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A Future of Genuine Liberalism

December 10, 1999

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

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

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

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

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

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 other 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.

See also What is Classical Liberalism.

Ludwig von Mises's Liberalism and Human Action.

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