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Façade Capitalism Means Façade Freedom

Posted By Don Boudreaux On May 16, 2013 @ 1:29 am In Civil Society,Crony Capitalism,Reality Is Not Optional | Comments Disabled

Yesterday I delivered some brief introductory remarks at, and then participated in, a panel discussion entitled “Façade Capitalism and Its Threat to Human Rights” – which was expertly moderated by the Daily Beast [1]‘s Michael Moynihan – at the Oslo Freedom Forum [2].  It was a great honor to do so.  Here are my remarks.

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An economy is capitalist in façade-only if much of the direction of resources in that economy is governed by something other than the free choices of consumers and the genuine competition of producers – competition both for customers and for resources to be used to produce what producers anticipate customers will demand.

Likewise, a society is free in façade-only if it is capitalist in façade-only.

The modern “liberal” – in America we increasingly say “Progressive” – ethos features two propositions relevant to the subject of this panel.  The first is that government intervention is a pernicious threat to liberty when exercised over “personal” or “civil” matters such as religious belief, speech, sexual practices, or participation in politics.

The second is that our liberty is somehow enhanced – or at least not threatened – by strong state or collective intervention into the economy.

I believe that the first of these propositions is absolutely valid.  I believe that the second – the one about the economy – is grossly mistaken.  And it’s mistaken in a way that is inconsistent with the very reasons for why the first proposition is valid.

Two facts support my belief.

One, economic liberty cannot be compromised without creating government power that threatens to destroy personal or civil liberty.

Two, the very same arguments that justify personal or civil liberty as being essential for civilization apply equally to economic liberty.

The first fact is – or should be – obvious.  And it is well-known – at least among us students of scholars such as F.A. Hayek and Milton Friedman.

To the extent that government controls the economy it controls – or has the power to control – those areas of life that are classified as “non-economic.”

An obvious example is the press: if the government owns the paper mills, or has discretionary power to determine the operation of the paper mills, the government has the power to prevent publishers from getting an essential input for spreading ideas through books, newspapers, and magazines.

A less-obvious example is the financial sector: if the government owns the banks, or has discretionary power to determine the allocation of credit, the government has the power to prevent publishers from getting an essential input for spreading ideas – namely, the financing that is often necessary to launch or to sustain a newspaper or an e-magazine.

These examples can be multiplied endlessly.

Political and personal freedoms require economic resources for their exercise.  So to control the latter is to have at least the power to control the former.

The second fact supporting my insistence on the inseparability of ‘economic’ from ‘non-economic’ liberty is, I think, just as obvious as the first – although it is too-seldom mentioned.  I break it down into four component parts, but in fact these four parts are all of a single piece.

First, liberty respects the dignity of each individual.

If the individual is not to be a tool of the collective or a pawn of the state – if the individual is not to be a mere means to some higher political or religious end – if the individual has standing as an individual moral agent to make his or her own “non-economic” life’s choices, then the individual has standing as an individual moral agent to make his or her own “economic” choices.

If your dignity is violated by the state preventing you from choosing your preferred form of birth control, your preferred sexual partners, or your preferred political candidates, your dignity is violated no less by the state preventing you from choosing your preferred working conditions, consumer products, retirement plan, or line of work.

Second, liberty respects the competence of each individual.

If the individual is competent to make political and personal choices, such as those involving reproduction, on what ground is he or she incompetent to make economic choices?  I can think of none.

Note that it will not do here to assert that private economic choices have system-wide consequences beyond the individual – consequences that might be undesirable.  Of course they do.

But the same holds true for political choices.  Indeed, because political choices necessarily are collective, they are much more prone than are private economic choices to be made irresponsibly and in ways that generate undesirable, unintended, system-wide consequences.

I might not always decide wisely how to spend my own money, but I will much less often decide wisely how to spend your money.

Either way, though, we do not face a choice between imperfect private economic decisions and perfect collective ones.  Both types of decisions are marked by imperfections.  We cannot, therefore, assume that real or imagined imperfections in the private economic sphere necessarily justify intervention through the political sphere.

Third, liberty reflects a healthy suspicion of those who would play god.

On non-economic matters we recognize today, at least in democracies, that government officials overstep their bounds of competence when they interfere in many ‘non-economic’ spheres.

No one, for example, believes the government official who asserts that he should restrict the press because he knows the truth better than do reporters and editors and bloggers and readers.

Yet the same limitations on the knowledge, wisdom, trustworthiness, and competence of the government official who would regulate the press or regulate our sexual practices exist also for the official who would regulate our economic and commercial practices.

The unwise, mistaken-prone, or dishonest regulator of speech, thought, belief, and sexuality doesn’t become wise, honest, and superhuman when he turns to regulating the economy.

Fourth, liberty strengthens the dynamism and creativity of an open, evolving society.

If restrictions on entry into political elections, restrictions on the extent of the adult franchise, restrictions on political speech, restrictions on whom we may marry, and other restrictions on our political and personal liberties stymie the dynamism of democracy and the progress of civil society, then restrictions on economic activities stymie the dynamism and growth of the economy.  We are made poorer as a result.

There is no more reason to be suspicious of competition, decentralized experimentation, and freedom of choice in matters economic than in matters political and personal.

The dogma that says that economic activities are somehow less important or uplifting than are non-economic activities is mistaken.  And it is also dangerous because it helps to fuel the fatal and false distinction between economic and non-economic liberty.

Liberty is whole; it is indivisible.  To treat it otherwise is to threaten it in full – to weaken it on all fronts.  And the consequence will be anything but progress toward a more civil, more peaceful, and more prosperous society.

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[1] Daily Beast: http://www.thedailybeast.com/

[2] Oslo Freedom Forum: http://www.oslofreedomforum.com/

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