Frédéric Bastiat’s Philosophy of Markets


The French political economist, politician, and journalist Frédéric Bastiat (1801-1850) placed “markets” and mutually beneficial “exchange” at the very heart of of his theory of economics which he elaborated in a two volume collection of essays Sophismes économiques (Economic Sophisms) (1846, 1848), a long essay on “La Loi” (The Law) (1850), and his unfinished treatise Harmonies économiques (Economic Harmonies) (1850, 1851)

His ideas are a sophisticated and theoretically rich “philosophy of markets” as he combined into a coherent whole the following aspects:

  • moral theory (the natural right to own property, opposition to the initiation of coercion against others),
  • economic theory (efficiency, prosperity, the primacy of the consumer), and
  • sociology (the class structure of the state, the organisation and history of “la spoliation” (plunder).

Bastiat’s Theory of Markets

Bastiat’s theory of markets has the following key points:

He believed that all individuals have needs and desires (des besoins) which they attempt to satisfy by taking action (l’action, les efforts) , either alone or by interacting with others in “markets”.

In order to explain how an individual makes choices when acting alone, Bastiat developed a theory of “Crusoe economics” to illustrate the nature of “human action” (l’action humaine) which influenced the thinking of Murray Rothbard in the 1950s and 60s when he was writing his treatise Man, Economy, and State (1962).

When individuals interact with others to satisfy their needs they create “markets” (or “the market”) which are made up of a multiplicity of individual exchanges.

He defined an exchange as the voluntary and mutually beneficial exchange of “service for service” (service pour service).

Over time there emerges an “apparatus of exchange” (l’appareil de l’échange) which is a collection of practices, beliefs, customs, laws, and institutions which make markets / exchange possible on a large scale and which continues over long periods of time.

Like Destutt de Tracy Bastiat thought that society could be regarded as “one Great Bazaar” (un immense bazar), in which there existed a huge number of interlocking / parallel markets satisfying a large number of of very diverse and often complex needs of the consumers which were satisfied by an equally large and very diverse number of producers. His concept of the “Great Bazaar” is very similar to Friedrich Hayek’s notion of the “Great Society” which was the global scale “spontaneous order” within which there were a myriad of smaller spontaneous orders often local in scale.

Markets are normally / potentially “harmonious” for all the participants (domestic or international, consumers and producers) unless they are disrupted by coercion and other “disturbing factors” (des causes perturbatrices) which creates “disharmony” (la dissonance).

If markets are allowed to flourish unmolested they can produce peace, prosperity and justice for those who participate in them.

On the other hand, if they are “disturbed” by government intervention markets can become “distorted” (déplacé), as in the misallocation of capital, and labour, and cause economic hardship, conflict, and injustice (economic recessions, war, plunder)

Thus markets are both fragile and robust at the same time. They can be broken or distorted by “disturbing factors” like coercion, war, plunder, and the granting of privileges to a favored few; yet they can also be quite robust since they have a self-repairing feature or what Bastiat termed “restorative factors” (des causes réparatrices)), which were driven by the self-interest of consumers and producers, price signals in the market, and the sense of “responsibility” and “solidarity” help by most people.

In order to properly understand the complexity of markets, especially if they are “disturbed” by government intervention, Bastiat developed his famous theory of “the seen” and “the unseen”. By “the seen” Bastiat meant that which was obvious and immediately visible to observers; and by “the unseen” he meant the hidden, delayed, or unexpected consequences of that intervention into markets which are not so obvious and apparent but nevertheless inevitable and apparent to the insightful and patient observer.

The opposite of the “harmony” of markets is “disharmony” (la dissonance”) caused by “la spoliation” (plunder) of various kinds. Bastiat had plans to write a multi-volume work of social theory which would deal with “Social Harmonies”, “Economic Harmonies” (the only volume to appear), and the Disharmonies caused by Plunder, the history of which Bastiat planned to write another volume but died before he could finish it.

In summary, one could say that the ideal of liberals like Bastiat and his friend Richard Cobden is that there should be “free markets in everything”.

Further Reading

Works by and about Bastiat here.

  • David M. Hart, “Bastiat on the Seen and the Unseen: An Intellectual History” here.
  • David M. Hart, “Bastiat on Harmony and Disharmony” here.
  • David M. Hart, ”The Paris School of Liberal Political Economy, 1803-1853” here.

The schematics I have created to illustrate the complex “word clusters” he used:

Blog Post: “Some Key Terms used by Bastiat in his Economic Theory” (22 Dec. 2019) here.

Website: “Vocabulary Clusters in the Thought of Frédéric Bastiat” here.

  1. Class:
  2. Disturbing Factors
  3. Harmony – Disharmony
  4. Human Action
  5. Plunder
  6. The Seen and the Unseen

The Negative Political Party


There was a sizable swing in the 2022 Federal election to the DNV (did not vote) camp as well as the “informal” vote, though this is less marked with the revised updated results than with the early and incomplete result I used in my earlier post. I now calculate that the total number of people who did not vote or whose vote was “informal” and thus not counted (I+DNV) increased from 13.19% in the 2019 election to 14.84% in the 2022 election, or in absolute terms 388,241 people.

