contrary, the vision seemed confirmed by the successes of the European social democracies, especially Sweden. In light of the Soviet experience, the democratic left emphasized its anticommunism. In light of the West's economic growth, it focused its criticism of capitalism on individual alienation, the loss of community, the culture of consumption, racial injustice, and, beginning in the 1970s, environmental problems. Of course, not everyone concerned about these issues had socialism in mind as a solution. But, explicitly or not, many of the critics on the left were pointing in that direction.

Today, this criticism of the limitations of capitalism continues -- as it should -- but the solution that so many had in mind has lost its plausibility. The socialist economic project, consisting fundamentally of national planning and extensive public ownership, has been thoroughly discredited as a means of economic growth. It has no better reputation as a means of reducing alienation and restoring community. The case for eco-socialism has suffered as well with the growing recognition that communist governments in the East have polluted on a far greater scale than have the capitalist countries of the West.

* * *

To the advocates of a third way, it seems a cruel irony and intellectual injustice that democratic socialism should lose its plausibility because of the bankruptcy of Soviet communism. But there are four good reasons why socialism even with a human face no longer looks appealing:

First, the sheer magnitude of the communist collapse has had a devastating impact on evaluations of the performance of command economies. It is now indisputable that communism impoverished the people who lived under it, and it is not clear how or why a more democratically planned socialist economy would do much better -- or that such a system is feasible at all.

Second, repeated efforts to reform communism from within, to make it both more responsive and more efficient, came to naught. Once a window of political light opened, those who lived under communism sought to escape altogether. If there is a third way, they have pretty much given up hope of discovering it.

Third, the record of socialism in Africa and Latin America has been equally disastrous. Socialism in the Third World is undergoing as severe a crisis of belief as communism in Eastern Europe and the Soviet Union. This shift reflects not only indigenous experiences, but also the withdrawal of Soviet support, the changing political winds from the West and from international agencies, and the example of East Asia. To be sure, the economic successes of East Asian capitalism are no vindication of laissez faire, but socialism was not their inspiration, either.

Finally, the Western European countries that have had Socialist and Labour parties in power have drifted progressively further away from a commitment to socialism. Soon after World War II, if not before, most Western socialists gave up the goal of replacing capitalism, and instead adopted programs that called for limited nationalization and the extension of welfare-state measures first introduced by earlier authoritarian, corporatist, and liberal governments. In recent years, however, Socialist parties have even given up nationalizing industry when in power and threatening to nationalize industry when out; indeed, some nominally Socialist governments have been actively privatizing public enterprises. Where firms have remained under public ownership, as in France, socialists have been operating them on a thoroughly commercial basis. Similarly, either the idea of a planned national economy has been abandoned or planning of limited scope has accommodated the basic contours of capitalism. Although European social democrats have Marxist grandparents on their family tree, they have largely outgrown not just Marxism, but socialism itself, and accepted -- wisely, I believe -- political ideals and social and economic institutions that have a more liberal character.

As a result, the synthesis of liberalism and socialism that once excited imaginations now seems almost drained of content. Much of what socialism once promised to bring to a synthesis, socialists with the experience of government no longer defend. Yet many who once dreamed of a third way are not ready to accept the economic framework of capitalism, much less capitalist civilization in the larger sense. They continue to hold out the idea of some sort of synthesis or a transcendent socialist alternative to liberalism, often now conceived as a more decentralized economy with a communitarian ethos.

This reluctance to let go of socialism, in the hope of finding some new, untried form in which it can still be defended as an ideal, is, I think, deeply mistaken. Liberals ought to continue striving to reform capitalism -- to eradicate poverty, to overcome racism, to protect the integrity of the environment, in short to achieve a variety of humane and democratic objectives. But it is time, I will argue, to give up on the idea of a grand synthesis or a third way, if by that is meant some system mid-way between capitalism and socialism or an alternative altogether "beyond" them. Reform capitalism, yes; replace it, no -- just as in the East many have concluded: Reform communism, no; replace it, yes.

