«Introduction Even though neither theoretical arguments nor historical evidence provide reasons to believe that the ideals of liberalism may be better ...»
“German-speaking Swiss still refer to confederation as Eidgenossenschaft. Genossenschaft means association or comradeship. Eid refers to oath. An Eidgenossenschaft is an association bound together in a special commitment expressed by reciprocal oath. A Swiss citizen is referred to as an Eidgenosse, that is, a covenantor – a comrade bound by oath. The source of authority resides, then, in a covenant that each is bound to uphold in governing relationships with another.” ultimate judges in their own affairs.50 In other words, it is based on the principle of normative individualism according to which the ultimate test of ‘social desirability’ lies in the informed voluntary agreement among the persons involved. As Buchanan and Tullock have shown, the principle of citizen sovereignty does in no way rule out that citizens may, for prudential reasons, voluntarily agree on abandoning unanimity as a decision rule and on deciding, instead, their ongoing common affairs by majority rule, and even by delegating decision-making authority to representatives. It is important, therefore, to distinguish carefully between unanimity as the ultimate legitimizing principle in democratic polities and unanimity as a decision rule for ongoing policy choices.
Individual Sovereignty: The Normative Foundation Of Liberalism and Democracy
In the previous section I have argued that a distinction should be made between two concepts of democracy, namely between the common definition of democracy as majority rule and the “generic” definition of democracy as citizen sovereignty. I have argued that it is not the principle of majority rule but the norm of citizen sovereignty that captures the fundamental ideal of democracy. The majority principle represents a particular institutional feature of democracy that “sovereign citizens” have prudential reasons to adopt, but that is not itself an essential ingredient of the fundamental ideal.
Earlier, in section 3 I had argued that, in a quite similar way, a distinction can be drawn between two concepts of liberalism or between two readings of the ideal of liberalism, namely, on the one hand, as the ideal of individual liberty in the sense of “private autonomy” (Privatautonomie) and, on the other hand, as the ideal of individual sovereignty. Both distinctions are in need of further specification.
In contrasting the democratic principles of majority rule and citizen sovereignty on the one side and the liberal principles of private autonomy and individual sovereignty on the other I made it appear as if both distinctions are at the same level of generality. This is, however, not quite correct. A more accurate analysis must, as I would like to suggest, distinguish between three levels at which liberalism and democracy can be compared, namely the level of their “institutional embodiments,” the level of their principal focus, and the level of their underlying normative premise. In terms of this three-leveldistinction democracy can be characterized by majority rule as part of its “institutional embodiment,” by citizen sovereignty as its principal focus, and by individual sovereignty as its underlying normative premise, while liberalism can be characterized, in reverse order, by individual sovereignty as its underlying normative premise, by private autonomy as its principal focus, while its “institutional embodiment” are the specific systems of rules that constitute existing private law systems and market economies. The matrix below summarizes this threefold classification.
In terms of their underlying normative premise democracy and liberalism can be said to be equally based on the principle of individual sovereignty.54 In terms of their principal ideals, namely citizen sovereignty and private autonomy, they can be said to complement each other in the sense explained above. It is at the level of their respective institutional embodiments that liberalism and democracy have come to appear as different and even conflicting concepts. Yet, this is the essential message of my argument, the particular institutional embodiments of the ideals of liberalism and democracy should not be confused with the ideals themselves. Nor should the apparent differences in their institutional embodiments distract attention from the fact that their principal ideals are rooted in the same fundamental normative premise.
An implication of the above “refined” distinction between different levels at which the ideals of liberalism and democracy can be compared is that, in the case of liberalism no less than in the case of democracy, the choice of their respective institutional embodiments should be regarded as a matter of prudence rather than a matter of principle. The question of what specific democratic procedures and institutions promise Hayek (1948: 29): “True individualism not only believes in democracy but can claim that democratic ideals spring from the basic principles of individualism.” – In his early treatise on Socialism L. von Mises emphasized the correspondence between the liberal principle of “consumers’ democracy” (1981: 11) and “political democracy,” arguing: “Democracy is self-government of the people; it is autonomy. … Political democracy necessarily follows from Liberalism” (ibid.: 63, 65).
to serve the ideal of citizen sovereignty best is a factual matter. It is not pre-answered by the fundamental ideal of democracy itself, but is a matter of prudent institutional choice.
