- Paul Krugman’s Ad Hominem Defense of Central Banking - August 4, 2020
- Gold and Free Banking Versus Central Banking - July 28, 2020
- “Systemic Racism” Theory is the New Political Tribalism - July 21, 2020
Freedom and the free society are once again under direct attack by those who espouse far-greater degrees of government control over people’s lives. Wrapping themselves in the cloak of progressivism, “social justice,” and liberation from oppression and discrimination, they use a lexicon of words that are designed to reflect their view of and desires for the world: diversity, inclusiveness, participatory democracy, pluralism, and peace. But in reality, the only social system able to deliver on these goals is free market liberalism.
To understand this, it is necessary to begin with first principles about human beings and the nature and workings of the social world. Social-democratic activists have as their starting premise the idea that society is composed of elementary groups or collectives, with these defining and determining the facts and fate of everyone in society.
Human Beings Defined as “Social Classes” at War
During the last 100 years, collectivists have differed over the characteristics of these elementary groups. Marxists and other socialists traditionally defined human beings on the basis of their relationship to and ownership of the means of production. Thus, there were, on the one side, the capitalist owners of the means of production and, on the other side, those who sell their labor to those owners as the means of earning a living.
In the Marxian story of human history, the private owners of the means of production extract a portion of what the workers have produced through their productive labors, and take that portion as ill-gotten gains simply because they own the tools and machines with which production is undertaken and without access to which the workers and their families would starve. Hence, the story of capitalism is a tale of exploitation and abuse by the few who own the means of production against the many who do the actual toiling.
Through his clairvoyant reading of the inescapable trajectory of the stages of history, Karl Marx promised that the workers would finally rise up and throw off their economic chains and collectively seize and jointly use the means of production for their common purposes, and the world would be transformed into a paradise on earth of equality and prosperity for all in the communism of the future.
In the Marxian worldview, your place in society, the identification of who and what you are, and your relationship to others are all predetermined by your “objective” status vis-a-vis the private ownership of and control over the physical means of production (factories, machines, land, resources, and raw materials). How you may think about these things is irrelevant to the reality of the class conflict between the haves and the have-nots. You are your social class. Your future and place in society are tied to the fate of that social class to which you belong.
Escape is impossible. If you do not see yourself and act as a member of the exploited working class, there are only two general explanations: either you have been duped and brainwashed by the capitalist class with a “false consciousness” from which you need to be re-educated; or you are a “traitor to your class” — that is, a paid hireling who has betrayed his own abused social class for a privileged position or special pay provided by the oppressing private owners of those means of production.
Individuals Submerged Within Nations and Races
The other two dominant collectivisms of the last 100 years have been nationalism and racialism, with their extreme forms represented by Italian fascism and German national socialism (Nazism). Fascism declared that the nation was the building block of society, represented by shared culture, heritage, language, and history. There was nothing above or outside of the nation-state, Benito Mussolini insisted; the individual owed all his strength and obedience, including sacrifice of his life and all that he considered to be his own, because what anyone considers his own is really the property of the nation-state to which be belongs. After all, the individual passes away, but “the nation” continues indefinitely.
Nazism’s twist on this was that who and what you are is defined by “the blood” — that is, the biological inheritance given to you based on the racial group into which you have been born. The racial characteristics and qualities identified as belonging to various races determine your place and position in the competitions among racial groups for dominance and power in the world.
Those forethoughtful enough to pick pureblooded Germans as their parents wisely ensured that they were members of the “master race.” Those in whose veins flowed “Jewish blood” were condemned as inferiors and socially dangerous parasites needing to be eliminated for the good of the superior racial group. Here, too, there was no escape from the genetic tribe into which one had been born. You are your race, with the individual a prisoner of his biological background.
The life-or-death struggles making up the course of human events were conflicts and combats between these groups — social, national, or racial. The individual human being was just along for the ride based on the good fortune or bad luck of the collective into which birth and circumstances had placed him. The individual is made nothing more than a passing droplet in the great stream of history, a history and reality of social classes, nation-states, and biological races.