* * *

There is, moreover, a need for clarity about intellectual premises as well as ultimate political objectives. In opposing evils like racism and poverty, reformers can find the grounds of justification and persuasion in liberal principles. They have no philosophical need to appeal to the socialist tradition, and in the United States no conceivable political rationale for doing so. Indeed, instead of softening or erasing the distinction between liberalism and socialism, as many have long hoped to do, liberals should be redrawing that distinction in their own minds and in public perception. Whatever the party of reform once may have had to learn from the ideas of socialism, it has already absorbed; indeed, some of what it learned, it ought to unlearn. Those who have believed socialism to be a higher stage of liberalism now need to take to heart, not the great vision of socialist theory, but the bitter disappointment of the practice. They need not conclude, however, that the only alternative to a socialist liberalism is a conservative liberalism. There is a liberalism that is serious, realistic, and where necessary even radical about liberal principles. That tradition is waiting for them to invoke and reclaim.

Points of Departure
Before making this argument, I need the help of a few definitions. Perhaps nothing makes it more difficult to talk about liberalism and socialism than the likelihood that different people hear different things in those words. This is a problem, not of loose language, but of a messy world and complex history. A great variety of thinkers, movements, and parties have called themselves liberal and socialist. In different parts of the world, they have evolved in distinctive, even contradictory directions. Since there is no way to establish who holds proper title to the names, the best that we can do is to make clear what each of us means by them.

By "socialist" I mean a party or program that gives highest priority to equality of economic condition and calls for replacing private ownership with public ownership in the sphere of production and substituting some form of public control for the market as the principal mechanism for allocating investment. Socialist programs vary, of course, in how comprehensive a transformation they envision. At the extreme, some have called for, or even tried, eliminating a money economy and private property in all its forms, while others have sought to nationalize only the "commanding heights" of industry.

Let us leave aside the pure communist project of eradicating private property. Socialism in the twentieth century has been mainly about socializing industrial production and investment. The theory has been that these measures, supplemented by social insurance, socialist education, and other influences, would eliminate the irrationalities and inequities of capitalism, producing a world of plenty, an equal and just distribution of income and life chances, greater social harmony, and a transformation of the human personality, away from an alienated "possessive individualism" toward a more cooperative spirit.

Some prefer to define socialism solely in terms of one or another of these aspirations, particularly equality. I believe, however, socialism ought to be defined in part by the measures that socialists have characteristically called for, rather than solely by the aims that they have hoped to achieve. The relation between means and results is a hypothesis, and history has shown it to be a doubtful one. Socialist aspirations, particularly for a classless society, are distinctive, but socialism consists of more than aspirations. To define socialism now only by its aspirations, rather than its actual practice, is not just a theoretical choice; it is an evasion of the burden of socialist experience.

* * *

As the concept of socialism is deeply contested, so, too, is the concept of liberalism. Indeed, the problem of definition is, if anything, more difficult. The key premises of socialism are economic; socialism cannot be separated from economics. But liberalism can be defined on either an economic or political basis, and a major question arises as to which has priority. Here a distinction is helpful. Economic liberalism identifies private property and reliance upon the market as the defining elements of liberalism; in this view, liberalism is joined indissolubly with capitalism and opposed to socialism. Political liberalism, on the other hand, maintains that what is essential to liberalism is the constitutional limitation of power and guarantee of individual civil and political rights.

In speaking of liberalism, I generally have in mind the political rather than the economic conception of liberalism. This choice agrees with current usage in the United States, where economic liberalism is identified with political conservativism. Political liberalism is also the relevant conception in a discussion of any potential synthesis or reconciliation between liberalism and socialism. For as the economic liberals have conceived it, liberalism is antithetical to socialism. They have insisted that the political institutions of liberal democracy depend upon a free-market economy and private property. Political liberalism, on the other hand, is open to the possibility that liberal democracy is compatible with varying economic arrangements. In short, while economic liberalism necessarily excludes socialism, political liberalism does not -- at least in principle.

Those who subscribe to what I am calling the political conception of liberalism differ greatly among themselves in how they conceive liberal political principles and what may be derived from them. Of greatest relevance here is that they differ on how universal and how comprehensive a democracy liberalism implies. At the risk of multiplying terms to the point of confusion, I want to call by the name of democratic liberalism the tradition that has been committed to extending democracy more universally and broadening it to wider spheres of social life. Democratic capitalism has a built-in tension between its capitalist and democratic elements; economic liberals favor the former, democratic liberals the latter. From the "new liberalism" of L.T. Hobhouse in late nineteenth- and early twentieth-century Great Britain, through the liberalism of the New Deal and Great Society in the United States, this tradition of democratic liberalism creates the greatest ambiguity about the boundaries of liberalism on the left. When I suggested earlier that European social democracy has evolved into a kind of liberalism, this is the kind I meant.