Likewise, the question of how exactly the rules of the private law society should be defined, and where specifically the demarcation line between the “private” and the “public” realm ought to be drawn, is not pre-answered by the fundamental ideal of liberalism. It is a matter of prudent constitutional choice of sovereign individuals.
When Hayek argues that “the problem of whether or not it is desirable to extend collective control must be decided on other grounds than the principle of democracy itself” (1960: 106) this can not be meant to imply that liberalism can offer a criterion for determining the appropriate demarcation line between the civil law society and the state that is external to, or independent of, the interests and preferences of the individuals concerned. In the context in which the quoted statement appears the term “principle of democracy” clearly is not meant in reference to the fundamental democratic ideal of citizens’ sovereignty, but in reference to the majority principle as a particular institutional feature of democracy.55 Yet, a consistent advocate of the democratic ideal of citizen sovereignty would have to agree no less that it is not the majority rule per se, but only the voluntary consent of the persons involved that provides the ultimate measuring rod for what may be regarded as “the desirable extent of collective control.” The logic of both ideals, of the liberal ideal of individual sovereignty and of the democratic ideal of citizen sovereignty, cannot but lead to the same conclusion, namely that, ultimately, there can be no other criterion for determining the desirable demarcation line between the private and the public sphere than voluntary agreement among the individuals concerned. Likewise, the two ideals must lead to the same conclusion in regard to the question of how the content of the rules of civil law and, by implication, of private autonomy should be defined, namely that, here too, voluntary agreement is the ultimate source of legitimacy.
The Liberal and Democratic Ideal of a Privilege-Free Order In the same context Hayek (1960: 106) notes: “While the dogmatic democrat regards it as desirable that as many issues as possible be decided by majority vote, the liberal believes that there are definite limits to the range of questions which should be thus decided.” Hayek’s critique of democracy in its prevailing institutional form centers around the charge that the absence of effective limitations to majority rule inevitably results in a policy that, instead of serving the common interests of the citizenry, gets entrapped in what one may justly call the dilemma of privilege granting or, in the terminology of public choice theory, the rent-seeking dilemma.56 It is, as Hayek argues, the very lack of effective limitations on its rule that forces the presently governing majority, in order to stay in power, to grant privileges to those groups on whose support it depends.57 It is this very fact that, according to Hayek, presents the principal threat to liberty, i.e. the fact “that unlimited democracy will abandon liberal principles in favor of discriminatory measures benefiting the various groups supporting the majority” (1978c: 143).58 The granting of privileges to some at the expense of other members of the polity is, however, not only in evident conflict with the liberal principle of non-discrimination, it is equally in conflict with the ideal of citizen sovereignty as the fundamental normative principle of democracy as a citizens’ co-operative, as a “cooperative venture for mutual advantage” (Rawls). In this sense, Hayek’s liberal critique of unlimited democracy can be said to imply that the absence of effective limits to the power of majorities not only violates liberal ideals but is in conflict with the fundamental democratic ideal as well.59 Instead of serving the common interests of all members of the citizens’ co-operative an Buchanan and Congleton (1998: 43): „Democracy, as such, loses its raison d’être if politics … becomes, and is seen to become, nothing more than a means through which one coalition of persons (groups) succeeds in extracting value from another coalition.” – “Majority coalitions must be restricted in their authority to advance the interests of some groups differentially at the costs of other groups” (ibid.: 125f.).
Hayek (1979: 128): “(T)he very omnipotence conferred on democratic representative assemblies exposes them to irresistible pressure to use their power for the benefit of special interests, a pressure a majority with unlimited power cannot resist if it is to remain a majority. This development can be prevented only by depriving the governing majority of the power to grant discriminatory benefits to groups or individuals.” – “An omnipotent sovereign parliament, not confined to laying down general rules, means that we have … a government which … must maintain itself by handing out special favors to particular groups” (ibid.: 102).