Skepticism and Freedom: A Modern Case for Classical Liberalism.

By Richard A. Epstein. Chicago: University of Chicago Press, 2003. 320p. $39.00.

Richard Epstein advances a consequentialist case for classical liberalism and seeks to answer skeptical challenges to it. He is adamant that any plausible justification of a politico-economic order must be consequentialist: “dogmatic” deontic pronouncements, such as Kant's “fall on barren ground today” (p. 3). For Epstein, the Pareto criterion is the core of normative political economy, though he is willing to employ the Kaldor-Hicks criterion and, in fact, social welfare functions that include interpersonal comparisons and trade-offs of welfare.

Epstein's consequentialism is even more complicated—one might say eclectic—than this suggests. He commences with what he describes as a “revised natural law position” (p. 18), according to which there are certain “empirical regularities across time, space, and culture” that provide the basis for consequentially justified principles for all societies. One might think the calculation problem would be daunting: It looks as though we would need to show that some rule is optimific across time, space, and culture. Epstein's response is ambivalent. One the one hand, he suggests that it is not all that difficult to find empirical laws upon which to base calculations, since “the huge size of the sample makes it possible to find elements of order hidden in the swirl of human events” (p. 19)—an argument that sociologists since Emile Durkheim have employed to show that the complexity of individual facts do not pose a barrier to uncovering social facts. Yet, although Epstein aims to counter radical skepticism, he upholds a moderate skepticism, and thus rather than explicit calculation, he often embraces an evolutionary account, according to which the appeal of principles “rests on a test of durability: those principles and practices that endure generally do so because they serve well the communities of which they are a part” (p. 19). Traditions and customs, he maintains, “gravitate to the solution that a sound cost–benefit analysis would dictate” (p. 20). At the heart of this book is a striking (and, I venture, implausible) commitment to evolutionary functionalism: If social systems all have norm N, then N now performs a necessary function that not only enhances social welfare but actually tends to converge on the optimific norm.

In any event, the traditional set of classical liberal principles—individual autonomy, private property, freedom of contract, tort law, regulation of monopoly, and the like—are said to be consequentially justified. Epstein stresses that he is not a libertarian; thus, he endorses forced exchanges that benefit both parties, for example, to efficiently supply goods. But redistribution is prohibited. One might think that this is obvious given his commitment to the Pareto criterion, but again things are complicated. Recall that he accepts the Kaldor-Hicks test (that the move from social state X to Y is efficient, even when some lose by moving from X to Y, so long as those who gain from the move could compensate the losers out of their gains). Indeed, Epstein accepts that the best argument for redistribution is the decreasing marginal utility of income, which of course relies on straightforward interpersonal comparisons of utility. While he thinks the argument is admissible, he seems to hold that on consequentialist grounds—especially given government failure—no redistribution of any sort could increase social welfare. I say “seems” as he also has another argument, more than a little unusual for a consequentialist. Not only is he a consequentialist but he is also a Lockean: When analyzing the tasks of government, protection of individual freedom is especially important since it is a Pareto improvement over the state of nature. It is puzzling why a consequentialist should evaluate the permissibility of a move from social state X to Y on the ground that X (a state honoring freedom) is Pareto superior to Z (the state of nature).

Only the first quarter of Skepticism and Freedom is devoted to Epstein's eclectic consequentialist case for classical liberalism, which he has more fully articulated elsewhere. Most of the book is devoted to replying to deeply skeptical positions that challenge classical liberalism. He takes up moral relativism (especially as advocated by Richard Posner), “conceptual skepticism” (that concepts such as coercion, liberty, and ownership are not well defined, or function in ways that undermine classical liberalism), and, most interestingly, philosophical and psychological considerations that cast doubt on whether people are really rational utility maximizers. Epstein is at home when talking law, not philosophy: His analyses of philosophical problems are impatient and not especially enlightening. His treatments of, for example, J. J. Thomson's Trolley Problem (pp. 101–3), abortion (pp. 103–7), and the supposed incommensurability of values (pp. 156–61) are not especially insightful. He is, however, more successful in showing that philosophical lawyers, such as Cass Sunstein, and philosophical economists, such as Robert H. Frank, err in supposing that analyses of philosophical puzzles about preferences—for example, whether they are adaptive, about relativities, or intransitive—have radical implications for legal practice and public policy. The discussions of psychological studies, such as those concerning the endowment effect, heuristics, and cognitive biases, are by far the most enlightening; there is a great deal to learn from these excellent chapters about the implications of these studies for our understanding of rationality and the defense of market freedom.

Although Epstein proclaims his empiricism and rejects “dogmatic” morality, his case for classical liberalism ultimately rests on “armchair economics” (p. 91); optimistic assumptions that social evolution selects for welfare-enhancing customs and that their welfare-enhancing status is not undermined by recent technological, social, and computational developments; and a complicated mix of consequential criteria, from simple Pareto to Kaldor-Hicks to Lockean to interpersonal social welfare functions. And, in addition, he relies on numerous empirical conjectures (e.g., pp. 59–64). Dogmatism is not avoided by building law and public policy on speculative hypotheses, just because they are speculatively empirical; and certainly it is an error to assert that nonconsequential moral principles are inherently dogmatic. In the end, Epstein's book should serve as a warning that those defending freedom not rest on armchair economics and armchair empiricism, no matter how modern they appear.