Paper prepared for the special meeting of the Mont Pelerin Society in Stockholm, Sweden, November 3-5, 2017. Preliminary draft for the conference, please do not quote without permission of the author. The usual caveat applies.
We must make the building of a free society once more an intellectual adventure, a deed of courage. What we lack is a liberal Utopia… truly liberal radicalism… The main lesson which the true liberal must learn from the success of the socialists is that it was their courage to be Utopian which gained them the support of the intellectuals… Unless we can make the philosophical foundations of a free society once more a living intellectual issue, and its implementation a task which challenges the ingenuity and imagination of our liveliest minds, the prospects of freedom are indeed dark. But if we can regain that belief in the power of ideas which was the market of liberalism at its greatest, the battle is not lost.
- F. A. Hayek (1949, 433)
Liberalism is in need of renewal. But, it is important for me to stress that in my opinion liberalism does not face a marketing problem, it faces a thinking problem.
Too much time and effort has been put into repackaging and marketing a fixed-doctrine of eternal truths, rather than rethinking and evolving to meet the new challenges.
True liberalism today faces a serious problem from ideas emerging from a new generation of socialists on the left, and from conservative movements on the right, some of which claim to follow liberalism’s own time-honored teaching about the sanctity of private property rights and freedom of association. Both sides are fueled by populist rhetoric, and disillusionment born of discomfort from having to adapt to an ever-changing globalized world.
Liberalism does not face a marketing problem, it faces a thinking problem.
The challenges of a globalized world are not new, just as fear of the “other” is not a new challenge to true liberalism. As Hayek pointed out repeatedly, the moral intuitions that are a product of our evolutionary past, which are largely in-group morals, often conflict with the moral requirements of the great globalized society (see, e.g., Hayek 1979, appendix).
The Populist Problem
We, as true liberal radicals, and in our capacity as scholarly students of civilization, as teachers of political economy and social philosophy, and as writers and public intellectuals must aid in the cultivation of more mature moral intuitions if the great benefits of the great society are to be sustained.1 Left and right populism agitates against such an effort at cultivating the sensibilities of the cosmopolitan liberal and instead promotes parochial and in-group political thought and action. And, both left and right populism are based on poor economic reasoning.
The contemporary arguments deployed identify with traditional criticisms of the market economy based on inefficiency, instability, and injustice, but, as in the past, cannot correctly identify the sources of those social ills in the existing reality of our times.
Being anti-establishment should never be enough to bring intellectual joy to a true liberal.
Just as the great economic voices of the Mont Pelerin Society in the post-WWII era such as Hayek, Friedman, and Buchanan had to counter these arguments with careful research and effective prose, so too must the current generation of MPS members if there is to be scientific progress, scholarly wisdom, and practical sanity in addressing the social ills of our times.
In the US and the UK, the populist threat can be seen on both the left and the right as evident in the rhetoric of Bernie Sanders and Jeremy Corbyn, respectively, and the populist electoral events of 2016 in the victory of Donald Trump in the US Presidential race as well as the Brexit vote in the UK.
Being anti-establishment should never be enough to bring intellectual joy to a true liberal.2 The progressive elite establishment in the Western democracies have indeed, as Hayek said in his Nobel Prize address, “made a mess of things” with economic policy, and with legislation that has undermined the rule of law (see Hayek  1989, 362).
True liberals must be vociferous critics of the intellectual errors committed by the progressive elite, and the empirical consequences that such errors have brought in their wake.
True liberalism is a subtle and nuanced expert critique of the rule by experts.
The dangerous alliance between scientism and statism that Hayek warned about must be first recognized, understood for the damage it has wrought to policy but also to science, and finally torn apart and institutional safeguards must be introduced that provide effective resistance to this unhelpful alliance ever being forged again in the future for either left or right leaning purposes. This requires hard thinking and careful research, and that is neither easy to do, nor to follow for the popular masses who too often become bored with nuance and subtleties of scientific and philosophical thought.
True liberalism radicalism was always in essence be a pulling on the nostril hairs of the pretentious and arrogant in positions of power who thought they could choose better for others than they could for themselves. Adam Smith (1776, 478), for example, warned that:
The statesman, who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would no-where be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.
In this century, Ludwig von Mises was quick to remind his audience that: “It is impossible to understand the history of economic thought if one does not pay attention to the fact that economics as such is a challenge to the conceit of those in power” (1949, 67). And, of course, F.A. Hayek diagnosed the consequences of The Fatal Conceit (1988).
True liberalism is a subtle and nuanced expert critique of the rule by experts. It uses reason, as Hayek put it, to whittle down the claims of Reason. If liberalism is not successful in this effort to expose the pretense of knowledge, then those experts risk becoming tyrants over their fellows and destroyers of civilization (see Hayek 1974, 7).
So the populist critique of the establishment elite is not what constitutes the threat to a free society, it is the specifics of the populist program of inward-looking policies, of economic nationalism, that seeks to erect barriers to trade, to association, to productive specialization and peaceful social cooperation among dispersed and diverse individuals scattered throughout the world.
