These are dark days for liberalism. I mean full, across-the-board, laissez-faire free-market, classical liberalism, otherwise known as libertarianism. While some budget-cutting and bureaucracy slimming will probably go through, those steps, though necessary to advance toward liberalism, are not sufficient.
What's conspicuously missing from the regime's activities is a ringing and unmistakable endorsement of full individual liberty, which requires a free-market economy. The imagined dichotomy between economic liberty and personal liberty is a snare and a delusion. What's more personal than how one makes and spends his money? Ominously, we've heard no such endorsement of liberty from the regime.
The cuts in government now being touted might increase liberty, even if unintended; then again, it might not. It depends on how the regime deploys the power and personnel left in place. All signs point to a regime run by a man who sees the theoretically private sector as merely an extension of his domain. A truly liberal program would combine the dramatic shrinking of government with comprehensive deregulation and other market-freeing measures so that private firms could provide the legitimate services that the government ostensibly provides now. For example, eliminating Medicaid would be paired with a radical freeing of the medical market, which would expand services and lower prices. (Admittedly, much deregulation, such as abolishing licensing, would have to occur at the state level.)
Dark days for liberalism are nothing new. That's been the norm for many decades. The economist Ludwig von Mises (1881-1973), one of the greatest liberal champions, lived through them. Throughout his long life he never stopped fighting for freedom and free enterprise, no matter how bleak the outlook. I look to him for encouragement.
Mises was born in what is now Ukraine, then part of the Austro-Hungarian Empire. He was educated at the University of Vienna, where he discovered the Austrian school of economics (a line of thought having nothing to do with Austria per se). He left Europe for America in 1940, a wanted man by the Nazis. It seems that being a liberal economist, a prominent anti-socialist, and a descendant of a Jewish family was hazardous to one's health in those days.
In 1927, after living through the catastrophe known as the Great War (later World War I), Mises published his political manifesto, Liberalism: The Classical Tradition. He had already published his pathbreaking book The Theory of Money and Credit (1912), which not only integrated money into general economic analysis but also showed that government creation of credit and fiat currency caused the boom-and-bust cycle. Next came Socialism: An Economic and Sociological Analysis (1922), which showed once and for all that socialism could never create or sustain a modern large-scale society in which everyone could prosper because private property in the means of production, which socialism forbade, was indispensable for market-price formation and thus economic calculation, without which no one (including bureaucrats) could make rational economizing plans in a world of scarcity. Had Mises retired at that point, our debt to him would have been limitless. Thankfully, he kept working despite the odds. His magnum opus, Human Action: A Treatise on Economics, was published in 1949.
In his introduction to Liberalism, section 4, Mises set out how he saw "the aim of liberalism." Let's look at what he wrote.
There is a widespread opinion that liberalism is distinguished from other political movements by the fact that it places the interests of a part of society—the propertied classes, the capitalists, the entrepreneurs—above the interests of the other classes. This assertion is completely mistaken. Liberalism has always had in view the good of the whole, not that of any special group. It was this that the English utilitarians meant to express—although, it is true, not very aptly—in their famous formula, “the greatest happiness of the greatest number.” Historically, liberalism was the first political movement that aimed at promoting the welfare of all, not that of special groups. Liberalism is distinguished from socialism, which likewise professes to strive for the good of all, not by the goal at which it aims, but by the means that it chooses to attain that goal.
Mises here was identifying a central part of what Adam Smith called the "system of natural liberty." It favored no particular group. Rather, it held out the promise of freedom and hence opportunity for all. (Obviously, it was inconsistently implemented, most horribly through slavery, though slavery had been practiced by virtually all people in virtually all places from time immemorial.) It is liberalism that ushered in the first mass production of all kinds of goods, that is, production for the entire population and not just for the aristocracy. That was revolutionary. The world was never the same afterward.
As for socialism striving for the same goal as liberalism. That was true, at least in theory, until the mid-20th century, when the New Left arose, jettisoned the goal of mass affluence, and substituted the "age of limits," that is, environmentalism.
Mises had in mind, not any good-faith critics, but "those critics of liberalism who reproach it for wanting to promote, not the general welfare, but only the special interests of certain classes." He thought they were "unfair and ignorant" because by "choosing this mode of attack, they show that they are inwardly well aware of the weakness of their own case. They snatch at poisoned weapons because they cannot otherwise hope for success."
