The goals of social justice will best be served by the forces of free market competition.
Boettke: Liberalism, Socialism and Our Future
Injustice is not built to last. Each generation must rise to the challenge of answering the cries of the powerless and give voice to the voiceless, in the unending quest to ensure that we do everything within our capabilities to establish a humane and just society. Anything short is a demonstration of a lack of understanding of our shared humanity. We are one another’s dignified equals, and justice demands that equals be treated equally.
Human beings are imperfect, and our institutions are imperfect. That is simply reality. Perfection is not an option for us. As Immanuel Kant argued long ago, and Isiah Berlin adopted as a motto, out of the crooked timber of humanity nothing straight can ever be made. But that doesn’t mean we acquiesce in the face of that imperfection. We can, and must, constantly strive to do better in our quest to establish a more humane and just society.
This is where economic reasoning enters as an essential tool in both understanding the human condition and striving to achieve a better world. Simply put, constraints matter. Human action always takes place against given constraints. Consequences follow from actions, and not all consequences are as intended. Scarcity, choice and the necessity of trade-offs is at the core of the first lesson of economics. But, the recognition of unintended consequences of purposive human action – both beneficial and detrimental – is critical in our quest for understanding social systems of exchange, production and distribution. These unintended consequences must be taken into account in our deliberations over alternative institutional arrangements in the hope that we can achieve a social system that delivers peace and prosperity, that satisfies the conditions of equality and justice, and that minimizes human suffering and maximizes the opportunities for human flourishing. Simply intending these components of a “Good Society” is not enough. Immature modes of reasoning – e.g., bad people do bad things; good people do good things – must be replaced by the more mature and disciplined reasoning of “invisible hand” explanations. As discussed in several of the essays in this collection, this mode of analysis is commences with a focus on purposive human actors, but then places those actors within specified institutional filters. The social scientist then examines the “mechanism” in operation in these alternative institutional filters through a study of the structure of incentives and the flow of information they generate. In a market society, for example, property, prices and profit and loss work in concert with one another to produce the positive and negative feedbacks that result in a continuous stream of new and fresh knowledge that individuals discover, utilize and learn from in coordinating their plans with one another through time. The influence these economics forces at work impose of the relevant human actors produces systematic tendencies that either prod and guide actors to pursue productive specialization and realize peaceful social cooperation through exchange, or, in the absence or attenuation of the institutions of property, prices and profit and loss, toward the misallocation of scarce resources and missed opportunities for mutual gains from trade, and ignorance of least cost technologies in production. The wealth and poverty of nations turns on the adoption of institutions. But so do the questions of equality, liberty and justice.
Joseph Stiglitz in his Whither Socialism? (1994, 269) argues that “The dream of a better world here on earth has been a central theme in the development of Western civilization since the Reformation.” The history of the translation of these utopian visions into social experiments in the 20th century “should make us cautious in the confidence with which we hold our views, and cautious in our appeal to ‘science’ to justify our beliefs about the organization of society.” But, Stiglitz argues, we cannot commit the alternative intellectual sin and insist that we live in the best of all possible worlds. The struggle to solve the problems that plague our world must continually be waged. And Stiglitz (1994, 277) is correct to ask “whether the insights on modern economic theory and the utopian ideas of the nineteenth century can be brought closer together?”
One of my teachers, James Buchanan, often quoted his teacher Frank Knight, in our classes – “to say a situation is hopeless is to say it’s ideal.” Since Buchanan was firmly committed to the idea that improvement in human affairs could result from a change in the rules of the game, or as he put it, by shifting to the constitutional level of analysis, there was an implied corollary to the Knightian quip. Since obviously the current situation is less than ideal, the situation must not be hopeless. Improvement was indeed possible through constitutional rearrangement. There is freedom, as Buchanan put it, through constitutional contract.
