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Liberal Capitalism as the Ideology of Freedom and Moderation

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Nowadays, many along the political spectrum seem to agree that America increasingly has become a polarized society. Ideological and public policy discourse has been gravitating more toward the extremes: progressives and the Democratic Party with a more explicitly socialist rhetoric and proposed government agenda, and conservatives and Republicans who increasingly appear to be moving in the direction of populist, and especially economic, nationalism under the presidency of Donald Trump.

If such ideological extremism is politically tearing the country apart in the eyes of many, then what could and should be a “non-ideology” of compromise and moderation? This is a question that Jerry Taylor, president of the William Niskanen Center, asks and answers in a recent article, “The Alternative to Ideology,” in which he directly challenges the premises and policy perspective of many libertarians.

Mr. Taylor insists that those who espouse a political philosophy of individualism, free markets, and strictly limited constitutional government are out of touch with reality and make themselves irrelevant in contemporary political discourse. Having long been a proponent of libertarianism himself, Mr. Taylor believes that he understands its asserted weaknesses from the inside.

Doubting Market Solutions to Global Problems

His first doubts, he explains, emerged with his conclusion that libertarians have little or nothing to contribute to the leading problem of our time: global warming. In Mr. Taylor’s view, this demonstrated to him that there needed to be answers outside the mantra of individual liberty and free markets. How else could this threat to humanity be tackled other than through extensive and combined governmental intervention, regulation, taxation, and possibly organized planning?

Like a revelatory conversion on the road to Damascus, this led him to the conclusion that libertarianism, like other “dogmatic” and single-focused ideological perspectives, fails to admit that there are problems in the world that do not and cannot be dealt with through a strict following of a policy view of free market voluntarism based on an uncompromising attachment to individual liberty.

Furthermore, Mr. Taylor says he saw that too many libertarians ignored the reality that there are personal and social values in the world other than individual liberty. People also value “the pursuit of social justice, equity, community, virtue … pluralism, material well-being, or any number of concerns that animate people,” besides unrestrained personal freedom.

Jerry Taylor decided, therefore, that he had to give up his belief in and adherence to the ideology of libertarianism. Instead, he came to the awareness that what needed to be cultivated and advanced is a social philosophy of moderation and compromise. He explains:

Politics and policymaking without an ideological bible is incredibly demanding. It requires far more technocratic expertise and engagement than is required by ideologues, who already (they think) know the answers. It also requires difficult judgments, on a case-by-case basis, about which ethical considerations are of paramount concern for any given issue at hand, and what trade offs regarding those considerations are most warranted.

To embrace nonideological politics, then, is to embrace moderation, which requires humility, prudence, pragmatism, and a conservative temperament. No matter what principles we bring to the political table, remaking society in some ideologically-driven image is off the table given the need to respect pluralism. A sober appreciation of the limitations of knowledge (and the irresolvable problem of unintended consequences) further cautions against over-ambitious policy agendas.

Does this mean anything goes in a non-ideological politics, including ideas and policies that many might consider abhorrent? No, Mr. Taylor says; there are limits to what may be accepted as legitimate policy views in the common area of democratic decision-making: “Compromise, however, has limits,” he states. “Compromise with theft, murder, slavery, or gross infringements on human dignity is indefensible.… Firm positions and tough stances are sometimes required. And when necessary, moderates must have the stomach for a fight.”

The Meaning of Ideology and Its Social Relevance

Is Mr. Taylor right about the nature of ideology and moderation, and what does this imply about the classical liberal or libertarian views of man, society and government? First, what is an ideology? The Oxford Dictionary defines it as “a system of ideas and ideals, especially one which forms the basis of economic and political theory and policy,” and “the science of ideas, the study of their origin and nature.”

The term seems to have been first used in this way by the French classical liberal Destutt de Tracy in 1813 as an attempt to formulate a conception of the reality of the human condition and what it implied about the organization of a social order in response to the tyranny and terror during the French Revolution and then the dictatorship of Napoleon Bonaparte.

