A half century ago, one of the best-known representatives of the Austrian School of Economics, Murray N. Rothbard, wrote a short essay, a review of George Orwell’s 1984, with the same title as this essay. I won’t attempt to recapitulate the themes of his article, or even update them in light of present events. Rothbard’s review was a battle cry for freedom against the forces of statism.
Instead, I want to briefly describe the fatal errors that continue to keep genuine liberalism at bay in our own time. Let me begin by pointing to a fact which is often overlooked: the entire world, and especially Europe, continue to suffer from the dreadful consequences of the two world wars. Every war brings about an enormous outbreak of socialism, nationalism, brutality, government control, inflation, taxation, and spending–all the things that liberalism has always fought against.
The world wars, especially the last one, were an immense blow against liberalism; indeed, we can say they were nearly fatal blows. In every country, government spending skyrocketed, regulations proliferated, the welfare state exploded, public monopolies were created, new “public goods” were invented, the tax state became voracious, and so on, with the state expanding to almost every area of human life.
We have to ask: what led to those wars and how can such horrible events be prevented in the future? The Marxist answer is that profit-seeking capitalism led to imperialism and thus to political conflict and aggression. There is a grain of truth here: governments and their leaders and pressure groups profit from wars against each other. Wars are always in the “national interest,” if we identify the nation with the state. But the Marxist view is wrong about the actual root of the problem. Capitalism and the market economy in its genuine form have never involved the idea of coercion; their core institutions rely on voluntarism and peace.
What actually causes war is socialism. Whether we call it nationalism, imperialism, historicism, or communism, its face remains the same since Plato through Keynes to Stiglitz in our own time: state coercion. The idea is that there must be someone or somebody to control the processes of social development and market exchange to create “social justice,” or whatever name they give to the ridiculous ideal they have created in their imaginations.
The world wars did at least produce one good effect. Their resulting suffering created something of a normative foreign-policy benchmark that is consistent with liberal foreign policy: the maintenance of peace. But are the means we use to achieve the best ones? Today, it is said that Nato and the EU are our source of peace and security.
But is it true? Nato senselessly bombed Serbian villages and cities just this year. And nothing can ever wash away the responsibility of European and American leaders for thousands of people dying right now in Chechyna. After all, it is the IMF that has so heavily subsidized the imperial Russian state. Why shouldn’t it and its benefactors be held accountable for the killing and property destruction that causes indescribable suffering for hundreds of thousands of innocent people?
As classical liberals, conscious about the previous failures of international organisations, we have to ask: what is the source of the fundamental failure of the European Union, and, by extension, the World Trade Organization? The answer is that they are formed and administered by bureaucrats with loyalties to member states.
A true free-trade accord consists in agreements between buyers and sellers, not government negotiators and delegates. To achieve all the benefits of collaboration, it is not necessary to create supranational bureaucracies like the European Commission. Superstates have never improved the conditions of individuals. They only create larger monopolies of power, while taking away the freedom to choose among different levels of government expenditures, services, and efficiency.
The second important, but almost universally ignored, error of our times, which keeps genuine liberalism at bay, is the triumph of empiricism as the methodology of the human sciences. It is a method taken from physics by Karl Popper, Milton Friedman, and others who are wrongly included in the pantheon of liberalism’s heroes.
They couldn’t see the fatal flaw in empiricism, especially in economics: it says there is nothing conceptually or logically wrong with socialism or any form of coercion in principle. From there, it becomes easy to regard the failure of socialism as an error in The Plan or the unique conditions under which it was implemented. Moreover, in empiricist social theory, no past failure can teach us anything fundamental.
Empiricists can never say: socialism doesn’t work and government coercion doesn’t work. They can and do say: it doesn’t work under the precise conditions of the past (e.g., the rule of Lenin), but we have to see what happens in the future (e.g., the rule of Stalin). This is why empiricists become the useful tools of government. No empiricist can demand that we try genuine liberalism. Instead they must admit that they can no nothing about the prospects of success or failure under the changed conditions of the future.
The future of genuine liberalism will continue to be a dark one so long as the ideologies of socialism and social democracy hold sway. And the two major forces keeping these ideologies alive are war (and the international agencies purporting to protect us from war) and methodological empiricism that cannot unswervingly advocate a completely free society. Both must be rejected and replaced if liberalism is to have a future.
* * * * *
This talk was delivered in Estonia in November 1999 and was published in Libertas.