While Hayek adopted the Humean dictum of using reason to whittle down the claims of reason, and thus a more evolutionary approach in The Constitution of Liberty and Law, Legislation and Liberty, Buchanan was more Hobbesian and sought to provide the underlying ‘Reason of Rules’ and the “logical foundations” to ‘The Calculus of Consent’. For my purpose here, though, the important element to stress in their respective efforts in the second half of the 20th century was their rejection of the modern trend in economic and political economy thinking toward a theory of social control, and their underlying commitment to the Smithian plan of equality, liberty and justice. But that liberal plan had to be reconstructed, as well as restated, and not merely reprinted, for their time. The task at hand wasn’t limited to salvaging the old books of Adam Smith, J.S. Mill, and Ludwig von Mises, nor even saving the ideas of classical liberalism, but of refining and advancing the science and art of political economy in the modern age. As Hayek states to begin The Constitution of Liberty (1960, 1):
If old truths are to retain their hold on men’s minds, they must be restated in the language and concepts of successive generations. What at one time are their most effective expressions gradually become so worn with use that they cease to carry a definite meaning. The underlying ideas may be as valid as ever, but the words, even when they refer to problems that are still with us, no longer convey the same conviction; the arguments do not move in a context familiar to us; and they rarely give us direct answers to the questions we are asking.
Those of us influenced by these ideas must take that message of Hayek seriously for our time in the 21st century.
As I mentioned in my introduction, at the present time (summer 2020) economic and political liberalism faces both a severe test in the form of a public health crisis and a severe challenge in the form of the antithetical doctrines fueled by odious racism, nationalism, and intolerance. The test is an old one for liberalism in that it highlights the tensions in the project of collective action to address externalities and supply public goods. Whenever we must choose in groups the fundamental question emerges of how can individuals be free while subject to wills other than their own. Liberalism is not silent on this question, in fact, it was largely born with wrestling with this puzzle of freedom and authority and in addressing the appropriate constitutional design question. Similarly, the challengers to liberalism – both prior to its inception and after – have always been grounded in odious doctrines of a parochial nature whether based on race, ethnicity, creed, or gender. The cosmopolitan liberal project is the opposite of these collectivist doctrines, and begins instead with the insistence that the dignity of each human being must be respected. Within the liberal order, each of us has a moral obligation to respect the dignity of our fellow citizens. The cosmopolitan aspect of that liberal order is reflected in an inclusive and expansive definition of fellow citizens. In the extreme, the position I maintain is that of true radical liberalism, that citizenship would reflect the entire planet. The cosmopolitan liberal ideal is that we are “strangers nowhere in this world.” We are in fact citizens of the world, free to move, free to transact, free to associate, free to believe, free to love, as we want, where we want, and with whom we want, as long as we do not infringe on the rights of others to do similarly. The liberal order is a tolerant society, and liberal citizens cultivate a cosmopolitan attitude toward others who differ from them. Liberalism is LIBERAL, and the liberal expresses LIBERALITY – an openness to change and new ideas and new experiments in living. The liberal order is an open society, a social and political arrangement that when organized correctly, exhibits neither discrimination nor permits domination in public or private space. It is a system that is designed at its core to be absent of any privileges granted to some and not to others.
Enough with abstract theory/philosophy. We must face that fact that we don’t live in a world of open borders, with peace and prosperous international commerce, and a political, legal, and social order that doesn’t have privileges embedded in its very structure. We are often not tolerant of “others”, and institutions do not perfectly reflect liberal values and citizens do not exhibit liberality in their attitudes and practices. At best, in the developed economies of the globe we have a quasi-mercantilist order that has produced a managed global network of trade and commerce; at worst, we have a system of power and privilege that has been in perpetual war with other nation states. This system at its “best” has, due to pockets of liberal commerce, raised the living standards of billions over the course of the last 50 years. If we take the current definition of extreme poverty, which is living on or below $1.90/day, then in 1990, there were 1.9 billion (or 36% of the global population) living in extreme poverty. In 2015, that number had fallen to 730 million (or 9.9% of the global population). That was the first time in recorded human history that less than 10% of the global population was living in extreme poverty. Let that sink in a minute. Then think a bit more about what that means in terms of human well-being. We do not eat economic growth rates!!! But economic growth brings with it better nutrition, better health care, better education, greater access to more opportunities for women and minorities, more freedom from arbitrary coercion, etc. It is not a panacea for all the world’s ills, but economic growth and development may be a necessary condition for human flourishing even if it is not a sufficient one. Projections are that if modern economic growth – which is fueled by trade and technology – was to continue on trend, that by 2030 the number living in extreme poverty would be reduced to under 500 million. But those projections were made before the rise of a new wave of xenophobia, nationalism and the restrictions on the free flow of goods, labor and capital due to first a rise of populist regimes in Europe, North America and Latin America, and then pursued with even more vehemence in the wake of the emergence of the Covid19 global pandemic.