A starting premise to the classical liberal or libertarian ideology has been a focus on the uniqueness of the individual as a distinct thinking, feeling, valuing, and acting being. Different authors have expressed it differently, but in general there has been a common consensus that based on God or nature and man’s reasoning ability, it is possible to deduce an understanding of individual human beings as unique creations and conscious entities that both need and deserve to be seen as having an inherent right to life, liberty, and peacefully and honestly acquired property for their survival and betterment.

This classical liberal or libertarian conception of humankind has never presumed or posited that people are atomistic beings separate from other persons. Rather, its philosophy or ideology has been to ask what should be the institutional arrangements that can be most conducive to respecting each human being as a free agent yet ordering the social system in such a way that each individual in pursuing their own self-interest does so, in general, in a way that can further the betterment of others at the same time.

The key moral premise is that coercion and the threat or use of violence should be prohibited or at least minimized to the greatest extent possible still consistent with a keeping of the peace among human beings. An outgrowth of this is the argument that, therefore, human interactions should be based on free association and mutual, voluntary agreement; hence, the ideal of the free market in which people enter into exchanges with each other through agreed-upon terms of trade.

Social Contract and Social Evolution in Classical Liberal Ideas

From the time of John Locke, the imagery of a social contract has sometimes been posited as the basis for interpersonal agreement concerning the origin of society and the institution of government derived from each individual’s “natural right” to their life and liberty. However, this usually has been understood to be merely a form of a mental experiment to clarify the logic and meaning of individual liberty and the rationale and limits of government consistent with personal liberty and social peace. (See my articles “John Locke and American Individualism” and “Francis Hutcheson and a System of Natural Liberty.”)

The classical liberal tradition has generally appreciated that, in fact, the institutions of society and the ideas of personal freedom, private property and enterprise, the rule of law, and free trade are the results of a social evolutionary process, out of which the liberal order emerged over a long period of time. Human reflection and experience led to the articulated ideals and the codifying of the premises and practices of a free society. (See my articles “Adam Ferguson and Society as a Spontaneous Order” and “Adam Smith on Moral Sentiments, Division of Labor and the Invisible Hand.”)

Classical Liberalism as the Epitome of Moderation

For the classical liberal or libertarian, the free society is the epitome of human moderation and compromise. This view recognizes that the notion of the distinct and distinctive individual human being means that there is an inescapable diversity among people in terms of experiences, values, purposes, and abilities. To the friend of freedom, the philosophical extremist and political fanatic is the one who is revolted by and rebels against the fact that men and women differ in what they consider the most desirable ends to pursue and the best means of attaining them.

Such extremists and fanatics are those who ultimately represent an ideology of totalitarianism — that is, the attitude and insistence that all in society should and must conform to and be confined within their notion of a socially just or fair or good society. The method of imposing their collectivist ideal may be through dictatorship or democracy, but the underlying premise is that there is one way (or a narrowly defined set of ways) of living and associating.

Several years ago I wrote an article titled “Is the Case for Liberty Too Extreme?” I argued:

The free society tries to avoid extremes through the diversity of free men that it both permits and fosters. It restrains the practice of “extreme” personal behavior because it imposes costs and consequences upon everyone who practices them, in the form of lost economic opportunity, and possibly social ostracism by those who are repelled by it.

It also teaches the advantages of moderation — courtesy, good manners, tolerance, and “socially acceptable” conduct — in the competitive arena of intellectual pluralism where to win an argument the only medium of exchange is peaceful persuasion.

In other words, the free society nudges men toward better behavior and rational thought rather than tries to compel it. It teaches good and tolerant conduct through reason and example. It fosters compromise by demonstrating the personal costs of being too extreme in one’s words and actions. And it raises the ethical conduct of society by the discovered advantages of personal improvement through time.

Are the arguments for and the advocates of liberty too extreme? Quite to the contrary. Freedom is the epitome of moderation.

Civil Society and the Market as Arenas of Moderation and Diversity

Classical liberalism and libertarianism do not ask that people abandon their sincere devotion to notions of “the pursuit of social justice, equity, community, virtue, … pluralism, material well-being, or any number of concerns that animate people,” despite Mr. Taylor’s rhetorical question. What they do argue and, indeed, insist upon is that the social setting in which to advance these purposes be based on and guided by one fundamental and underlying principle: the forgoing of coercive means to attain them and the tolerance of diversity among men by utilizing peaceful and mutually agreed-upon avenues to achieve them.

