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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 LibertyTruth 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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