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Society Needs No Managers

December 16, 2005

Tags History of the Austrian School of EconomicsPolitical Theory

It
has been decades since legislatures have struck out daringly in some
new and uncharted territory of social and economic management. For the
most part, in the US, Europe, Russia, China, and Latin America,
legislatures are constantly at work reforming the systems they created
in the past rather than embarking on totally new ventures.

And
what are they working to reform? Sectors of governance that are not
operating as they should due to dislocations, expense, perceived
violations of fairness or some other consideration. We need only think
of the financial mess of Medicare and Medicaid, the wholesale crookery
of Social Security, the looming dangers of the Alternative Minimum Tax,
the unending mess of crisis management, among a thousand other problems
in every area of society over which government presumes some
responsibility.

The
same is true in Western Europe, where there is widespread knowledge
that the welfare rolls are too large, that unions exercise too much
power, that regulations on enterprise have crippled growth in country
after country. Interest groups continue to stop progress toward
liberty, but progress is being made on the level of ideology. More
large steps towards socialism are not being contemplated, and for this
we can be thankful.

Abolish Public Policy

The
main debate in our time thus concerns the direction and pace of reform
towards market economics. This is all to the good, and yet I would like
to highlight what strikes me as a great confusion. The reformers here
and abroad are widely under the impression that the liberty they seek
for their societies can be imposed in much the way that socialist
systems of old were imposed. The idea is that if Congress, the
president, and the courts would just get hip to the program, they could
fix what's wrong with the country in a jiffy. Thus we need only elect
liberty minded politicians, support a president trained in the merit of
market incentives, and confirm judges who know all about the Chicago
School of Economics.

It
cannot be, and I predict that if we continue to go down the path, we
will replace one bad form of central planning with another. Genuine
liberty is not just another form of government management. It means the
absence of government management. It is this theme that I would like to
pursue further.

I can
present my own perspective on this up front: all reform in all areas of
politics, economics, and society should be in one direction: toward
more freedom for individuals and less power for government. I will go
further to say that individuals ought to enjoy as much freedom as
possible and government as little power as possible.

Yes,
that position qualifies me as a libertarian. But I fear that this word
does not have the explanatory power that it might have once had. There
is in Washington a tendency to see libertarianism as a flavor of
public-policy soda, or just another grab bag of policy proposals, ones
that emphasize free enterprise and personal liberties as opposed to
bureaucratic regimentation.

This
perspective is seriously flawed, and it has dangerous consequences.
Imagine if Moses had sought the advice of Washington policy experts
when seeking some means of freeing the Jewish people from Egyptian
captivity.

They
might have told him that marching up to the Pharaoh and telling him to
"let my people go" is highly imprudent and pointless. The media won't
like it and it is asking for too much too fast. What the Israelites
need is a higher legal standing in the courts, more market incentives,
more choices made possible through vouchers and subsidies, and a
greater say in the structure of regulations imposed by the Pharaoh.
Besides, Mr. Moses, to cut and run is unpatriotic.

Instead
Moses took a principled position and demanded immediate freedom from
all political control — a complete separation between government and
the lives of the Israelites. This is my kind of libertarian.
Libertarianism is more correctly seen not as a political agenda
detailing a better method of governance. It is instead the modern
embodiment of a radical view that stands apart from and above all
existing political ideologies.

Libertarianism
doesn't propose any plan for reorganizing government; it calls for the
plan to be abandoned. It doesn't propose that market incentives be
employed in the formulation of public policy; it rather hopes for a
society in which there is no public policy as that term in usually
understood.

True Liberalism

If this
idea sounds radical and even crazy today, it would not have sounded so
to 18th-century thinkers. The hallmark of Thomas Jefferson's theory of
politics — drawn from John Locke and the English liberal tradition,
which in turn derived it from a Continental theory of politics that
dates to the late Middle Ages at the birth of modernity itself — is
that freedom is a natural right. It precedes politics and it precedes
the state. The natural right to freedom need not be granted or earned
or conferred. It need only be recognized as fact. It is something that
exists in the absence of a systematic effort to take it away. The role
of government is neither to grant rights nor to offer them some kind of
permission to exist, but to restrain from violating them.