Classical Liberalism’s Foundation in Individuals and Ideas
Against these collectivisms has stood the social and political philosophy of classical or free market liberalism. Groups of any type do not exist separate from or independently of the individuals of which they are composed. Individual human beings are ultimately the building blocks of society, not collective combinations of them.
Yes, we are born into families, we inherit biological characteristics of our parents and those that preceded them, and we grow up in the social, political, and economic institutional orders in which birth and our family circumstances have placed us. All this is no doubt true without deterministically dictating our fate as distinct human beings.
The classical liberals of the 18th and 19th centuries argued that all of these things do not change the fact that each and every one of us is a thinking, reasoning, valuing, and acting individual. And it is our thinking, reasoning, and acting that ultimately determine how we view ourselves, others around us, and the social orders in which we wish to live.
For instance, are the Germans of the 21st century the same as the Germans of the 1930s? The large majority of them are the descendants of those who lived in the geographical area defined as Germany in that earlier time. And these later Germans are the inheritors of the social and institutional order into which they were born and that had preceded them.
But are they the same “Germans” in certain essential and meaningful senses? Specifically, in the realm of ideas and the actions that follow from beliefs and understandings, the answer is surely no. Eighty years ago in 1939, a sizable number of Germans believed in, accepted, or acquiesced in and went along with Nazi ideology and Hitler’s domestic and foreign policies. Many Germans were formally or informally Nazis in their words and in a good many of their deeds.
Out of a population of 87 million in 1939, the German secret police, the Gestapo, numbered less than 35,000, or .000425 percent of the total. Surveillance, obedience, and informing on others were dependent on the willful participation of many millions of people under German national socialism.
Today, Nazis and neo-Nazis make up a very small percentage of the total German population. The vast majority of Germans are anti-totalitarian in their thinking, they reject the notion of a one-party state, and they do not believe in race theories concerning human society. They may hold a variety of other ideas that are far from classical liberal and free market ideals, but contemporary German society is different from that of 1939 because of the ideas, beliefs, and values in the minds of multitudes of individual Germans today. The racist sins of the fathers and grandfathers have not been biologically passed on to their children and grandchildren through “the blood,” independently of individual human views and values about man, society, and government.
The ideas in our minds and not the DNA in our chromosomes determine who or what we are in terms of our attitudes and actions, though of course we are biological creatures. We can choose to not see human beings as “class enemies” or “race opponents” or “nationalist threats.” We can choose to see our fellow human beings as individuals, each of whom has their own history and experiences, has their own personality and proclivities, but is nonetheless a distinct and unique person to be looked at, judged, and interacted with on that basis.
The Liberal Heritage of Life, Liberty, and Property
In the classical liberal heritage of ideas, every human being has an inviolable right to their individual life, liberty, and honestly acquired property. The philosophical founders of classical liberalism grounded this, in general, in theology and/or reason. We are each creations of God, who breathes life into each one of us, and who in his commandments to humankind forbids killing and stealing and fraud (bearing false witness). Hence, from the beginning, God ordains a society of free and peaceful people.
Our reason, also and separately, enables us to reach a similar conclusion. Born into this world, no person in reflecting on him- or herself wishes to be murdered or plundered. Every human being wishes to have the liberty to try to survive and prosper, to pursue and perhaps achieve happiness, and to peacefully produce and acquire the means for material and cultural betterment. Not one of us wishes to be reduced to the compulsory servant or slave of another, who denies us the ability to be and act as an end in ourselves rather than a forced means to their ends. All reasonable and right-thinking people know this to be true about themselves and those around them.
The rational voice inside each one of us, upon that inward reflection, says that what we want is for others to respect our own right to our life, liberty, and property, but that this requires a matching respect on our part for their similar rights; through such a reciprocal respect for each other’s individual rights, social peace and prosperity become possible.
