Freedom in One Lesson

11.

Freedom and the Fate of Nations

Most people who have been exposed to economics in an academic setting have heard of Adam Smith’s invisible hand, but few really grasp its importance. Smith uses the image to explain how people who only intend their own gain are led to benefit others through the need for voluntary agreement in market arrangements.

The invisible hand is a metaphor for the social coordination and other benefits that are unintended byproducts of the pursuit of self-interest under appropriate rules of the game, which are, in a nutshell, the rules that protect private-property rights.

Leonard Read grasps the concept of the invisible hand, but in his claim that the inviolable right to private property is a practical means of ensuring mutual freedom in society, he extends the unintended gains of the invisible hand beyond market arrangements to all of civilization. Read’s insight, articulated in a chapter titled “A Role for Rationality,” from his 1969 book Let Freedom Reign (Read 1969b), deserves careful consideration.

The observation that those who do not learn from history are condemned to repeat it generally refers to the rise and fall of nations and civilizations. My contention is that history does have certain lessons to teach:

1. The rise of civilized societies is the result of freedom, and freedom is a state of affairs stumbled upon and, in no instance, a premeditated, rational design.

2. The explanations for societies in ascendancy have generally been false—the ascent has been attributed to organizational gadgetry rather than to freedom.

3. The decline and fall of civilized societies has usually been attributed to some organizational error rather than to over-organization. Rarely has a lack of freedom been assigned as the cause.

4. To avert a decline and fall requires rational analysis and an understanding of what it is about freedom that accounts not only for ascendancy but for the maintenance of the ascendant position. Be rational in this respect or look for the cycles of history to repeat themselves!

Professor F.A. Hayek, who has a scholarly sense of what is historically significant in human behavior, observes:

Modern man prides himself that he has built his civilization as if in doing so he had carried out a plan which he had before formed in his mind. The fact is, of course, that if at any point of the past man had mapped out his future on the basis of the then-existing knowledge and then followed this plan, we would not be where we are. We would not only be much poorer, we would not only be less wise, but we would also be less gentle, less moral; in fact we would still have brutally to fight each other for our very lives. We owe the fact that not only our knowledge has grown, but also our morals have improved . . . not to anybody planning for such a development, but to the fact that in an essentially free society certain trends have prevailed because they made for a peaceful, orderly, and progressive society. (italics added)

It is my belief that each praiseworthy society—Sumer, Athens, Carthage, Rome, Venice, Florence, Kiev, England, America—has not flowered from a rationally designed scheme for social felicity but, rather, has bloomed from a state of freedom come upon unwittingly, inadvertently, accidentally. . . .

History’s greatest creative outburst took place in the United States of America where freedom—private ownership, freedom in transactions, willing exchange, government limited to keeping the peace—was more nearly approximated than elsewhere or at any time. The correlation between freedom and creativity appears to be unassailable.

Was the American miracle premeditated, a rationally designed structure of society? Far from it! The people who came to this land were fleeing from old-world tyranny. They had little else in mind than to get away from their shackles. Europeans who migrated to America observed that the more a government ruled the actions of men the worse off they became. Their conclusion: That government is best which governs least. Hardly a refined theory!

What did these settlers do? They limited government more severely than governments had theretofore been limited. An examination of the Constitution and the Bill of Rights reveals 46 instances of “no” and “not” directed against governmental action; in short, hands off ! And there they stood, freer than man had ever been before.

This American action did not occur as a rational prognosis of better things to come, for these forebears of ours hadn’t the slightest idea of what lay in store for them except that each could be his own man. They chose freedom for freedom’s sake alone; hang the economic or other consequences.

If we could gather all the facts, I believe that every instance of freedom has come about as a last resort. Authoritarians had tried everything in the way of controlling the creative actions of men; everything had failed and their bag of tricks was exhausted. What to do when such a dead end is reached? . . . Nothing! And there stood the citizens free to act creatively as they pleased.

Freedom in every historical instance has been brought on by desperation; there simply wasn’t anything else to try. And then followed the miracle which was attributed far more to organization than to freedom.

. . . People the world over observed in America something most unusual. For the first time in history, every individual, regardless of station or status, was his own man. Each could employ himself as he saw fit, each retain the fruits of his own labor, each decide his form of worship; in a word, freedom of choice in all aspects of life was as open to one as to another. Foreigners heard of an explosive creativity and an unprecedented prosperity—a new world in which the lowliest laborer might rise to an affluence greater than that of lords and dukes!

The upshot? There began the greatest migration to a single country ever known. And something more: curious individuals, such as Alexis de Tocqueville, as well as governmental commissions from many nations, came here to discover the magic that had been loosed. If they could find it, they themselves could experience the miracle. Or, so they thought.

What was the message most of them took back to their countries? What was the magic word? It was organization. They focused their eyes on the Constitution and the Bill of Rights featuring limitations of governmental authority, separation of powers as between the legislative, judicial, and executive branches, and so on. Simple enough; merely duplicate these forms of political organization and then any society can experience the social and economic progress evident in America!

And many nations did just that, patterning their new Constitutions after our own. . . . [But] “organization” is not the magic word. . . .

The American Constitution was no more than a written record of what the preponderant leadership at that time believed. It was a recording of the thoughts, sentiments, and principles that made up their code and that they were capable of practicing. This document merely put their ideals in writing. The Constitution did not produce their high qualities; it was the other way round: their qualities produced the Constitution. And that’s all a Constitution can ever be; it’s an effect, not a cause. Instead of paying obeisance to our Constitution, we ought to be probing and admiring the thoughts of those who wrote it.