Angus Deaton described the contemporary period of globalization and economic development as The Great Escape (2013). But while Deaton tells his readers about the remarkable improvements in global wealth, health and well-being, he does also stress the problem of global inequality both between rich countries and poor countries, and within rich countries as some segments in those societies fall behind the general trend. It is important to correct two false impressions. The rich did not get rich at the expense of the poor. And while the rich did get richer, in study after study we learn that the poor tended to get richer faster than the rich got richer. The poor are “escaping” from extreme poverty and experiencing vast improvements in their lives, and they are doing so at a faster rate than the rich have seen their life circumstances improve. But still, even with that correction, there remains much suffering, and the Covid19 global pandemic threatens to heighten human suffering.
The cries of injustice and the tragedy of human suffering all demand our attention. The older among the current generation of young and intellectually aware individuals (roughly 40 years old) only know the pale rhetoric of liberalism, having been raised on a steady diet of criticisms of neoliberalism and capitalism, and having had to grow up in a reality (in the US) where since 2001, there has been an ongoing and seemingly never ending ‘War Against Terrorism’ that has not only committed our troops overseas but has robbed us of civil liberties and privacy at home. The median aged (30 something) among the current generation young citizens came to intellectual awareness as the Global Financial Crisis of 2008-2009 hit home, and families were impacted and financial prospects were derailed. Between 2010 and 2020, the youngest members of the current generation of college students and recent graduates entering the workplace (20 something) witnessed growing political division in society, almost to the point where any sort of civil discourse seems impossible between the contending perspectives in public policy. They have grown up with social media and seen the amazing explosion of information available to them at their fingertips, but they have also been witnesses to the potentially dire consequences of the spread of misinformation and cyber bullying. The current generation (old, median, young) understands that the value of a college education per se has declined relative to its cost. Again, it is important to clarify misperceptions because the rate of return for a college education is still very favorable for those who choose certain majors (e.g., computer science and engineering), while very low for those who pursue other educational routes (e.g., English and Theatre Arts). Market conditions may change, the rate of return on the human capital investment made will shift once again to reflect that change. The college experience is, once again pre-Covid19, more than occupational training. And, in aggregate college graduates still do much better in terms of lifetime earnings than non-college graduates. Nevertheless, it much be admitted that the cost of education is significant and the student debt problem is real. This generation I have been talking about (those in their 40s, 30s and 20s) has less savings, less home ownership, and less long-term economic security than previous ones. And their frustrations and anger are directed at what they have been told is the ruling capitalist system, and to a considerable extent at the guardians of that current system – economists.