For the classical liberal, the institutions of civil society are those that human beings participate in and through which they reach their chosen ends. Government necessarily imposes forms of “one-size-fits-all” once it goes beyond the “negative” though essential task of protecting each individual’s right to life, liberty, and honestly acquired property.

The libertarian recognizes that human beings do differ in terms of what they consider important and the best ways of advancing them. The pluralism of the free marketplace is precisely that it allows each individual to follow that peaceful path that they consider most attractive and opportune to improving their own life and that of others that they are concerned with. (See my article “Civil Society and Individual Freedom.”)

Libertarian Solutions to Various Social Problems

Mr. Taylor suggests that libertarians propose a free society without detailing how many of the things that various people consider useful or desirable will be possible to attain. This has historically been very far from the case. Take the advocate of the welfare state. People may be honestly motivated by a desire to assist those who are less well off than themselves. But when friends of freedom respond that these matters should be left up to individuals and the market, they do not stop there.

Classical liberals and libertarians have explained the logic and social mechanisms that are open to bettering those who are in need or who have fallen upon hard times not of their own making. Indeed, the history of the 19th century, the era considered to be the heyday of laissez-faire, saw the emergence and success of a very large number of private charities and voluntary associations. For instance, the friendly societies provided the means through which the vast majority in Great Britain found ways of providing themselves with medical insurance, unemployment assistance, retirement pensions, and life insurance — all without government and covering the vast majority of, especially, the British “lower classes.” (See my article “A World Without the Welfare State.”)

The same may be said about education. Many if not most classical liberals and libertarians advocate private education and greater schooling choice. They have noted the historical successes of private education before compulsory government schooling and the means by which it would operate in our modern times. They have pointed out, likewise, the private sector means to assist during and after natural disasters. (See my articles “Educational Socialism Versus the Free Market” and “Another National Disaster in the Making: Government Reconstruction of New Orleans.”)

The Tragedy of the Commons and Environmental Externalities

Mr. Taylor explained that his own doubts about the efficacy of free market solutions to social problems arose from his concerns about the reality of global warming, and not seeing any answers that did not involve encroaching upon the fundamental libertarian principle of non-intervention that precluded both regulation of business or taxing policies to reduce atmospheric pollution problems.

The impression, therefore, could easily be drawn that market-oriented economists have given little or no attention to the problem of externalities. At least since the 1960s — that is, for more than half a century — problems of externalities and the tragedy of the commons have been a major subject area for serious study concerning the role of private property rights to “internalize” such problems through extension, introduction, or greater enforcement of private property rights.

Some of the classic essays on this theme are by Harold Demsetz and Garrett Hardin, demonstrating the history and theory of the role of property rights in reducing overuse of scarce resources and the related role of efficient economizing decision-making when the costs and the benefits must be more fully weighed and borne by agents in the market both in the present and looking to the future.

Rivers and lakes have been privatized with resulting reductions in pollution or excessive harvesting of plant and animal life. The same applies to forests and wildlife. Proposals have been detailed on how the same might be extended to the oceans. And possibilities of similar enforceable private property rights in the atmosphere exist, with the technologies available to trace back pollutants to their points of origin for legal recourse as in many other property rights disputes presented to the courts. (See my article “Bill Gates, Global Warming, and the Capitalist System.”)

Without getting into the pros and cons of the heated technical and scientific debates concerning human activities threatening significant global temperature increases through the use of fossil fuels, the issue does concern policy proposals involving a reduction in the liberty of individuals and enterprises in society and must be judged and weighed in this context. Mr. Taylor too easily brushes aside the potentials and possibilities of real free market responses to global warming, if it presents the danger that many in the media and the scientific community claim that it is.

Social Humility and Limited, Decentralized Knowledge

We saw earlier that Mr. Taylor called for a non-ideological public policy approach because “a sober appreciation of the limitations of knowledge (and the irresolvable problem of unintended consequences) further cautions against over-ambitious policy agendas.” But unlike those ideologues exposing interventionist, regulatory, fiscal, and direct planning policies to deal with environmental and other social and economic issues, the classical liberal and the libertarian take Mr. Taylor’s concerns completely to heart.

