We left the previous post on On Liberty by noting the problematic nature of John Stuart Mill's application of his philosophy to economics. Just to quickly recap, because the economy is the collective outcome of self-organising individual activity liberty's interest is best served by the state and society keeping their noses out of it as much as possible. However, the (relatively) brief airing of his views on economics in On Liberty are by no means his final words on the subject. Mill did after all produce a large body of work examining the political economy of the day and, according to a collection of Mill's and Jeremy Bentham's essays on utilitarianism, began enunciating positions calling for a 'cooperative wage system' and means of narrowing the wealth divide between employers and employees. But at the same time Mill - consistent with his understanding of liberty - remained a resolute opponent of economic planning by the state, the practice of trade unionism and championed flat taxes over progressive taxation because they infringed the liberty of the individual.
Looking at the foundation of Mill's philosophy is the individual, albeit the individual abstracted from all social contexts. Society as a conglomeration of individuals minding their business and having the freedom to pursue their heart's desire - provided their conduct is not injurious of others and/or does not interfere with the right of every other individual to do the same - is the good society. Liberty is the freedom to act without unjust interference from the state, society and other groups of individuals while respecting at all times the right of others to the same.
Applied to economics we have a picture of individuals freely buying and selling and entering into contractual relationships with one another. The latter can assume any number of types of transaction, but what interests us here is the contract of employment, whereby one party to the contract receives a regular payment in return for working under the direction of the employer. Though Mill was aware these relationships were open to abuse society had thrown up legal remedies designed to protect the interests of contract parties and, fundamentally, the liberty of withdrawing from the contract remains intact. For example, an employer who runs their workplace as a mini-police state does not damage liberty because all the employees are there voluntarily. If they do not like it they are always free to leave. However if those workers down tools or otherwise not cooperate with the employer in an attempt to change their conditions they are collectively overstepping their contracts and are actively forcing their will on the manager/owner. From Mill's point of view they are acting against liberty.
This is where Mill's liberalism is its weakest. To put it bluntly where the vast majority of people engaged in economic activity are compelled to work in return for a wage because they have very little or no capital to invest, all talk of their economic freedom is meaningless. Mill fails to appreciate the illiberal authoritarianism that underpins market economies. One does not have to adhere to Marx's theory of exploitation to acknowledge that this situation, which is an unshakeable characteristic of all capitalist economies, is not compatible with liberty of the majority who live in these societies. And if we move into a situation that acknowledges inequalities between individuals exist - again without necessarily having to support Marx's treatment of these as systemic features of capitalism - the key assumption liberalism makes concerning the fundamental but abstract a priori equality of individuals completely breaks down. This leads to two basic political positions. You either accept the prevailing state of affairs as natural or the best of all possible worlds, or you seek to improve and/or radically transform society. There is no room in between for a distinct, independent liberal position.
Does that mean On Liberty's arguments can be deposited in history's museum of nice ideas? No. Firstly the stress Mill placed on liberty is invaluable to any critique of capitalism that would like to see it replaced by a freer democratic society not scarred by the injuries of class, race, gender and sexuality. Taking liberty as a central element of radical politics does not mean a trip into the whacky realms of "libertarianism".
Second the abstract character of liberalism that renders it a utopian strand of capitalist politics can paradoxically make it useful to address problems in Marxian political theory - so argues Leo Panitch in his 2001 book Renewing Socialism. For Marxists the fight for socialism is bound up with the material existence of the working class. Capitalism will only be transcended by our class becoming conscious of its existence and its interests and waging class struggle successfully. This culminates in the first, or lower stage of socialism - the dictatorship of the proletariat. This simply means the replacement of the dictatorship of the bourgeoisie (under which we exist now, be the state forms it takes are constitutional monarchies, liberal republics or outright dictatorships) by the rule of the working class. The workers' state constructed on the bones of what went before would likely be more democratic and free than any form of political rule possible under capitalism, but there remains a key contradiction at its heart. As the rule of the workers become more consolidated and a greater proportion of society falls under its conscious democratic direction the need for security against counterrevolution from within and without remains pressing until capitalism is decisively defeated on a global scale. The Russian revolution and the history of the USSR demonstrates the negative resolution of this contradiction. Actual counterrevolution and the threat of it saw the infant workers' state in that country relied on militarily defeating those who wished to overthrow it. But in so doing, exacerbated by the backwardness and devastation of the country the state became increasingly bureaucratised and turned into the very opposite of a socialist state.
For Panitch liberalism's theorisation of the relationships between individuals, states and societies in an idealised context is ready made for addressing these issues in an emerging socialist society. They offer a set of arguments that already have wide currency and can be deployed in defence of and for furthering democratisation - in other words they can be a resource for countering the bureaucratising consequences of vigilance against counterrevolution.
Liberalism means Marxists do not have to re-invent the wheel to defend the democratic gains of revolutionary change.
Edit: A complete list of posts on On Liberty can be found here.