The
liberal tradition of the 18th century and following observed that it
was government that has engaged in the most systematic efforts to rob
people of their natural rights — the right to life, liberty, and
property — and this is why the state must exist only with the
permission of the people and be strictly limited to performing only
essential tasks. To this agenda was this movement wholly and completely
committed.

The
idea of the American Revolution was not to fight for certain rights to
be given or imposed on the people. It was not for a positive form of
liberty to be imposed on society. It was purely negative in its
ideological outlook. It sought to end the oppression, to clip the
chains, to throw off the yoke, to set people free. It sought an end to
governance by the state and a beginning to governance by people in
their private associations.

For a
demonstration of how this operated in practice, we need not look any
further than the Articles of Confederation, which had no provisions for
a substantive central government at all. This is usually considered its
failing. We should give the revolutionaries more credit than that. The
Articles was the embodiment of a radical theory that asserted that
society does not need any kind of social management. Society is held
together not by a state but by the cooperative daily actions of its
members.

The
nation needed no Caesar, nor president, nor single will to bring about
the blessings of liberty. Those blessings flow from liberty itself,
which, as American essayist Benjamin Tucker wrote, is the mother, not
the daughter of order. This principle was illustrated well during the
whole of the Colonial Era and in the years before the Constitution.

But we
need not look back that far to see how liberty is a self-organizing
principle. In millions of privately owned subdivisions around the
country, communities have managed to create order out of a
property-rights-based liberty, and the residents would have it no other
way. In their private lives and as members of private communities, it
may appear that they have seceded from government. The movement to
gated communities has been condemned across the political spectrum but
evidently consumers disagree with their assessment. The market has
provided a form of security that the government has failed to provide.

Another
example of the capacity of people to organize themselves through trade
and exchange is shown in modern technological innovations. The web is
largely self-organizing, and some communities of commerce such as eBay
have become larger and more expansive than entire countries once were.
Firms such as Microsoft or Sun Microsystems are themselves communities
of self-organizing individuals, operating under rules and enforcements
that are largely private.

The
innovations available to us in our times are so astonishing that our
times have been called revolutionary, and truly they are. But in what
sense has government contributed to it? I recall a few years ago that
the Post Office suggested that it provide people email addresses, but
that was a one-day wonder, since the idea was forgotten amidst all the
derisive laughter that greeted the idea.

Modern
life has become so imbued with these smaller spheres of authority —
spheres of authority born of liberty — that it resembles many aspects
of the Colonial period with sectors and complexities. All the great
institutions of our epoch — from huge and innovative technology firms
to retailers such as Wal-Mart to massive international charitable
organizations — are organized on the basis of voluntarism and exchange.
They were not created by the state and they are not managed in their
daily operations by the state.

In Praise of Ordered Anarchy

This
imparts a lesson and a model to follow. Why not permit this successful
model of liberty and order to characterize the whole of society? Why
not expand what works and eliminate what doesn't? All that needs to
happen is for government to remove itself from the picture.

I don't
need to tell you that this is not a widely held view. Almost anyone
living and working in Washington, D.C., or in any major capital of
state in the world, believes that there is some sense in which
government holds society together, makes it run, inspires greatness,
makes society fair and peaceful, and brings liberty and prosperity by
enacting a set of policies.

This is
a view that bypasses the liberal revolution altogether. It borrows from
the ancient world of Pharaohs and Caesars in which a person's rights
were defined and dictated by the state, which was seen as the organic
expression of the community will as embodied in its leadership class.
No clean lines of separation delimited individuals from society, state,
and religion. All were seen as part of the organic unity of the civil
order.

It was
this view that came to be rejected with the Christian view that the
state is not the master of the individual soul, which has infinite
worth, and had no claim over the conscience. One thousand years later
we began to see how this principle was expanded. The state is not the
master over property or life either. Five hundred years later we saw
the birth of economic science and the discovery of the principles of
exchange and the miraculous observation that economic laws work
independently of government.