In the socialist manifesto, Bigger Than Bernie (2020), Meagan Day and Michah Uetricht explain that what matters is not Bernie Sanders’s personal electoral fate, but that he has set in motion a movement for socialist reform that in their opinion cannot be stopped. He has helped to reinvigorate “class struggle” in America, and socialist ideas are no longer relegated to the sidelines in popular culture and political discourse. Their message has a sense of urgency as well as elation tied to it. If, they argue, rabidly racist and xenophobic politics is going to be defeated in America, then it will be because of the rise of a modern socialist movement; a democratic socialist movement. Capitalist exploitation, empowered by privatization and austerity, produces not only needless human misery, but is driving the planet to the brink of environmental catastrophe. The answer, according to Day and Uetricht (2020, 1) is straight forward. We must pursue public policies that guarantee “justice, equality, security, and shared prosperity in the form of free education, affordable housing, free high quality health care, full employment, a secure retirement, and a clean environment for all.” High ideals. The reason we aren’t achieving these high ideals, in their opinion, is because of monied interests in politics that perpetuate the capitalist system and the reckless pursuit of profit over the welfare of people, and the neoliberal theories of economists that supposedly came to dominate public policy in the 1970s and increased in influence globally through the 1980s. “The rise of neoliberalism has been disastrous for workers in the United States and helped defeat and dismantle the movements that won so many gains in the New Deal era and the 1960s.” (Day and Uetricht 2020, 22) The serious problem, they contend, is that even the Democratic Party sold out to the neoliberal ideology, and monied interests and the professional economists who championed the ideology and thwarted the working class struggle from below. Sanders in his failed Presidential bids demonstrated that the democratic socialist message can inspire people and unite them in solidarity in the struggle against the injustice and inequality of the capitalist system. The drive for equality and justice that the democratic socialist demands “excites working people’s passions and raises their class consciousness, and inspires them to dream of a better world.” (Day and Uetricht 2020, 211)
There are so many seriously flawed aspects of this narrative, but challenging each of them and providing the correcting arguments and evidence is beyond the scope of this essay. Though let me just reference a recent book by Geoffrey Hodgson that should give pause to a significant part of this narrative from perhaps the most sympathetic perspective that one might find — Hodgson’s Is Socialism Feasible? (2019) As Hodgson argues, the bold and inspiring idea of socialism “suffers from a number of fundamental problems” which are “revealed by theoretical analysis and confirmed by the experience” with the socialist experiments of the 20th century. And, it is critical to point out that, attaching the intended modifier “democratic” doesn’t achieve what modern socialist activists think it does for the simple reason that “Socialist have often promised a substantial expansion and enrichment of democracy.” Unfortunately, “Things always turn out differently, despite their intentions, because of the centralist logic of big socialism.” (Hodgson 2020, 72-73)
There is, however, enough truth in the critiques of the existing crony-capitalist system, and enough falsehood spread among the economically illiterate of the intellectual class related to the critical theoretical and empirical observations in the debate over socialism and capitalism, that it is relatively easy to sustain the fallacious narrative. This becomes especially true as the experience with real-existing socialism of the 20th century fades into historical memory. In the effort to sustain the falsehoods, the contemporary intelligentsia often condemn the responses most commonly offered by classical and modern political economists to address the serious social ills of our time. Not with reason and evidence, but with emotion and ad hominem. This just reinforces the cycle of despair as programs are devised to address social ills, and the social ills persist and in many instances grow worse. Rational discourse would focus on means/ends, and the critical questions of incentive alignment and informational transmission to guide adaptation, adjustment and social learning how best to organize affairs to address the pressing issues in the most effective manner possible. But rational discourse is not what is encouraged in the modern age of anger, resentment and despair. Arguments are ignored or dismissed without critical engagement, and evidence is either ignored or worse distorted to construct the preferred narrative. The post-truth world of “truthiness” creates a serious challenge to rational deliberation and discourse between contending perspectives. The most egregious example of this is Nancy MacLean’s Democracy in Chains (2018), which I have tried to provide a measured review of stressing the tragic missed opportunity her work represents. (see Boettke 2019) But the real tragedy is that she is far from alone in pursuing this style of work in assessing contending perspectives on capitalism and society.