Ever since their emergence as self-conscious movements and systems of thought in the nineteenth century, liberalism and socialism have been divided in their responses to the other. Some on each side have been polarizers: anxious to insist upon the opposition and incompatibility of the two. In this regard, Leninists and economic liberals have much in common. Others in both camps have been reconcilers, more open-minded and willing to accept lessons from the other side. Of the open-minded, two figures in the history of liberal thought seem to me particularly instructive: John Stuart Mill and John Dewey. I shall take them as exemplars of two different types of liberal receptivity to socialism.

Mill's Wisdom, Dewey's Error
Those who know Mill only from his essay On Liberty easily mistake him for a libertarian who believed in the most minimal conception of the state. But one has only to open Mill's other works, particularly his Principles of Political Economy, to discover that while he praises laissez faire, Milton Friedman is not his reincarnated spirit. Mill did not deny the state was responsible for welfare and distributive justice; on the contrary, he insisted that the distribution of wealth was in no way dictated by economic necessity, but was rather a social choice, depending on such measures as laws of inheritance. Moreover, for from condemning socialism outright, he saw merit in socialist ideas and accepted the possibility of a fundamental reconstruction of industry with the ownership of firms belonging to those who provided labor rather than those who provided capital. He supported cooperatives and was curious to learn from the experimental communities of his time conceived on socialist principles.

But Mill could not agree with socialists on some fundamentals. He argued that whatever the ownership of the firm, competition was essential. In evaluating the merits of systems of political economy, he believed that the decision would ultimately rest with the system "consistent with the greatest amount of human liberty and spontaneity." And he insisted that judgments of the liberal economy not underestimate what it was capable of achieving in the future. "If...," he wrote in 1852,

the choice were to be made between Communism with all its chances, and the present state of society with all its sufferings and injustices ... all the difficulties, great or small, of Communism would be but as dust in the balance.

"But," Mill went on,

to make the comparison applicable, we must compare Communism at its best, with the regime of individual property, not as it is, but as it might be made.... The laws of property have never yet conformed to the principles on which the justification of private property rests. They have made property of things which never ought to be property, and absolute property where only a qualified property ought to exist. They have not held the balance fairly between human beings, but have heaped impediments upon some, to give advantage to others; they have purposely fostered inequalities, and prevented all from starting fair in the race. That all should indeed start on perfectly equal terms is inconsistent with any law of private property; but if as much pains as has been taken to aggravate the inequality of chances arising from the natural working of the principle, had been taken to temper that inequality by every means not subversive of the principle itself; if the tendency of legislation had been to favour the diffusion, instead of concentration of wealth ... the principle of individual property would have been found to have no necessary connexion with the physical and social evils which almost all Socialist writers assume to be inseparable from it.

Marx once remarked acidly that the eminence of John Stuart Mill in England was due to the flatness of the terrain. But on the central question of the historical possibilities of capitalism, Mill was by far the wiser of the two.

* * *

In his emphasis on the potential contribution of socialism at the level of the firm, rather than the economy as a whole, Mill was also, I believe, wiser than my second exemplary liberal, John Dewey. Dewey subscribed to the view that socialism is a higher stage of liberalism and that the great "task before us," to use a favorite phrase of his, is to find a synthesis between liberal political values and socialist economics.

Dewey spelled out the argument in Liberalism and Social Action, published in 1935. His understanding of early liberalism reflected Marxist influence; he accepted the premise that liberalism had emerged as the ideology of the rising bourgeoisie. But, unlike the Marxists, Dewey thought if one stripped away the "adventitious" elements that accompanied liberalism at its genesis, enduring values remained, and he particularly identified three: "liberty, the development of the inherent capacities of individuals made possible through liberty, and the central role of free intelligence in inquiry, discussion and expression." The challenge to liberalism, as Dewey saw it, was to recognize that the realization of these values now required a dramatic shift. "The ends," Dewey wrote, "can now be achieved only by reversal of the means to which early liberalism was committed. Organized social planning... is now the sole method of social action by which liberalism can realize its professed aims. Such planning demands in turn a new conception and logic of freed intelligence as a social force."

This emphasis on intelligence was the core of Dewey's argument and, alas, the core of what was wrong with it. He credited all economic advance to intelligence, nothing to the market. "[T]wo forces, one active, the other resistant and deflecting, ...have produced the social scene in which we live," Dewey wrote. "The active force is... scientific method and technological application. The opposite force is that of older institutions and the habits that have grown up around them." For Dewey, the institutions of capitalism were the older, resisting force, arresting, deflecting, and corrupting the progressive force of science. Since he saw capitalism as having no positive impact at all, Dewey was unable to see how subjecting the economy to collective control could hinder its development.