Classical liberal and Austrian-school economist Friedrich A. Hayek strongly emphasized not only that individual human knowledge is limited, but that the knowledge of the world is decentralized and diffused among all the members of the human society; it is made up of such characteristics that it is logically and practically impossible for even the most sincere and best of human minds in government and its bureaucracies to assemble, integrate, and utilize that knowledge better than the multitudes of market participants themselves. (See my article “F. A. Hayek and Why Government Cannot Manage Society.”)

How can we know whether some proposed governmental remedies for global warming, such as international taxes on fossil fuels or cap-and-trade licensing, are the most effective and efficient tools for dealing with rising temperatures, if the proponents of the hypothesis are correct?

How can we know what costs individuals may or may not be willing to bear to grapple with this problem, if government, instead, co-opts and preempts any possible answers by “nationalizing” the problem through preventing or limiting private property solutions (solutions internalizing the impacts from people’s energy-related actions)?

How can we know whether the particular “energy alternatives” currently proposed by advocates of government intervention and regulation are the ones that are the most cost-efficient or capable of producing positive payoffs, when government policies by necessity narrow or hinder or prohibit any private enterprise answers guided by real market-driven incentives and returns?

For all of his insistence on a new non-ideological politics of public policy moderation, Mr. Taylor’s proposals amount to merely more of the same. What classical liberals and libertarians are asked to compromise is the principle and ideal of a society with minimum use or threat of compulsion by the very government meant to secure people’s freedom. Compromise, in this instance, is acceptance of the introduction of political coercion and paternalism into human affairs, and far more so than is already the case. Classical liberals and libertarians have a far greater respect for and appreciation of real social diversity and pluralism than those with whom Mr. Taylor is asking them to compromise. (See my article “Political Planning vs. Personal Planning by Everyone.”)

The Principled Case for Liberty Is Not a Vice

Finally, Mr. Taylor states that there are some things worth standing on principle to defend, without compromise. He states that “theft, murder, slavery, or gross infringements on human dignity” are not open to compromise. But in many cases acceptance of these ideals originally started with and even required a “dogmatic” and “ideological” outlook and fervor.

Between 200 and 300 years ago, those insisting upon the end to human slavery and its trade confronted a diversity of competing and institutionally entrenched views that claimed that African slaves were meant to be held in bondage according to a particular reading of the Bible; that slavery was a form of benevolent socialism that was good for those lucky enough to be the human property of other men; that it secured jobs and a certain way of life that justified its continuation in the American South; and that good money was paid for that human property and it would be unjust to the owners to take it away without just compensation.

It required a strong, uncompromising, principled dogmatism with a single focus and ideological determination to insist upon and fight for the full abolition of the slave system. No acceptance of value diversity was considered possible by the abolitionists. Moderation was not a politically acceptable stance in the face of this moral evil of holding human beings in perpetual servitude by others who were permitted to use fairly unrestricted force to maintain their plantation life. In calling for the end to slavery, the abolitionists declared (to echo a phrase) that political extremism in the defense of liberty was not a vice.

Classical liberals and libertarians consider that their defense and insistence upon a principled practice of individual liberty and competitive free markets is no less of a moral necessity and calling than earlier demands for ending infringements on personal and social freedom that were widely taken for granted.

What Mr. Taylor considers to be unacceptable dogmatism is for the classical liberal and libertarian the just fight against the century-long collectivist counter-revolution against human liberty and the peaceful society of voluntary association. His appeal to moderation is, in fact, an appeal to give up the fight for human freedom and prosperity that only the arena of voluntary association and trade can bring about.

This article was originally published by The American Institute for Economic Research.

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    Dr. Richard M. Ebeling is the BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel. He was formerly professor of Economics at Northwood University, president of The Foundation for Economic Education (2003–2008), was the Ludwig von Mises Professor of Economics at Hillsdale College (1988–2003) in Hillsdale, Michigan, and served as vice president of academic affairs for The Future of Freedom Foundation (1989–2003).