The critical point I want to stress, is that because this current generation has no knowledge of the horrors of socialism, except what they might read in a history book, nor do they have any experience with high bouts of inflation and unemployment that brought down the Keynesian consensus in the 1970s, as a result they are ill-equipped to ferret out the falsehoods and to adjudicate between contending perspectives. It is not their fault. They lack the context, and they lack the training. Their teachers and professors in philosophy, politics, economics and history have failed them. They do not possess the arguments or evidence that would aid in formulating an effective and robust response to the cries of injustice and the tears of human misery that plague our society. Without that knowledge and command of the evidence, the proposed solutions may not only fail to address the root cause of the social ill, but in pursuing them enthusiastically and with such passion as if they have found the definitive solutions, unintentionally exacerbate the very ills they are hoping to eradicate. This would be a tragedy.
It is not a new form of tragedy, but sadly an old one. As Hayek warned in The Road to Serfdom (1944, 5): “Is there a greater tragedy imaginable than that, in our endeavor consciously to shape our future in accordance with high ideals, we should in fact unwittingly produce the very opposite of what we have been striving for?” And, it is all the more tragic the more passionate and confident the advocates are in their beliefs that this is the only path forward to achieve equality and justice.
Economists, Paul Rubin (2019) has recently argued, have failed in their educational mission because they have miscommunicated their core message. There is no doubt, Rubin suggests, that the economic way of thinking focuses on choice within constraints and the vital role played by competitive forces in bringing about efficient solutions. But that is not, and should not be, the main lesson from Adam Smith to James Buchanan. The main lesson of economics is the mutual gains from trade and the peaceful social cooperation under the division of labor that a modern commercial society engenders. Motivated by Rubin’s book, I published a book of essays on The Four Pillars of Economic Understanding (2020), where I argue that with the increasing attacks on economics – some legitimate, others misplaced – it is time for a renewed commitment by teachers of economics to take up the communication challenge with students of this generation and teach them the best of what the discipline of economics has to offer through the years, and not the sterility of optimization and equilibrium modeling exclusively. We must tap into the natural curiosity of our students and open them to the ongoing and fascinating conversation that constitutes the worldly philosophy. And, above all if we are inviting them to be active participants in a contested conversation, we must demonstrate by our own behavior and cultivate in them the fundamental virtue of civility in discourse.
A collective of essays by Edward Shils was actually published posthumously under the title The Virtue of Civility (1997). In one of his more relevant essays for our current contexts, “Civility and Civil Society: Good Manners Between Persons and Concern for the Common Good”, Shils divides political discourse and practice into “ideological politics”, “machine politics”, and “interest politics”. Ideological politics is grounded in the “us versus them” mentality of a final struggle and definitive judgment. Machine politics, on the other hand, is best reflected in the spoils system and the bureaucratization of the leadership of political parties. Interest politics, however, can devolve into machine politics, or mature into a politics of responsibility. It takes something outside of the political process itself, and a general disposition in the social order, for the practice of the politics of responsibility to rise to prominence in the everyday life of a modern liberal democratic society. A critical aspect of that disposition is civility. Such civility fades into oblivion under ideological politics, where only the one notion of the higher good is to be recognized and only those who truly believe are dignified and purified, while all others are irredeemably defective and the solution for the defects is extirpation, suppression, or exile. Machine politics does not exhibit any such a philosophical rejection of the other, but a practical rejection because politics is reduced to a zero sum game where the one party gains only at the expense of the other party. Thus, civility fades again once the party affiliation becomes the basis for the spoils.