Dewey continually spoke about the need for "social control of the economy," but exactly what he wanted is unclear. In Liberalism and Social Action he criticized current political life for merely summing up individuals quantitatively, as if intelligence were purely an individual possession; for still depending upon "the method of discussion, with only incidental scientific control"; and for relying upon symbols, which are readily manipulated. "The crisis in democracy," he wrote, "demands the substitution of the intelligence that is exemplified in scientific procedure for the kind of intelligence that is now accepted."

Dewey did not, however, take the model of science to imply a need for technocratic rule because, in his mind, the world of science was a democratic community. Indeed, his primary criticism of socialism was that it was insufficiently committed to democratic practice. Writing to James Farrell in 1948, he asked, "What is Democratic Socialism? I read considerable talk about 'the democratic' as applying to the process of getting socialism; damn little about it as an adjective applying to socialism when you get it." Robert B. Westbrook, who quotes this and similar passages in a new intellectual biography of Dewey, sees in Dewey a guide for a vision of a liberal, socialist, participatory democracy.2 But to say that Dewey opposed state socialism, as he did, or was aware of the danger that planning might lead to domination by experts, is not to establish that he had any solution to the problem. His belief that the method of intelligence, as embodied in science, could be applied to social choices reflected a failure to understand the irreducible differences between science and politics. Despite frequent references to planning and public ownership, Dewey failed to specify how participatory democratic planning and public ownership would work in practice -- for example, what branches or levels of government would have what powers; how people were to be represented; or how decisions were to be made on investments in firms.

* * *

This vagueness is not simply a limitation of Dewey's work; it is indicative of the deeper problems in the tradition of democratic socialism. The theory comes to grief on the hard rock of specifying political arrangements. To condemn bureaucracy is easy; to find means that will actually avoid it is the trick. To favor participation is fine; to find means to sustain it is another thing. Oscar Wilde's famous remark that the problem with socialism is that it takes too many evenings is not just the view of the ironic aesthete; it is the basic problem with a theory that is unrealistic about human interests and energies. No matter how participatory in theory, democratic planning cannot escape the problem of bureaucracy; democracy creates bureaucracy. As James Q. Wilson points out in his recent book Bureaucracy, the demands for democratic access and participation in America are one of the principal reasons why bureaucracy in America is especially encumbered with rules. To avoid domination by experts, the experts must be checked, and these checks involve formal rules controlling their discretion, requiring public disclosure, providing opportunities for hearings, and so on. If the modern economy were simple, planning could be simple. But it cannot be simple, and every attempt to make it democratic would make it more complex.

If the economic world were not only simple but stationary, a democratically planned economy might be manageable. Change, however, is devastating. The reasons for the failure of the planned economy lie fundamentally in its inability to generate innovation or to deal with fundamental shifts in markets and technologies. In theory, socialist governments should be able to set prices in line with marginal costs; the socialist planner, as the economist Oskar Lange argued in the 1930s, should be capable of taking into account all costs and consequently be less resistant than the private entrepreneur to technological progress that devalues existing capital investments. But, in practice, the difficulties in securing information and maintaining political legitimacy, as well as the privileges of elites with a stake in protected economic sectors, prevent socialist planners from readily adjusting prices or promoting technical change. The concentration of economic responsibilities on the state makes it difficult to impose the economic cruelties of higher consumer prices, factory shutdowns, occupational displacement, and social dislocation that innovation and growth typically require. Over time, prices typically get drastically out of line with costs; public enterprises become sinkholes of public subsidy; and the planned economy becomes a backwater of development. More democratic economic planning, far from solving these problems, quite likely would aggravate them, since it would be even harder to carry out the changes that development requires.

These difficulties do not necessarily appear in the short term or under conditions of national crisis. That is why command-and-control planning can be successful in wartime or in the initial stages of a revolution, especially if a regime is able to transplant technologies developed elsewhere. But as time wears on, the planned economy's slowness to innovate and its resistance to what Joseph Schumpeter called capitalism's "gales of creative destruction" bring about a long-term deterioration.