Once
the ideological culture began to absorb the lesson of just how
unnecessary the state is for the functioning of society — a lesson that
clearly needs to be relearned in every generation — the liberal
revolution could not be held back. Despots fell, free trade reigned,
and society grew ever more rich, peaceful, and free.

It is
only natural that people who work for and in government imagine that
without their efforts, only calamity would result. But this attitude is
ubiquitous today in politics. Nearly all sides of the political debate
are seeking to use government to impose their view of how society
should work.

Government Cannot Be Restrained

I have
gotten this question: what constitutional amendment would you favor to
enact the Misesian agenda. Would you want one that forbids taxes from
being raised above a certain amount, or enacts free trade, or
guarantees the freedom of contract? My answer is that if I were to wish
for amendments, they would look very much like the Bill of Rights.
Major swaths of that document are ignored now. Why should we believe
that a new amendment is going to perform any better?

The
problem with amendments is that they presume a government large enough
and powerful enough to enforce them, and a government that is
interested more in the common good than its own good. After all, a
tendency we've seen over 200 years is for the whole of the Constitution
to be rendered by the courts as a mandate for government to intervene,
not a restriction on its ability to intervene. Why do we believe that
our pet amendment would be treated any differently?

What we
need is not more things for government to do, but fewer and fewer until
the point where genuine liberty can thrive. Speaking of the
Constitution, the grounds on which it was approved was not that it
would create the conditions of liberty; it was rather that it would
restrain government in its unrelenting tendency to take away the
people's liberties. Its benefit was purely negative: it would restrain
the state. The positive good it would do would consist entirely in
letting society thrive and grow and develop on its own.

In
short, the Constitution did not impose American liberty, contrary to
what children are taught today. Instead, it permitted the liberty that
already existed to continue to exist and even be more secure against
despotic encroachments. Somehow this point has been lost on the current
generation, and, as a result, we are learning all the wrong lessons
from our founding and other history.

If we
come to believe that the Constitution gave us liberty, we become very
confused by the role of the US in the history of the world. Too many
people see the US as the possessor of the political equivalent of the
Midas touch. It can go into any country with its troops and bring
American prosperity to them.

What is
rarely considered an option these days is the old Jeffersonian vision
of not imposing liberty but simply permitting liberty to occur and
develop from within society itself.

As for
foreign countries, the record that the US has in so-called
"nation-building" is abysmal. Time after time, the US enters a country
with its troops, handpicks its leaders, sets up its own intrusive
agencies, props up structures that people regard as tyrannous, and then
we find ourselves in shock and awe when the people complain about it.

By the
way, I'm old enough to remember a time when Republicans didn't call
critics of nation building traitors. They called them patriots. If
memory serves, that was about 10 years ago.

As
dreadful as this may sound, it does seem that the US government and
American political culture are masking their fears of liberty in the
name of imposing it. For truly, most political sectors in the US have a
deep fear of the consequences of just leaving things alone — laissez
faire, in the old French phrase.

The
left tells us that under genuine liberty, children, the aged, and the
poor would suffer abuse, neglect, discrimination and deprivation. The
right tells us that people would wallow in the abyss of immorality
while foreign foes would overtake us. Economists say that financial
collapse would be inevitable, environmentalists warn of a new age of
insufferable fire and ice, while public policy experts of all sorts
conjure up visions of market failures of every size and shape.

We
continue to speak about freedom in our rhetoric. Every president and
legislator praises the idea and swears fealty to the idea in public
statements. But how many today believe this essential postulate of the
old liberal revolution, that society can manage itself without central
design and direction? Very few. Instead people believe in bureaucracy,
central banking, war and sanctions, regulations and dictates,
limitations and mandates, crisis management, and any and every means of
financing all of this through taxes and debt and the printing press.

The Myth of Iraq's Freedom

We
flatter ourselves into believing that our central planning mechanisms
are imposing not socialism but freedom itself, with Iraq as the most
obvious example and the reductio ad absurdum, all in one. Here
we have a country that the US invaded to overthrow its government and
replace it with martial law administered by tanks on the street and
bombers in the air, a controlled economy complete with gasoline price
controls, and handpicked political leaders, and what do we call it? We
call it freedom.