In a liberal democratic society, though, civil society plays the role of the informal governor, which regulates both the economy and the government. Civility is the critical social glue that permits social cooperation among diverse and conflicting factions. The totalitarian societies of the 20th century all destroyed civil society in their countries, and with that, the countervailing forces against the devolution into either ideological politics or machine politics, or some atrocious combination of both as in the Stalinist and post-Stalinist Soviet Union. Shils contends that all large and heterogenous societies stand in need of civility to operate. “Civility,” he argues, “is an attitude and a mode of action which attempts to strike a balance between conflicting demands and conflicting interests. Liberal democracy is especially in need of the virtue of civility because liberal democracy is more prone to bring latent conflicts into actuality, simply because it permits their open pursuit.” (Shils 1997, 76)
The lack of civility that defines our current age in US politics is striking. Political polarization has grown so stark in the last decade that the Pew Research Center maintains a website tracking the extent of the divide and the consequences. The divide has produced a corresponding distrust among those on opposite sides, and as a result, an increase in the lack of civility in our public space. The rancor is especially seen in the federal government and the interaction with media. Shils’s observations were prescient. The center of government and society, Shils argued, must be more civil than the peripheries. “It is dangerous for the internal peace and good order of society if the centers are very uncivil internally and in their relations with each other. A civil society is imperiled if there is a low degree of civility within the between its centers.” (Shils 1997, 86) The importance of the virtue of civility cannot be stressed enough in the workings of a free and democratic society. “I should emphasize,” Shils (1997, 87) writes, “that the institutions of civil society – representative government, competitive political parties, periodic or regular elections, secret ballot, universal suffrage, a free press, freedom of association, assembly and petition or representation, independent institutions of learning and institutions of private property and freedom of contract – are absolutely necessary for a civil society. Without these institutions, there is no such thing as civil society.”
As I stressed in my introduction, Deirdre McCloskey in her Why Liberalism Works (2019) is striving to encourage an ongoing conversation among adults where they can continually learn together. Remember what I said earlier about liberality; liberality is about openness to new information and to change. In short, liberality is about life-long learning. Such an ongoing learning through social interaction and true conversation presupposes certain institutions, and those institutions dovetail with the liberalism I have been exploring throughout the essays in this volume. Liberalism is far from a perfected doctrine, and it is nowhere practiced to perfection. But its absence means we devolve into ideological politics and/or machine politics. Socialism is the antithesis of liberalism, thus it is incoherent with respect to democratic values in practice. Placing the modifier “democratic” in front of the word “socialism” in a polemical tract does not address the logical incongruence of the two ideas in any practical implementation. Our own lack of civility in the US at this time is because of the explicit rejection of liberalism and the adoption of nationalism on the one hand, socialism on the other, with the result that we have unleashed both ideological politics and machine politics, and have squeezed out the politics of responsibility and squashed civil society. Civility has lost its proper place as a restraining power in the public sphere of US.
We must fix this issue for the sake of our future.
I am going to end this concluding essay by reaching back to my own roots in the writings of my dissertation advisor Don Lavoie. While I was studying with Don, he published a landmark study on the socialist calculation debate, Rivalry and Central Planning (1985a) and, a more wide-ranging book in political economy and social theory, National Economic Planning: What is Left? (1985b) These works of Lavoie have informed my scholarly career at every step along the way. His teaching influenced my methodological perspective, my analytical approach, and my social philosophical commitments. He was “my teacher” and I was “his student”, and I remain that to this day, almost 20 years after his tragic death.
I honestly believe Lavoie’s work is a perfect conversation starter with the new generation of students who are searching for answers as they too struggle for a better world. The radical seeks, Lavoie stresses, not to merely change the current personnel in power, but to change the foundational institutions in society. And liberal radicalism, the true progressive left according to Lavoie, sought to “transform institutions in such a way as to make the very exercise of power by one human being over another extinct.” (Lavoie 1985b, p. 233) The socialist movement expressed high ideals of equality and justice, but they misdiagnosed the social disease, and provided the wrong treatment and cure. It was because of the failure to learn the lessons of economics that paved the way for this betrayal of the high ideals of the progressive left during the age of socialism. As he argues:
It is not correct to say that planning was modified from its Marxist origins to take on its modern, noncomprehensive forms. It would be more accurate to say that comprehensive planning and the radical movement it inspired were utterly defeated and replaced root and branch by an entirely different idea with an entirely different heritage, by a movement driven not by popular resistance to oppression but by ruling groups themselves. The radicals’ chief purpose was not just modified but completely reversed: from ending all wars and exploitation to conducting a world war of unprecedented destruction; from avoiding the monopoly power of big corporations that they feared unrestricted competition would permit, to handing these corporations the very weapons they needed (and could not have gotten under a free market) to secure monopoly power for themselves. The Left, in short, was duped into cloaking the corporations’ monopoly-building agenda in its progressive-sounding anticorporate rhetoric.Lavoie (1985b, p. 220)
And, the current enthusiasm for socialist means to address the social ills that continue to plague our current society threatens once more to derail the struggle for our better world. We cannot succeed in our dual quest to understand the human condition and effectively address the injustice we hope to eradicate if we turn our backs, Lavoie (1985b, 232-233) stresses, on “what logic and economic science tells us we should do.”