The most elevated and eloquent expression of this is still to be found in the American Declaration of Independence, in which the securing and protecting of such individual rights becomes the reason for the establishment of government to guard everyone from the plundering hands of their neighbors — and for a document such as the U.S. Constitution, meant to delineate and narrowly define the functions of that government so as to ensure that political power guards our liberty and does not become a means for denying it. (See my article “John Locke and American Individualism.”)
But just as the Germans of 2019 are not politically the carbon copies of the Germans of 1939, the Americans of today are not the Americans of 1819 or 1919 in terms of ideas held, government policies wanted, or freedoms cherished. Not everyone in America understands, supports, or wants what the more active and vocal progressives and new American democratic socialists say they want to see implemented in the United States. But the attention to, sympathy for, and deference to their message in the political arena and the mass media suggest just how far the Americans of 2019 are from those earlier Americans of one or two centuries ago.
Classical Liberal Diversity and Inclusiveness
Which gets us to the progressive and democratic-socialist agenda of diversity, inclusion, participatory democracy, pluralism, and peace. These may not have been the catchphrases of the 18th- and 19th-century classical, free market liberals, but they represented a good part of their vision for a better world, though significantly different from the meanings and content assigned to these terms in contemporary America.
For the classical liberal, diversity is inseparable from the idea of individuals and their rights. Society is as diverse as the number of people existing in it. Every human being has a right and is encouraged to “find himself” — that is, to discover and decide who they are, what they want, what peaceful avenues seem most likely to bring them closer to those goals for life. Each of us has one life to live in this earthly sojourn. And all of us should be respectful of and even understanding of the plethora of ways that human beings try to find happiness and personal meaning behind it all.
Tyranny of any sort, classical liberals argue, restricts and restrains that human diversity by controlling and confining individual human beings in terms of what they can do and with whom within the dictates of what the tyrants impose on all the others in society. The corridors of diversity are narrowed to those within the commands and prohibitions set by those with the political power to threaten others with physical force. Diversity extends no further than what serves the purposes and pleasures of those in that political authority.
In the classical liberal world of open and free markets, inclusion is both offered and fostered for all through participation in the social system of division of labor. In the arena of free exchange every member of society is encouraged and given the opportunity to find their niche of specialized productive ability as both the means to earn the financial wherewithal to obtain from others all that can better improve the satisfaction of their own ends through trade, and for all the others in society to gain from what that individual can offer to them in the voluntary reciprocity of buying and selling.
This is why classical liberals have argued for free trade, for its multitude of benefits when taken far beyond the exchanges within the village or town to incorporate everyone within the same country, then on the same continent, and finally to bring together all of humanity, everywhere, around the entire world in an interdependent community of industry and commerce that includes all of humanity. What can be more inclusive than offering partnership to everyone on the planet to share what they can do to better the conditions of others as the self-interested means to improve one’s own life as defined by each of us?
Here, too, is a crucial reason why classical liberals have criticized, opposed, and called for the repeal of all restrictions and restraints on the peaceful and voluntary trades desired and associations wanted among all those anywhere around the globe. When governments impose barriers to freedom of exchange and association, they limit the bringing together of all those who wish the partnership of their fellow human beings on the basis of terms they mutually agree upon, rather than the prohibitions and interventions of governments that want to benefit some at the cost of excluding or limiting the possibilities that could have belonged to others, if only markets had been left free from the controlling hands of political power.
Market Participatory Democracy and Income Inequality
In the classical liberal view of society there is no better, adaptable, and successful system of participatory democracy than the freedom of the competitive marketplace. There are no majority, winner-take-all outcomes in the market. The more developed and prosperous a market economy the greater the possibilities and the more the profitable opportunities to serve and fulfill the wants and desires of not only a majority of consumers, but a wide array of minority demands for a variety of goods and services.
As long as a minority of buyers are willing and able to cover the costs of production and a bit more for some private enterprisers searching for the best profit opportunities they can find given their own interests and capabilities, even relatively small niche markets will find suppliers to satisfy their demands.