In some instances, they don’t even want to see the gains from mutual trade to be pursued between neighbors who possess some degree of social distance that makes them uncomfortable.
The true liberal mindset, on the other hand, is one of cultivating and unleashing the creative powers of the free civilization. It is one that celebrates human diversity in skills, talents, attitudes, and beliefs and seeks to learn constantly from this smorgasbord of human delights in all things large and small, from different recipes to fine arts to fundamental beliefs and attitudes about the most sacred.3
Liberalism is in theory and in practice about emancipating individuals from the bonds of oppression. In doing so, it gives individuals the right to say NO (see Schmidtz 2006).
But while saying no is critical to being able to break relationships of dominion, the positive program for liberalism is creating greater scope for mutually beneficial relationships and thus opening the possibility for free and willing YESs in all acted upon social engagements.
Economic liberalism was an argument grounded in the mutual gains from association that could be realized with individuals of great social distance from each other, and in fact benefiting from cooperation with strangers as well as friends, and furthermore, expanding the scope by which strangers are turned into friends through mutually beneficial commercial relationships.
The liberal argument was based in part on the deux-commerce thesis, which is as much about civility and respect as it is about efficiency and profit.4
The liberal does acknowledge the right of others to hold parochial attitudes in their restricted sphere and the right to say NO to potential relationships of mutual cooperation, but they also recognize that this can only be possible within a framework of cosmopolitan liberalism.
Liberal thinking always has the whole of humanity in view and not just parts.
Saying NO in that context entails a cost that must be paid by the individual or group turning inward. They will bear the cost of foregoing the mutual gains from exchange and thus the benefits of productive specialization and peaceful social cooperation with others.
If, on the other hand, parochial attitudes grasp hold of the framework, which is what is currently at risk with this current populist threat, then those in power end up saying NO for the individual, and the creative powers of the free civilization will be curtailed and the growth of knowledge and growth of wealth will be equally stunted.
Parochialism kills progress by forcing attention in-group, rather than allowing, let alone, enabling individuals in their quest to seek new ways to learn and benefit from others. Turning inward means turning away from pursuing productive specialization and peaceful social cooperation in the global marketplace.
“The goal of the domestic policy of liberalism,” the great economist and social theorist Ludwig von Mises wrote in Liberalism ( 1985, 76 ), “is the same as that of its foreign policy: peace. It aims at peaceful cooperation just as much between nations as within each nation.
The starting point of liberal thought is the recognition of the value and importance of human cooperation, and the whole policy and program of liberalism is designed to serve the purpose of maintaining the existing state of mutual cooperation among the members of the human race and of extending it still further.
The ultimate ideal envisioned by liberalism is the perfect cooperation of all mankind, taking place peacefully and without friction. Liberal thinking always has the whole of humanity in view and not just parts. It does not stop at limited groups; it does not end at the border of the village, of the province, of the nation, or of the continent. Its thinking is cosmopolitan and ecumenical: it takes in all men and the whole world. Liberalism is, in this sense, humanism; and the liberal, a citizen of the world, a cosmopolite.”
So how can there be any confusion on the relationship between liberalism and populism? True liberal radicalism has nothing in common with populist movements except a critique of the progressive elite establishment that has ruled the intellectual and policy world since WWII.
And, the liberal critique of the progressive elite is grounded in sound economics and the grand and honorable tradition of political economy, and is not born in disillusionment and angry frustration. Mont Pelerin Society was founded to cultivate the conversation and perpetuate progress in liberal thinking for each new generation. That task remains our task, and we have to rise to the challenge.
- See James Buchanan’s address to MPS on “The Soul of Classical Liberalism.” These calls are not for a change in human nature, but for a cultivation of an understanding and appreciation of how a change in the rules that govern social intercourse can channel our behavior into productive and peaceful interactions.
- The anti-globalization movement of the 2000s and the Occupy Wall Street protests in the wake of the global financial crisis of 2008 reflect the populist left, while the rise of the paleo-conservatives, paleo-libertarians, economic nationalists segments of the Alt Right movement represent the populist right. I am leaving out of the discussion the odious racial politics that is also intermingled here in the populist discussions of the US and in Europe concerning immigration, refugees, and public policy.
- I still find one of the most persuasive statements of the underlying attitudes of a liberal society to be Steve Macedo’s Liberal Virtues (1990), and of the institutional infrastructure that might follow to be Chandran Kukathus, The Liberal Archipelago (2003). The cultivating of mutual respect and dignity accorded to each that at liberal order must entail does, as my colleague Tyler Cowen argued in Creative Destruction (2002), turn on the homogeneity of some beliefs at the rules level of analysis while the celebration of heterogeneity at the within rules level. It is a question ultimately of the relevant margins that enable the operationalizability of cosmopolitan liberalism.
- The work of my colleague Virgil Storr (2008) has developed this core thesis of liberal political economy in new and fascinating ways, and in the process drawing our methodological and analytical attention to foundational issues in the cultural science. See also Storr, Understanding the Culture of Markets (2012).