Seen in this light, it becomes clear why other nations gained nothing by copying our Constitution. Copying is useless unless the thinking be up to such a standard. And when our thinking falls below that of our Founding Fathers, our Constitution, like copies of it in other lands, becomes but a scrap of paper. To expect anything more is like expecting a rogue to change his ways by pinning on him a “good conduct” medal.

. . . Something much more than organizational gadgetry accounts for the good society. Social remedies are not to be found in writing a new Constitution, by amending the present one, or by adding laws upon laws. We must keep in mind that a good society and good organization are not two different sets of data to be correlated; they are simply two different aspects of the same set of facts.

Of all the foreign investigators who sought an explanation of the American miracle, Alexis de Tocqueville came closer to the right answer than anyone else known to me. . . . “[. . .] America is great because America is good. When America ceases to be good, America will cease to be great.”

. . . Of one thing I am certain: there can never be a good society except it be comprised of persons distinguished by righteousness. . . .

I return to Professor Hayek for the key ingredient: “. . . in an essentially free society certain trends have prevailed because they made for a peaceful, orderly, and progressive society.” For it is only in an essentially free society that certain trends have the possibility of prevailing: self-responsibility, improved morals, a passionate striving for intellectual excellence, a will to overcome obstacles, an energetic enthusiasm turned inward to self-improvement, an abounding entrepreneurial spirit, competition, and free pricing.

. . . No manner of organizational gadgetry can make a great society out of unworthy people. Further, a nation of great people can suffer considerable imperfection in organization and still experience an outburst of creativity. . . .

I wish only to stress that creative outbursts have a direct correlation with freedom; that freedom exists in the absence of coercive control of creative activity and that the limitation of power, whenever it has occurred, must be attributed to happenstance rather than to organizational design. And, finally, there never has been nor can there now be any avoidance of a decline in our Western societies short of a rational analysis of why societal ascendancy depends on freedom. These points, I believe, are what history has to teach; and the failure to apprehend them is not only an invitation for history to repeat itself but an assurance that it will.

The reason that creativity and social felicity can flourish only in an essentially free society is an enormous wisdom or knowledge that cannot otherwise be tapped. My own term for this is Creative Wisdom. This, I am insisting, is not only the most important but, also, the most over-looked point in political economy.

. . . Reflect on freedom’s opposite, an essentially authoritarian society where the dictator or a committee of commissars—bureaucrats—plan and dictate. . . . On what knowledge does such a society operate? According to the authoritarian design, only on . . . the dictator, and his conforming henchmen—infinitesimal knowledge! Were the authoritarian design carried out to the letter—no more knowledge in operation than he and his bureaucracy possess—all would perish. . . .

Actually, what happens in all statist arrangements is a leakage of free human energy. Independent knowledge persists in showing itself. It is this leakage of knowledge which alone accounts for any and all accomplishments generally credited to statist arrangements. For it is self-evident that it is only a free, volitional action that can possibly be creative. . . . All knowledge in society stems from freedom trying to operate, and only when this fact is overlooked do people come to believe that an authoritarian society has possibilities worth exploring. It is the knowledge that leaks out despite the Plan that accounts for all the accomplishment, but people see only the Plan and mistakenly attribute the accomplishment to it.

Now, reflect on the knowledge that emanates from an essentially free society. It is a luminosity so brilliant that, by and large, we are blinded not only to its genesis but even to its part in our lives. The blessings it confers are taken for granted as is the gift of sunshine—automatically our daily due.

. . . We will either discover how to give this luminosity—Creative Wisdom—a rational analysis; or we will lose it—that is, history will repeat itself.

The enormous knowledge that emanates from an essentially free society develops by reason of the fact that in such a society no person imposes his will by force upon any other person. . . . When no one can restrain anyone else in his creative actions, then knowledge, ideas, insights are free to emerge from many millions of potential sources. Creativity, in this event, has no external inhibition! . . .

. . . Freedom taps this richest of all the world’s resources and assures us that society will have the use of all the knowledge there is or ever will be!

The knowledge freedom makes available to all of us is unimaginably greater than the knowledge that can issue from those who would rule others, for they suffer the greatest ignorance of all: an unawareness of how little they know. . . .

Those of us without such deep understanding are unaware of any impressive alternative to your or my rule. To ever so many people, it’s only a question of who shall rule. . . . Overlooked is the fact that your knowledge or mine is infinitesimal, that not enough knowledge exists in any discrete individual to rule a single person, let alone a society. Also overlooked . . . is the almost unknown alternative, strikingly impressive, once it is apprehended. That alternative is the aggregate of all the knowledge issuing in literally trillions of tiny bits from all who live, which I refer to as Creative Wisdom.

Leonard Read recognizes that freedom is the foundation of civilization—what he calls “praiseworthy society.” In other words, civilized society, which is so complex that it defies our ability to plan either its creation or development, is solely the unintended outgrowth of freedom. Thus, civilization rises and falls together with freedom. The erosion of freedom by public servants who continually substitute their necessarily limited knowledge for the “Creative Wisdom” of a free society coordinated by voluntary arrangements does not bode well for our future. But we can change our prospects by recognizing the irreplaceable role of freedom and restoring it, thereby unleashing the “luminosity” that has been increasingly dimmed.

Rationality does not require that I comprehend precisely how trillions of tiny bits of knowledge form into Creative Wisdom in order to affirm my certainty that this is a phenomenon essential to life. Finally, Creative Wisdom functions only in freedom. To avoid another disastrous decline and fall, we must not only know that freedom is essential but must try to know why it is essential. This is the lesson that history teaches.