As a number of economists have explained, in the marketplace people vote with the dollars in their pockets for the goods and services that they wish to have and are willing to pay for. The critic, at this point, often points out that the “voting power” in the free market is unequal, with some having far more dollars in their pockets to vote with than others.
The classical liberal has never denied this. But he asks, how is it that such an unequal number of voting dollars are present among the members of the society? The answer usually given is, either from peaceful market-oriented production or political-power-based plunder.
If Joe has more dollars in his pocket than Bob or Bill, in a free, open, and competitive market, the only way he could have acquired those many dollars is precisely by having produced and offered on the market something that many others in society found so attractive and desirous that they “voted” to buy his wares and exchanged to him all those dollars he has earned from peaceful and voluntary services rendered.
If I as an economics professor earn more than a checkout clerk at the supermarket, but at the same time I earn less than the corporate executive managing a large industrial enterprise, this reflects our respective value in the eyes of our fellow human beings in the arena of market exchange, in terms of what they consider our respective talents to be worth as useful means to better satisfy their own ends.
Ethics and the Anonymity in the Free Market
This does not mean that in some moral or social sense that I am “better” than the supermarket checkout clerk, or that I stand below the ethical status of the business executive. The market does not reward people on the basis of personal “goodness” or ethical deservedness. The market — which means all of us as individual buyers and sellers — judges and estimates what a person’s services are worth in terms of the ends and goals that others in society are attempting to fulfill.
In this sense, the market is neither moral nor immoral, other than in terms of asking whether the transactions and trades have been peaceful, voluntary, and non-fraudulent. In buying from or selling to anyone, rarely if ever do I ask whether I consider them to be a “good person” or an ethical human being. In the general anonymity of the marketplace, I am simply evaluating how much I think what this person can do for me is worth at this moment and in this context.
This is disturbing and shocking to many critics of the free market system. But this anonymity and disinterestedness of most buying and selling protects and frees most of us from the prying and manipulating eyes and actions of others in society. When the busybody moralizing meddler buys a box of breakfast cereal off the supermarket shelf he does not ask and cannot know who participated in the manufacture of that product. He does not know the sexual preferences of the participants in that production process, or what church (if any) they attend, or whether they smoke or drink, or whether they cheat on their spouse, or whether they like classical music instead of punk rock.
Each can make his own living in the corner of the market’s division of labor that they find most interesting and profitable in which to work; they take home their honestly earned pay, and proceed to spend it in any way they want that reflects their values, desires, and pleasures, whether or not that busybody meddler would approve if he could know it all and put his nose into that person’s business.
How many of us would want others to make moral judgments about us before determining what we could work at and how much we could earn and then letting us go about the private affairs of our own life? The general anonymity of the competitive marketplace helps to free us from the meddler. (See my article “The Market Democracy vs. Democratic Socialism.”)
So is there no economic injustice? No reality of ill-gotten gains? No distributions of income that reflect unfairness in society? Yes, there are within the classical liberal conception of society. But these are due precisely to the actions and interventions of the very government that progressives and democratic socialists wish to turn to and extend even more power.
The fairness and justice of the free market process is perverted when governments bestow privileges or favors, anticompetitive protections, licensing and regulatory restrictions, subsidies and bounties paid for with other people’s money for the benefit of some in society at the expense of the rest of the citizenry. All or part of the incomes earned through such interventionist and welfare-statist policies have been political pickpocketing through the taxing and regulatory and planning powers of any government.
The answer to these and similar problems of unjust income earnings and inequalities is abolition and repeal of all of those policies so as to restore the freedom and voluntarism of all human interactions, trading relationships, and associations. Monopolies and concentrations and inequalities of wealth and income only become and remain concerns when markets are not left free and open to innovative rivals willing to compete against existing enterprises, and when consumers are not allowed to be fully sovereign in deciding on how to spend their own earning, in exchange with whomever they want, and at the terms mutually agreed upon. (See my articles “Capitalism and the Misunderstanding of Monopoly,” “Consumers’ Sovereignty and Natural vs. Contrived Scarcities,” and “The Inequality Trap Distracts From the Real Issue of Freedom.”)