Economic science imposes an intellectual discipline on us by insisting that we pay close attention to not only the logic of choice, but the situational logic of alternative institutional arrangements. By following pursuing the economic way of thinking persistently and consistently, we come to understand the functional significance of the private property order and the price system for coordinating the diverse and often divergent plans of individuals. The market process through the prodding of property, guiding of prices, luring of profits, and disciplining of loss, provides the required incentives wrapped in signals for constant social learning by the participants. As Lavoie (1985b, 215-216) put it: “The evolution of the economy would be driven by the unplanned flux of market competition regulated only by the principles of natural law. Social progress was to be the indirect consequence of the competitive engagement of human minds with one another, not the direct result of the conscious planning of any single organization of minds. It was to be a society where no person was to coercively rule over another but where each one was to be persuasively influenced by others.”
Unfortunately, socialist intellectuals either ignored or rejected the teachings of the classical and modern economists about spontaneous order and social cooperation under the division of labor. Rather than embrace the market process, they sought to replace it either with comprehensive (Marxism) and non-comprehensive (Market Socialism) planning. The policy chosen was designed to eliminate the “anarchy of the production” and substitute a “rationalization of production” through scientific management of economic life. The adaptability and adjustment processes mediated through the competitive entrepreneurial market process and steered by the buying, and abstaining from buying, activity of consumers was to be substituted for by socialist planning authorities. “The essence of planning,” Lavoie argues (1985b, 221-222), “as it is practiced is to sabotage this very feature of markets, to slow down or prevent the revision of established routines. These rigidification policies are implemented by using the traditional mercantilist tools for government interference into the competitive process: licensing restrictions, wage and price controls, credit allocation, and the dispensing of subsidies to special interest groups …” The modifier “democratic” doesn’t fix this. As Lavoie (1985b, 225) further elaborated “planning in practice constituted nothing more nor less than governmentally sanctioned moves by leaders of major industries to insulate themselves from risk and from the vicissitudes of market competition. It was not a failure to achieve democratic purposes; it was the ultimate fulfillment of the monopolistic purposes of certain members of the corporate elite.”
As I stated earlier, the contemporary demand for a socialist solution to our contemporary woes – and there are serious issues to contend with – results in my assessment from a failure of educators to communicate widely to the general public the core teachings of economic science and the lessons from economic history of the 19th and 20th century. Instead, bad theory and distorted history directs their passion and outrage in a tragic direction. The tragedy, as Hayek warned us in the quote from The Road to Serfdom I gave earlier, is that in their effort to address demands for social justice, they perpetuate injustice. “Planning,” Lavoie (1985b, 230) states, “does not accidentally deteriorate into the militarization of the economy; it is the militarization of the economy.” … The theory of planning was, from its inception, modeled after feudal and militaristic organization. Elements of the Left tried to transform it into a radical program, to fit into a progressive revolutionary vision. But it doesn’t fit. Attempts to implement this theory invariably reveal its true nature. The practice of planning is nothing but the militarization of the economy.”