For example, those critics accuse liberals of callousness because they oppose government interference with production. Mises showed that criticism to be baseless.
If a doctor shows a patient who craves food detrimental to his health the perversity of his desire, no one will be so foolish as to say: “The doctor does not care for the good of the patient; whoever wishes the patient well must not grudge him the enjoyment of relishing such delicious food.” Everyone will understand that the doctor advises the patient to forgo the pleasure that the enjoyment of the harmful food affords solely in order to avoid injuring his health.
Who would disagree?
But as soon as the matter concerns social policy, one is prone to consider it quite differently. When the liberal advises against certain popular measures because he expects harmful consequences from them, he is censured as an enemy of the people, and praise is heaped on the demagogues who, without consideration of the harm that will follow, recommend what seems to be expedient for the moment.
Continuing his medical metaphor:
Reasonable action is distinguished from unreasonable action by the fact that it involves provisional sacrifices. The latter are only apparent sacrifices, since they are outweighed by the favorable consequences that later ensue. The person who avoids tasty but unwholesome food makes merely a provisional, a seeming sacrifice. The outcome—the nonoccurrence of injury to his health—shows that he has not lost, but gained. To act in this way, however, requires insight into the consequences of one’s action. The demagogue takes advantage of this fact. He opposes the liberal, who calls for provisional and merely apparent sacrifices, and denounces him as a hard-hearted enemy of the people, meanwhile setting himself up as a friend of humanity. In supporting the measures he advocates, he knows well how to touch the hearts of his hearers and to move them to tears with allusions to want and misery.
Mises is right in describing the demagogue, who makes promises to the economically illiterate votes—prescribing measures that will bring general misery later. With the government's debt at over 100 percent of GDP and looming budget deficits of $2 trillion or more for the future, who would argue with him?
Antiliberal policy is a policy of capital consumption. It recommends that the present be more abundantly provided for at the expense of the future. It is in exactly the same case as the patient of whom we have spoken. In both instances a relatively grievous disadvantage in the future stands in opposition to a relatively abundant momentary gratification. To talk, in such a case, as if the question were one of hard-heartedness versus philanthropy is downright dishonest and untruthful. It is not only the common run of politicians and the press of the antiliberal parties that are open to such a reproach. Almost all the writers of the school of Sozialpolitik [interventionist social policy] have made use of this underhanded mode of combat.
The interventionists and socialists heap this abuse on liberals as a way to distract the public from the fact that the statists seek power over people's freedom in the market and society at large. The statists want to give orders for the people's own good. Really?
That there is want and misery in the world is not, as the average newspaper reader, in his dullness, is only too prone to believe, an argument against liberalism. It is precisely want and misery that liberalism seeks to abolish, and it considers the means that it proposes the only suitable ones for the achievement of this end. Let whoever thinks that he knows a better, or even a different, means to this end adduce the proof. The assertion that the liberals do not strive for the good of all members of society, but only for that of special groups, is in no way a substitute for this proof.
We must add that it is liberalization and globalization—liberty—that have nearly eradicated extreme poverty in the world. You can look it up. Mises would not be surprised. But remember, he was writing in the 1920s.
The fact that there is want and misery would not constitute an argument against liberalism even if the world today followed a liberal policy. It would always be an open question whether still more want and misery might not prevail if other policies had been followed. In view of all the ways in which the functioning of the institution of private property is curbed and hindered in every quarter today by antiliberal policies, it is manifestly quite absurd to seek to infer anything against the correctness of liberal principles from the fact that economic conditions are not, at present, all that one could wish. In order to appreciate what liberalism and capitalism have accomplished, one should compare conditions as they are at present with those of the Middle Ages or of the first centuries of the modern era. What liberalism and capitalism could have accomplished had they been allowed free rein can be inferred only from theoretical considerations.
In 2025, in light of the dramatic fall in poverty and the improvement in the other markers of well-being, we can readily see, if we look, what Mises was writing about: social cooperation founded on individual freedom, private property, the division of labor, voluntary exchange, and human creativity would empower people to live the kind of lives they want to live—unless they want to live as predators, which most people don't.
No comments:
Post a Comment