Archive: friedrich-hayek

Update: This post has been published over at Liberal Conspiracy here. To keep the discussion in one place, I will close the comments on this post. If you have any comments please post them here.

What do you think the word ‘liberal’ means?

Perhaps if you are American, you are thinking of what Europeans call social democrats. Maybe some Europeans think of it as some kind of wishy-washy centrism that can’t decide between left and right. In certain countries it may have something to do with a pro-business approach. If you’re Australian it probably means the same as conservative.

A pre condition of liberalism might be the existence of free markets. Or maybe liberalism is to do with equality of some kind or another. Animal rights? Environmentalism? [insert trendy cause here]? Smith, Mill or Kant? Etc, etc. It seems to me that the word ‘liberal’ is about as useful as words like ‘that’ and ‘thingy’.

As such, it wasn’t really a surprise that the name of Sunny Hundal’s new ‘superblog’, Liberal Conspiracy, provoked some debate about the nature of liberalism when it was launched a month or so back. “My liberalism is more liberal than yours” and that type of thing.

I would agree that, looking at the list of contributors, ‘Socialist Conspiracy’ might have been a more apt title. For instance, Jonathan Calder noted the lack of Liberal Democrats involved.

It looks like a conspiracy against Liberals.

In fairness, apart from the title (which I actually find quite amusing — it makes a good point), the site is describing itself as liberal-left rather than just liberal. Fair enough I guess, although I always thought that people describing themselves as ‘liberal-left’ were really just socialists trying to duck jibes about the Judean People’s Front.

Even the design of the website looks rather more socialist than liberal. The dark maroon colour scheme, Impact font and spatter marks make it look like some kind of SWP-affiliated website.

Anyway, liberalism. The thing that vexes me about this is the fact that — you guessed it — I describe myself as a liberal. This is mostly because I don’t know of a better term. (If you don’t know about my political views, take a look at my position on the political compass.)

When I describe myself as a liberal that means I am talking about limited government. It can’t be no government. Liberalism can’t be the same as anarchism. The question becomes “how big can a government acceptably be?” And even the most hardcore libertarians (as in the free market kind, lest there be any confusion) see the need for a government in order to protect property rights and prevent force and fraud.

A liberal (excuse the pun) interpretation of that could still leave quite a wide scope for government intervention. It might not be too controversial, for instance, for a government to step in when an activity causes a clear and unambiguous negative externality.

The classic example of a negative externality is pollution. A factory may dump pollution into a river that runs into land owned by another person. The government is duty bound to protect this property, so it would have to step in. Incidentally, I don’t think this approach is too far removed from Mill’s “harm principle”.

Liberalism “doctorvee style” goes a bit further than this. This is why you would tend not to find me using the word ‘libertarian’ to describe my political views. In my view, the government should also step in to prevent certain kinds of market failure. For instance, public goods will be under-supplied by the market.

I find it difficult to imagine how, for instance, street lights would be paid for in a strictly free market system. I can be a (critical) supporter of the BBC and still describe myself as a liberal without flinching because the BBC is a non-rival, non-excludable public good.

But for me, the bottom line is to be suspicious of any extension of government power, and to resist it unless there is overwhelming evidence of the need for it. If you take civil liberties and economic efficiency seriously, there can be no other way. History tells us to treat governments with contempt. When did you ever hear of a riot happening because the government was too small?

Given that most left-wing solutions to any problem usually involve a liberal (sorry) dose of extra government intervention, it shouldn’t be a surprise that Liberal Conspiracy found itself at the receiving end of some jibes about the term ‘liberal-left’ being an oxymoron. I think this is a tad unfair. It is possible to be left-wing / collectivist and anti-government at the same time (all I can say is, good luck solving the free rider problem).

However, it is not difficult to find instances of the Liberal Conspiracy being distinctly illiberal. One of the first posts on the blog was defending the government’s idea of forcibly keeping children in education until the age of 18. Not only that, but the writer, Mike Ion, said:

I struggle to understand why anyone on the Left of British politics could oppose Gordon Brown’s moves

It’s quite funny how I decided that my version of liberalism should keep the ‘liberal’ name. Has anybody got any better ideas?

For what it’s worth, I think the ‘liberal-left’ should just drop the pretence and call themselves socialists.

As for the (free market) libertarians? David Farrer grappled with this a few weeks back, and lamented the fact that both the ‘liberal’ and ‘libertarian’ tags have been stolen by leftists. I like his suggestion of using the unstealable “Real Fascist Bastard” tag.

But perhaps they could take inspiration from one of Hayek’s favoured terms. How about calling themselves catallactists? It would be a bit difficult for a socialist to use that one with a straight face!

I agree with Chris Dillow’s point about markets.

There is one criticism of markets that has often baffled me. The idea that free markets are bad because they promote “individualism” and their participants are “selfish” does not make sense.

Even putting aside the idea that selfishness might be a good thing (a subject that I am ambivalent about), I do not really see where where markets got this “selfishly individualistic” image from. Anybody who is truly selfish would surely not last long in a market system.

In Adam Smith’s world, the bread maker gets what he wants by thinking about what his customer wants. In return, the customer gets what he wants by thinking about what the bread maker wants.

While the bread maker’s ultimate goal — to make money — is selfish (as is the customer’s), neither party gets anywhere without considering the other. The baker knows that he can make more money by pleasing his customers, so he has to think about what his customers want. By the same token, the customer will not get his bread unless he thinks about what the bread maker wants.

So in this system you cannot get what you want if you are selfish. This sounds like a paradox. But the fact that you can only get what you want by taking into account what others want is part of the genius of the market system.

The above transaction involving the bread maker is obviously an extremely simple example which doesn’t look too impressive on its own. But most people go through several such situations every day. I am sure both Adam Smith and Friedrich Hayek saw markets as an intertwining network of social interaction. In such a system, you cannot possibly be an individualist! You cannot trade with yourself, can you?

Meanwhile, it is much easier to be a selfish individualist under the supposedly caring socialist system. This kind of arrangement has the potential to allow people to get by simply by sitting around doing nothing except watching television all day. They could spend their time without having a single generous thought about anyone else, and they could still pick up a benefits cheque at the end of the day.

While we are on the subject, here is another reason why markets should be celebrated rather than criticised. They can force bigots to face up to their prejudices.

Think of a racist who likes to buy a newspaper in the morning. If his local cornershop is run by a Pakistani businessman, the racist is forced to think twice. Does he swallow his pride and trade with a Pakistani, or will he spend extra energy and time going to a shop that is run by a white person but is further down the road?

Of course, the racist may well still decide to go to the shop that is further away. But this would make him a fool who ends up wasting a lot of time and energy because of a pretty prejudice.

The same applies to people who spend their time complaining about immigration but turn out to be more than happy to pay Polish immigrants whenever their house needs building work done.

Update: I should point out, in case it isn’t clear, that this is not meant to say that markets are perfect. Just that some of the arguments against it do not make sense.