* * *

I am not suggesting that the human costs of economic and technological change should be of no political concern. On the contrary, cushioning the losses and insecurities of economic upheaval is one of the principal interests of the liberal state, in part to ensure that the costs and benefits of change are fairly distributed and that progress does not founder because of resistance from those who would otherwise be the losers. But it has proved far more advantageous to release the transformative powers of capitalism and spread the gains, than to try to preserve the stakes of the weak in the status quo.

I also do not wish to suggest that the difficulties of economic planning on the command-and-control model extend to every other type of state intervention. The problems arise specifically from micro-management of the economy and suppression of the price system. Planning and public ownership, especially when combined, simultaneously suppress information (market signals) and demand continuously replenished information of minute detail. Both the basis for economic decisions and the mechanisms for correcting them are fatally weakened. This is not so of the use of fiscal and monetary instruments in macroeconomic policy. Nor does it apply to social insurance and other income-transfer programs, to government planning in the management of a limited public sector, to planning of public investments in human capital and physical infrastructure, and other areas where the term "planning" merely stands for the making of policy in line with longer-term objectives and projections of trends. Indeed, without national economic planning of the kind envisioned by socialists, we have achieved at least some of the social control of economic life that Dewey and others half a century ago wanted. But we do so -- and, in some areas, ought to do more -- without the detailed management of finance and industry that the socialist critics of capitalism thought necessary.

* * *

Marxists and other socialist critics earlier in this century, and even some today, have repeatedly underestimated the capacities of capitalist democracies for adaptation, stability, redistribution, and growth. But, of course, many defenders of capitalism have thought its requirements to be equally rigid. The tradition represented by Mill, in contrast, saw that capitalism could be drastically altered by law and government and was compatible with radical advances in equality and democratization, including a more just distribution of income, diminished status differences, and an altered hierarchy in the firm. This recognition that capitalism is not governed by iron laws of motion, as Marx believed, but can be modified politically and culturally lies at the foundation of the tradition of democratic liberalism. For Dewey and others to have believed half a century ago that capitalism needed to be transformed into socialism to realize liberal values was perhaps understandable, given what they knew of the two systems. But that was, in a sense, before socialism, at least before we had accumulated much experience of socialism.

The socialist experiment has now been run in many variations. Governments professing socialism have come to power by armed force and exercised dictatorial power; others have come to power through elections and exercised power more democratically. Some regimes, initially totalitarian, have tried to reform themselves from within. Nonetheless, we have yet to see the socialist economic model succeed in practice. It is evidently as hard for human beings to enter the kingdom of socialism as it is for a camel to pass through the eye of a needle. If socialism is so difficult to get right, people are justifiably skeptical of the democratic socialists among us who say that it has yet to be tried.

Now we know what we could not have known when socialism was a theory, and liberalism after socialism can never be the same. The task before us is plainly not to synthesize liberal political values with socialist economics. Neither is it to reconceive socialism on a more democratic, decentralized basis; the idea of a decentralized socialism bears even less relevance to economic realities today than the model of central planning whose bad odor socialist theorists are trying to escape. Socialism is simply not our appointed historical destiny. Indeed, the great irony is that while theorists have vexed themselves over the much-anticipated transition from capitalism to socialism, the great task in Eastern Europe and the Soviet Union is the reverse: how to build liberal societies after socialism has done such great damage to their economies, civil life, and even the legitimacy of their states.

Democratic Liberalism
The socialist critique of liberalism and its program for the reconstruction of society had other aspects besides those I have mentioned. To give a full assessment of those arguments, or of communitarianism -- which might be thought of socialism without the embarrassment of socialist economics -- is more than I can attempt here. By way of conclusion, let me spell out some elements of a realistic democratic liberalism, as I see it.

Like all versions of political liberalism, democratic liberalism rests on a foundation of constitutionalism and guarantees of individual political and civil liberty. These rights are primary; they take priority over property rights where they come into conflict, and the most fundamental of them cannot be sacrificed or compromised for prudential reasons, except in cases of rare and compelling state interest. Since the capacity to hold leaders accountable is essential to the limitation of power, the protection of liberty requires democracy. And as Dewey properly argued, liberal values require democracy as a thoroughgoing social practice, a way of life. But where Dewey and others were mistaken was in asking too much of democracy, particularly by expecting that the economy as a whole could be directly subjected to democratic rule. "Economic democracy," appealing as a slogan, makes sense only in the immediate environment of the firm, and even there within limits. For the economy as a whole, collective interests require collective political restraint.

