The virtue of economic liberalism
A liberal society, by granting freedom to the people, is a society where prosperity is possible. It liberates individuals to realise as much of their own potential as is possible...
Written by: James Peron
The last century was a century where authoritarianism prevailed. The Marxist belief in state power dominated much of the century and as a direct result Communist regimes have been indicted for the wholesale slaughter of over 100 million people. To put that in perspective that is the equivalent of one execution every 30 seconds, every hour, every day, every year for one full century.
Authoritarian governments controlled Europe under Hitler and Mussolini and the result was the eradication of individual liberty and ultimately the destruction of Europe with untold suffering and the further deaths of many millions. Freedom was in retreat during much of the last century.
State interventionism never lead to prosperity. The more it was tried the less prosperous the nation that tried it. Marxist central planning lead to economic collapse in the old Soviet Union. Even worse, it destroyed the foundation of free markets and the concept of political freedom. The idea of profit seeking, property rights, and free trade had been vanquished so when communism finally did collapse the people had lost all sense of what was required to regain prosperity and now live under a murderous dictator.
In China Marxist leaders tried central planning and controls to guarantee economic prosperity. This resulted in a state-created famine lasting four years during which an estimated 30 million people starved to death while warehouses were filled with food. The Chinese eventually started on a path of some economic liberalisation. Property rights were recognised and private ownership was promoted. Profit seeking entrepreneurs were encouraged and the state slowly started leaving behind the idea of state ownership. The result has been economic growth in China and reductions in poverty.
In nation after nation the idea that prosperity can be created by state interventionism died. It died because it has been tried and did not succeed. Studies of dozens of nations over decades prove liberal policies of economic and social freedom, lead directly to wealth creation. The more liberal a nation the more prosperous the people.
A liberal society, by granting freedom to the people, is a society where prosperity is possible. It liberates individuals to realise as much of their own potential as is possible for them in degree to the effort they make.
We do not only benefit from the freedom we are given. We also benefit from the freedom others have. The poor man may not see immediate benefits from the freedom afforded the wealthy businessman. But if we look around we see we have consistently benefited by the freedom of others. In the United States the inventor Henry Ford was free to create his own automobile factory. The innovations he created turned automobiles from a luxury item for the wealthy to something hundreds of millions of poor people worldwide enjoy. The freedom of the researcher brings about new medicines that combat disease. FA Hayek noted: “The benefits I derive from freedom are thus largely the result of the uses of freedom by others, and mostly of those uses of freedom that I could never avail myself of.” Hayek argues that while our own freedom brings us benefits we accrue more benefit from the freedom of others.
A free society leads to empowerment and prosperity because it affords freedom to everyone. As Hayek wrote: “The successful combination of knowledge and aptitude is not selected by common deliberation, by people seeking a solution to their problems through a joint effort; it is the product of individuals imitating those who have been more successful...” Freedom works because men are not all-knowing, “if we
could know not only all that affects the attainment of our present wishes but also our future wants and desires, there would be little case for liberty”. “Liberty is essential in order to leave room for the unforeseeable and unpredictable; we want it because we have learned to expect from it the opportunity of realising many of our aims. It is because every individual knows so little and, in particular, because we rarely know which of us knows best that we trust the independent and competitive efforts of many to induce the emergence of what we shall want when we see it.”
Freedom unleashes the creative powers of everyone. As such it can’t be planned or regulated. The benefits which no one anticipated are the most important. Creativity requires freedom and when others are creative I benefit regardless of how creative I am myself. By liberating human potential a liberal society leads to greater and greater levels of prosperity and history bears this out. Some freedoms may only be exercised by the exceptional individual and are thus useless to the majority. But as Hayek points out: “The freedom that will be used by only one man in a million may be more important to society and more beneficial to the majority than any freedom that we all use.”
James Peron has written for multiple publications and is the author of several books, including Exploding Population Myths and The Liberal Tide. James is an Associate of the Free Market Foundation.