Non-Market Concerns and Civil Society
Outside of the marketplace, having earned our incomes from rendering those services to our fellows through buying and selling, we are at liberty to make our decisions about what to do with our earnings. Here is where we may make value judgments about our fellows in terms of charity, philanthropy, good works, and helping hands for those less well off than ourselves who we consider to be deserving of our assistance when we feel called upon to do so by our conscience and senses of right and wrong as members of the wider society in which we live.
This aspect of the classical liberal conception of participatory democracy is reflected in the associations and organizations of what are widely called the institutions of civil society. People come together to advance shared interests, causes, and purposes that may be beyond the abilities of one, and for the accomplishment of which people voluntarily come together.
At the end of the day, the classical liberals not only consider this the more moral means of solving social problems that seem to be “beyond supply and demand,” by leaving such matters to the conscience and calling of free people rather than government compulsion through the impersonal and depersonalized structures of tax-funded bureaucracies. But also the organizations and associations of civil society are far more effective means to those ends by drawing upon the advantages of decentralization, competition, and voluntarism over the general monopoly power and decision-making of those assigned such tasks within the government. For the classical liberal these represent the true forms of participatory democracy both inside and outside of the marketplace, both broadly and narrowly defined. (See my articles “Individual Liberty and Civil Society” and “A World Without the Welfare State.”)
The Pluralism of Freedom and Free Markets
This also captures the classical liberal idea of pluralism. Precisely by leaving all such matters outside of the prerogative and power of government, multiple avenues of trying and succeeding are both possible and allowed. Many voices may speak on any number of imaginable subjects at the same time; many minds can be set to work to investigate and search for solutions to any number of problems simultaneously; multitudes of people acting both on their own and in consort with others can advance their personal and joint purposes, each in his own way according to their individual and combined judgments; all are at liberty to live their own lives as they want in different circles of often-different people, given that we each of us have multiple interests concerning which different people may overlap and with whom we find it best and more beneficial to associate.
The government alternative invariably involves taking much of this decision-making, acting, and interacting out of the direct hands of people, themselves, and transfers control over all these issues and concerns to those elected into political office and those to whom authority has been delegated to act upon them through government agencies. The classical liberal considers this to be both an abridgement of each person’s liberty and the closing of those pluralist avenues to possible success.
Classical Liberalism and the Peaceful Society
Finally, for the classical liberal the marketplace of ideas, actions, and associations is the great arena of social peace. The fundamental premise upon which the free market liberal ideal is based precludes force and fraud from human relationships. Whether one is religious or not, the classical liberal lays down the following as the fundamental rules of human society: you will not kill, you will not steal, and you will not cheat or defraud any with whom you interact, deal, or associate — in other words, the primary societal “thou shalt not’s” to be found in the Ten Commandments.
That cannot be said in the same way about the world wanted by progressives, democratic socialists, and all others wishing to maintain and extend the interventionist-welfare state. For all of them, politics becomes the central if not the single human setting for determining how people live; how much they may earn; what they may do to make that living; where they will live and in what accommodations; with whom they may associate and for what purposes; what language and words may be spoken or written or what gestures may be used in any of various arenas of human interaction; and what opportunities will be yours and which may be closed to you due to majority rule or the dictates of the political-correctness police.
Diversity, inclusion, participatory democracy, pluralism, and peace dictated and determined by ideological tyrants and power-lusting interest groups using political means to achieve their ends through governmental force and collectivist intimidation undermines and then destroys the alternative and far-better world of peaceful persuasion or attractive offers in the voluntary arena of market exchange.
Once more, society is faced with the fundamental alternatives: Freedom or force? Peaceful production or political plunder? Voluntary consent or compulsory command? Personal choice or government planning? Market-based prosperity or the poverty of political planning? At the end of the day, we all will have to decide.
[Originally Published at AIER]