The choice is not between "market" and "plan," as so many theorists have put it. For even for those committed to reliance on the market, the question remains, "What market?" Markets do not exist in nature; they are institutions that have a design, based first of all in law. The realistic, democratic alternative to socialist planning lies primarily in the design of markets and other institutions: the shaping of the rules of the game. Banks and other financial institutions, broadcasting stations, school systems, health care services, agriculture -- these institutions all require a framework of legal rules that influence what they do, whom they serve, how they are controlled. In the shaping of the framework, not in the active management of those institutions, lies the principal point of liberal influence. To be sure, choices in institutional design are not as grand and inspiring as the great ideological struggle between capitalism and socialism. But those choices are where the big public decisions of our time lie.

* * *

Unlike socialism, which has held up an impractical vision of a classless society and total equality in all spheres, liberalism has a vision of equality that is more restricted, but less likely to be perennially disappointed, liberalism has often been accused of failing to extend its egalitarian ideals beyond the civil and political spheres. But there is good reason for holding back from organizing the economy according to the same rules as the polity. Political and civil liberty imply political and civil equality: equality before the law, equal rights of political participation. But even the strong, affirmative efforts necessary to create the institutions and conditions for civil and political liberty do not require an equalization of wealth and income or eradication of class differences. In matters of income distribution and material well-being/the objective should be, above all, to eliminate poverty and maintain a minimum floor of decency to enable individuals to carry out their own life plans.

What that floor entails is a distinctly social judgment; it will likely rise over time. Since the support of that floor will be a political decision, policies must be designed to maintain not only the floor, but the political support beneath it. As a result, the evaluation of policies and programs, even from the standpoint of distributive justice, cannot be separated from the overall task of constructing democratic majorities. And that imperative will often mean support for programs that provide universal benefits to all groups, including the middle class as well as the poor and majorities as well as minority groups.

Moreover, the long-term tasks of nation-building and of fostering a common culture and a sense of shared citizenship also strongly argue for public and universal schooling, old-age pensions, and other services that serve an integrative as well as egalitarian purpose. In a few cases, particularly those involving insurance, the universal alternative is also simply more efficient because of endemic market failures.

But the universalism of liberal democratic policies is limited to particular spheres of social life; it is not a stepping stone to generalized equality of economic condition, if only because of the inevitable conflict, which socialists hardly anticipated, between democracy and equality. The level of redistribution required to achieve the socialist vision of a classless society is so vast that it is unlikely ever to command majority support. It is difficult enough, and often impossible, to secure democratic approval even for the more limited equality that liberals favor. This problem must be taken, not as a temporary obstacle arising from false consciousness, but as a permanent problem arising from rational voter hesitations about losses of income and the role of the state.

Where socialism imagined transforming things "private" into things "public," liberalism seeks to maintain the public-private distinction and to enrich the forces of civil society, not in opposition to the state, but in partnership with it. The state has a comparative advantage in performing certain functions; for example, it can collect taxes more reliably and efficiently than can charities raise voluntary contributions. But it is not always best able to produce or deliver the services it finances. Through the devolution of functions to the independent associations and agencies of civil society, liberal policy provides a genuine way to limit governmental bureaucracy. In addition, the cultivation and strengthening of civil society reflects a commitment, not to some mythical idea of a single community but to the many and various communities that must exist peaceably and tolerantly along with each other in a liberal society.

* * *

As I have said nothing about international affairs and foreign policy, about the problems of moral authority, education, and the family, and countless other matters, this can scarcely be counted a general discussion of the problems facing liberalism. What I have tried to argue is that we need to draw, more sharply than we have, the distinction between liberalism and socialism. In everyday American politics, liberalism is now identified with a commitment to expanding public social programs, and this link is partly the cause of the general confusion of liberalism and socialism, which to many people appear to stand for the same thing.

Why American conservatives conflate liberalism and socialism is clear since, in their eyes, any defense of positive government counts as statism. What is less understandable is the confusion of American "progressives" -- a term which itself serves to obscure the difference between liberal and socialist positions. "Progressive," now the label of choice on the left, has the function of avoiding any overt ideological commitment and minimizing potential divisions; in some contexts, it has become the contemporary linguistic form of the Popular Front.

But while the house of liberalism in America has many rooms, it should not be allowed to become the last refuge of a defeated and disappointed socialism. When socialism was young and full of fervor, some liberals were understandably infatuated and thought of marrying their political values to socialist economics. But the romance should be over once and for all.

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