by William H. Simon

UCLA Law Review, 38 UCLA L. Rev. 1335, August, 1991

Copyright 1991 by the Regents of the University of California; William H. Simon


Economic democracy is the idea that the norms of equality and participation that classical liberalism confines to a narrowly defined sphere of government should apply to the sphere of economic life. Economic democracy thus entails a challenge to the classical liberal notion of property. In classical liberalism, property defines a realm of private enjoyment. No particular property right is a prerogative of, or a prerequisite to, citizenship, and the exercise of property rights by those who have them is not assessed in political terms.

One alternative to classical liberalism responsive to the ideal of economic democracy is classical socialism. Classical socialism opposes to the liberal notion of private property the notion of state property—property controlled by the officials of a democratically constituted state. Another alternative to classical liberalism inspired in part by the ideal of economic democracy is social democracy or welfare-regulatory liberalism. Social democracy retains the classical liberal notion of private property rights, but it both qualifies them by regulatory restrictions on their exercise and supplements them with welfare rights to minimal subsistence funded and administered through a tax-transfer system.

This essay is about aspects of a further alternative to classical liberalism inspired by the ideal of economic democracy. This alternative can be found in converging elements of the traditions of republicanism and market socialism. Like social democracy, the alternative rejects both state property and the unrestricted accumulation and exercise of private property rights. However, to a greater extent than social democracy, it pursues its concerns by encouraging a politically desirable primary organization of economic activity and distribution of income and wealth. The distinctive notion of property in this alternative view is sometimes called social property in the market socialist tradition, but its simultaneous affinity with the republican tradition leads me to call it social-republican property.

The distinctive feature of social-republican property is that it is held by private individuals subject to two types of conditions—one requiring that the holder bear a relation of potential active participation in a group or community constituted by the property, and another designed to limit inequality among the members of a group or community. Among the more familiar forms of social-republican property are interests in certain producer cooperatives and “limited equity” housing cooperatives.

In contemporary American society, the characteristics associated with social-republican property are routinely imputed to a narrow set of political or citizenship entitlements, such as voting rights, but these characteristics seem anomalous in private economic life. Nevertheless, there are some interesting examples of social-republican property in the private sphere, and there has recently been a variety of proposals that would increase its importance there. 81 Moreover, a variety of regulatory and welfare policies, such as certain forms of tax relief and rent control, create interests that resemble social-republican property and may be inspired by social-republican principles.

This essay has both historical and political purposes. One historical purpose is to clarify certain distinctive aspects of the republican and market socialist traditions and to emphasize an affinity that accounts for their frequent convergence in 19th century radicalism. Part I develops the notion of social-republican property as a heuristic designed to serve this purpose.

Another historical purpose is to illustrate that, while social-republican principles are usually treated as utopian and marginal in American public discourse, there is in fact a wide variety of property rights in the American economy that express such principles. Parts II through IV thus survey some contemporary examples of social-republican property in America (with some references to Europe for purposes of comparison).

The essay’s political purpose is to contribute to contemporary debates about radical economic reform, in particular to debates over the possibility of a “third way” between capitalism (both its classical liberal and social democratic versions) and socialism. The social-republican vision may be the closest thing we have to a reform model that is both distinguishable from the capitalist and socialist models and at least moderately institutionally concrete.

To be sure, the sophisticated contemporary response to the question of the “third way” is to assert the indeterminacy of all general reform models, and to insist that any plausible program for a particular economy would have to be an amalgam of a diverse variety of forms of property. General models do not generate concrete programs by themselves, and no single general model could plausibly serve as a unique inspiration for the restructuring of an entire economy. Nevertheless, general models inescapably influence even the most contextual thinking about particular reforms. Enlarging our repertory of general models thus seems likely to enhance the flexibility of our thinking and the range of particular alternative possibilities we can summon in appraising particular practices and institutions.

Thus, the essay concludes in Part V with a tentative normative appraisal of the social-republican vision. It defends social- republican institutions against the charge that they have strong general tendencies toward economic inefficiency. On the other hand, it concedes that such institutions have a troubling tendency toward exclusiveness. The cultural exclusiveness attributed to republicanism in some recent critiques has a counterpart in the economic logic of social-republican property. Plausible applications of social-republican principles would have to confine or neutralize this tendency.

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