And yet
some 15 years ago, when Saddam invaded Kuwait, threw out its leaders,
occupied the country and attempted to impose a new government, the US
president called it an aggression that would not stand. He took us to
war to send a message that the sovereignty of states must be considered
inviolate. It seems that everyone got the message except the US.

Iraq is
hardly the only country. US troops are strewn throughout the world with
the mission to bring about the conditions of freedom. Ads for military
contractors emphasize the same theme, juxtaposing hymns to liberty with
pictures of tanks, bomber's eye views of cities, and soldiers with gas
masks on. Then we wonder why so many people in the world bar the door
when they hear that the US government is going to bring the blessings
of democratic freedom to their doorsteps.

We have
developed some strange sense that freedom is a condition that can be
imposed by government, one of the many policy options we can pursue as
experts in public policy. But it is not real freedom of the sort
described above, the kind Jefferson claimed was to be possessed by all
people everywhere whose rights are not violated. Rather it is freedom
that conforms to a particular model that can be imposed from the top
down, whether by the US government domestically or by US troops
internationally.

Freedom Cannot Be Imposed

It is
not only in war that we have come to believe this myth of imposed
freedom. The left imagines that by restricting the freedom of
association in labor markets, it is protecting the freedom of the
marginalized to obtain jobs. But that supposed freedom is purchased at
other peoples' expense. The employer no longer has the right to hire
and fire. As a result, the freedom of contract becomes one-sided. The
employee is free to contract with the employer and quit whenever it
seems right, but the employer is not free to contract on his terms and
to fire whenever he sees fit.

The
same is true for a huge range of activities essential to our civil
lives. In education, it is said that the state must impose schooling on
all children, else the parents and communities will neglect it. Only
the state can make sure that no child is left behind. The only question
is the means: will we use the union and bureaucracies favored by the
left, or the market incentives and vouchers favored by the right. I
don't want to get into a debate about which means is better, but only
to draw attention to the reality that these are both forms of planning
that compromise the freedom of families to manage their own affairs.

The
catastrophic error of the left has been to underestimate the power of
free markets to generate prosperity for the masses of people. But just
as dangerous is the error of the right that markets constitute a system
of social management, as if Washington has a series of levers, one of
which is labeled "market-based." If one side wants to build bigger,
better bureaucracies, the other side would rather tax and spend on
contracting out government services or putting private enterprise on
the payroll as a way of harnessing the market's power for the common
good.

The
first view denies the power of freedom itself but the second view is
just as dangerous because it sees freedom purely in instrumental terms,
as if it were something to be marshaled on behalf of the political
establishment's view of what constitutes the national interest.

The
formulation implies a concession that it is up to the state — its
managers and kept intellectuals — to decide how, when, and where
freedom is to be permitted. It further implies that the purpose of
freedom, private ownership, and market incentives is the superior
management of society, that is, to allow the current regime to operate
more efficiently.

Murray
Rothbard had noted back in the 1950s that economists, even those
favoring markets, had become "efficiency experts for the state." They
would explain how our central planners can employ market incentives to
make Washington's plans work better. This view is now common among all
people who adhere to the Chicago School of economics. They imagine that
judges possess the wisdom and power to rearrange rights in a way that
perfectly accords with their view of economic efficiency.

This
view also appears in other right-wing proposals for Social Security
private accounts, school vouchers, pollution trading permits, and other
forms of market-based half measures. They don't cut the chains or throw
away the yoke. They forge the steel with different materials and
readjust the yoke to make it more comfortable.

There
are many examples of this awful concession operating today. In policy
circles, people use the word privatization to mean not the bowing out
of government from a particular aspect of social and economic life, but
merely the contracting out of statist priorities to politically
connected private enterprise.

Indeed,
the contracted-out state has become one of the most dangerous threats
we face. A major part of the Iraq war has been undertaken by private
groups working on behalf of government agencies. Republicans have
warmed to the idea of contracting out major parts of the welfare state
by putting formerly independent religious charities on the public
payroll.