The power of Lavoie’s analysis in National Economic Planning is conveyed throughout his book as he discusses the underlying governing dynamic mechanisms of the three main social arrangements: Tradition, Market, Planning. He demonstrates the poverty and misery of Tradition, and the impracticality and tragic consequences of Planning. That leaves us with Market, and in particular the radical liberal vision of commercial society and free association among individuals. We must be willing to think through to a vision of a “workable utopia”. As Lavoie (1985b, 234) makes the case: “Many, perhaps most, utopias that have inspired people in the past have been inherently unachievable, and their pursuit has often led to immeasurable social harm. But there is really no alternative for anyone who recognizes the gross injustices of our modern world – and, for that matter, of virtually the whole of human history – but to lie down and resign oneself in defeat or to try to get up and devise a new utopia, a new vision of a fundamentally different world with which to reinspire an international movement. For if we settle for anything less than this, if we try to work within the constraints imposed by the current regimes, we are playing into the hands of the existing power structure and are destined to repeat the tragic story of the twentieth-century Left.”
The essays in this volume should be viewed as an invitation to inquiry to others. None should be viewed by anyone, and certainly weren’t intended by me, to be definitive statements. They are conversation starters, not conversation enders. The struggle is ongoing and never ending in science and in society. This means, however, that we must also face up to our imperfections; our troubling past and our difficult present. If we don’t, we are doomed.
Building on the work of Mises, Hayek, Buchanan, and Lavoie, the essays in this volume try to tackle various aspects of the argument for a true radical liberalism. “Our task now,” Lavoie (1985b, 238) suggests, “is to complete the American revolution. Unlike the failed Marxist utopia of Planning, the Jeffersonian, Market-guided society is a workable idea, an ideal that when properly understood is far more consistent with the humanitarian and internationalistic values of the Left.” Lavoie, and me, are not blind to the gross inconsistencies in the American experience. But the principles are not to be rejected because of the imperfections and immorality of men. If the principles in principle are workable, then it would be a grave error to reject them. Rather than reject, we argue that our task today is to admit “exceptions to the principles that otherwise guided that revolution were allowed which kept America from fully achieving its ideal. For example, equal rights were incompletely extended to women and withheld altogether from blacks and Native Americans. … Such remnants of coercion were not only inconsistent with the general principles that fueled the American revolution but were also ultimately to prove the causes of most of the nation’s problems – and shame – since. It was this incompleteness that let Americans massacre Indians, enslave blacks, and restrict the rights of women.” (Lavoie 1985b, p. 238)
Liberalism has nothing to do with the maintenance of the status quo. The constant adaptation and adjustment to change, and the continuous evolution of social mores that promote peaceful cooperation and wealth creation, represent the greatest threat to the citadels of power and privilege. The goals of social justice will best be served by the free forces of market competition, and will be ill-served by the renewed calls for socialist planning that inevitably devolve into the permanent war economy of the militaristic state. True liberal radicalism, as we have stressed, was born in the struggle for emancipation from dogma, from subjugation, from violence, from poverty. The goal was to find that set of institutions that would minimize human suffering and maximize the opportunities for human flourishing. A system that could empower and grant freedom to all, rather than a select few. The liberal plan of equality, liberty and justice would deliver autonomy, prosperity and peace. Foreign military entanglements would end, and peaceful and mutually beneficial entanglements of trade would be pursued instead. Interventionism in domestic economic and foreign political affairs would be rejected, and the principles of noninterventionism both at home and abroad would be the governing principles. Such a complete liberalism has yet to be instituted, but it follows from the consistent and persistent applications of the teachings of economics and political economy to the practical affairs of our world.
I am neither a cynical pessimist, who believes such a vision of cosmopolitan liberalism is an unrealizable dream, nor am I a naïve optimist who believes the ideal society is easily to be achieved if one we show good will toward each other. The “Good Society” of true radical liberalism is an ideal, not a speculative Utopia, but a guiding principle for what ought to be. Economic science is the tool we use to examine how the guiding principles that ought to be, can be realized through institutions that align incentives and discovery, utilize and disseminate the relevant participants in the social order to they can coordinate their plans with one another. In this way, we can find that set of institutions that enable individuals to pursue productive specialization and realize peaceful social cooperation through exchange. Autonomy, prosperity and peace.
Liberalism promises a more harmonious world, a less violent world, a more prosperous world, a better world. Achieving such a world is worth the struggle.
This is an excerpt adapted from the book The Struggle for a Better World.