After
the abysmal performance of FEMA after hurricane Katrina, many lawmakers
suggested that Wal-Mart play a bigger role in crisis management. The
assumption here is that nothing important is happening unless
government somehow blesses the effort through a spending program that
goes directly to a particular group or interest.

The
worst mistake that free-enterprise supporters can make is to sell our
ideas as a better means for achieving the state's ends. In many
countries around the world, the idea of capitalism stands discredited
not because it has been tried and failed but because a false model of
capitalism was imposed from above. This is true in large parts of
Eastern Europe and Russia, and also in Latin America. Not that
socialism is seen as an alternative but there is a search going on in
many parts of the world for some mythical third way.

It
doesn't take much for the government to completely distort a market: a
price control at any level, a subsidy to an economic loser at the
expense of an economic winner, a limitation or restriction or special
favor. All of these approaches can create huge problems that end up
discrediting reform down the line.

Government Always Grows

Another
case against partial reform or imposed freedom was noted by Ludwig von
Mises: "There is an inherent tendency in all governmental power to
recognize no restraints on its operation and to extend the sphere of
its dominance as much as possible. To control everything, to leave no
room for anything to happen of its own accord without the interference
of the authorities — this is the goal for which every ruler secretly
strives."

The
problem he identified is how to limit the state once it becomes
involved at all. Once you permit the state to manage one aspect of a
business sector, you create the conditions that eventually lead it to
manage the whole of the sector. Because of government's tendency to
expand, it is better to never permit it to have any controlling
interest in economic and cultural life.

Airports
and airlines are a good example. Fearing the inability of the private
sector to provide airline security — under the bizarre assumption that
airlines and their passengers have less reason then the government to
care about whether they die flying — the government long managed how
airlines screen passengers and handle hijacking attempts.

The
system was riddled with failure. Then the ultimate failure occurred:
9-11. But instead of backing off the system of bureaucratically
administered airline security, Congress and the president created
another bureaucracy that specialized in confiscating cosmetic scissors,
ripping babies out of mothers' arms, and otherwise slowing down airline
check-in to a crawl.

The
pressures of new regulations have further cartelized the industry and
made genuine market competition even more remote. And when the next
catastrophe comes? We can look into our future and see what we might
have once thought to be unthinkable: the nationalization of airlines.

One
objection to my thesis is that measures to impose a form of freedom at
least take us in the right direction. It's true that even a partially
free system is better than a full socialist one. And yet, partial
victories are unstable. They easily fall back into full statism, as the
airline case illustrates. With US schools and pensions and health care,
these privatization schemes could actually make the present system less
free by insisting on new spending to cover new expenses to provide
vouchers and private accounts.

Abdicate, please

 Speaking of Liberty Truth to Power: $25

What is the right thing for
Washington policy experts and analysts to advocate? The only thing that
government does well: nothing at all. The proper role of government is
to walk away from society, culture, economy, and the world stage of
international politics. Leave it all to manage itself. The result will
not be a perfect world. But it will be a world not made worse by the
intervention of the state.

Free
markets are not just about generating profits, productivity, and
efficiency. They aren't just about spurring innovation and competition.
They are about the right of individuals to make autonomous choices and
contracts, to pursue lives that fulfill their dreams even if these
dreams are not approved by their government masters.

So let
us not kid ourselves into thinking that we can have it both ways so
that freedom and despotism live peacefully together, the former imposed
by the latter. To make a transition from statism to freedom means a
complete revolution in economic and political life, from one where the
state and its interests rule, to a system where the power of the state
plays no role.

Freedom
is not a public-policy option and it is not a plan. It is the end of
politics itself. It is time for us to take that next step and call for
precisely that. If we believe what Jefferson believed, and I think we
should, it is time to speak less like managers of bureaucracies, and
more like Moses.


Llewellyn H. Rockwell, Jr., is president of the Mises Institute and editor of LewRockwell.com. Send him mail. See his Mises.org archive.
This talk was delivered, at the request of Congressman Ron Paul, to
Republican and Democratic staff aides of the US House of
Representatives in Washington, DC, on December 8, 2005. Comment on the blog .


Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.

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