I think it is as important to take into account those who did not vote for a candidate or party as those who did. Not voting at all or not voting “properly” (i.e. in the state approved manner) is also an expression of a political viewpoint which needs to be taken into account when trying to understand voter attitudes. I call this the “negative vote” as opposed to the “positive vote” which most journalists and academics consider when analyzing the results of an election. And the combined vote of the DNV (did not vote) and the “informal” vote (I) might be termed the “negative candidate” who stands for a “negative political party”. This “negative political party” did quite well in the last election, coming 3rd behind the two major parties and ahead of the Greens in the House of Representatives with a combined vote of 2,554,391 or 14.84%; and in the Senate similarly, also placing 3rd behind the two major parties and ahead of the Greens with a combined vote of 2,172,775 (12.62%). By my reckoning this makes the “negative political party” a potentially powerful force in Australian politics.

I have taken my terminology of the “negative political party” from the brilliant and clever essay by Frédéric Bastiat called “Un chemin de fer négativ” (The Negative Railway) which was first published in his first collection of Economic sophisms which was published in 1846. [English version CW3, p. 81; French version here.] In this essay, he satirises the politicians and rent-seekers who want to force the railway company building a new line from Bordeaux to Spain to have as many stops as possible in order to benefit the local restaurants and hotels near the railway station who would profit by forcing the passengers to stop, change trains, and move their luggage, and possibly have to stay overnight. This, they argued, would increase work, wages, and thus increase the national wealth. Bastiat mockingly implies that if this were true, then the more “breaks” in the line the better, so many in fact that the railway would no longer be a railway at all, as the passengers and their luggage would never get to their destination, but the “nation’s wealth” would supposedly have been increased by these measures.

[Note: In the edition I edited for Liberty Fund I included in the Appendix a witty piece by Mark Twain who noticed something similar when he was visiting Australia, in having to change trains in the middle of the night at Albury on his way to Melbourne from Sydney. See CW3 – Appendix 5. Mark Twain and the Australian Negative Railroad, 517.]

The House of Representatives

Data source: the Australian Electoral Commission website for the 2022 election results; for the 2019 election results.

In the 2019 election in the HR there were the following:

  • 16,419,543 eligible voters of whom
  • 14,253,393 (86.68%) voted “formally” (i.e. in the government approved manner) and
  • 835,223 (5.09%) voted informally for a combined total of 91.77%.
  • 1,330,927 (8.11%) Did Not Vote (DNV)
  • which made a total of 2,166,150 (13.19%) who did not vote or whose vote was not counted (I+DNV). If this group were considered as a “negative candidate” or a “negative party” it would have placed 3rd behind the two major parties and ahead of the Greens with a combined vote of 2,166,150 or 13.19%.

In the 2022 election in the HR there were the following:

  • 17,213,433 eligible voters of whom
  • 14,659,942 (85.16%) voted “formally” and
  • 802,337 (4.66%) voted informally for a combined total of 89.83%
  • 1,752,054 (10.18%) DNV
  • which made a total of 2,554,391 (14.84%) who did not vote or whose vote was not counted (I+DNV). If this group were considered as a “negative candidate” or a “negative party” it would have placed 3rd behind the two major parties and ahead of the Greens with a combined vote of 2,554,391 or 14.84%.

[See a larger version.]

Thus compared to 2019, in 2022 there was

  • a slight decline in the number “formal” votes (86.68% down to 85.16%) as well as “informal” votes (5.09% down to 4.66%).
  • but there was an increase in those who DNV, up from 8.11% to 10.18%. In absolute numbers this was an increase of 421,127, which is a sizable number of the eligible voters (2.45% of all eligible voters)
  • thus the total number of people who did not vote or whose vote was not counted (I+DNV) increased from 13.19% to 14.84%, or in absolute terms 388,241 people

In the NSW seat/division of Mackellar in the Northern Beaches region of Sydney a safe Liberal seat was won by one of the new “Teal” light Green independents. The sitting Liberal member won the primary vote (36.87%) but the collapse in the votes for the Labor candidate (from 15% to 7,34%) and the Green candidate (10.15% to 5.43%) meant that he second place Teal candidate won on preferences with 34% of the primary vote. Compared to the 2019 election, the informal vote decreased slightly (from 4.38% to 3.49%) and the DNV increased slightly from 6.95% to 7.46%). The combined I + DNV decreased slightly from 11.33% of the vote to 10.96%. With the collapse in the vote for the Labor Party, the previous Independent (now replaced by the Teal), and the Greens, the DNV “candidate” went from 5th position ion 2019 to 3rd in 2022.

See a larger version.

The Senate

To simplify a very complex matter, I will only consider the primary vote for Senate candidate, nit the final, allocation of seats by quota.

In the 2022 election there were the following

  • 17,213,433 eligible voters, of whom
  • 15,040,658 (87.38%) voted “formally” and
  • 532,003 (3.09%) voted “informally” for a combined total of 15,213,433 (89.82%)
  • 1,640,772 (9.53%) Did Not Vote
  • which made a total of 2,172,775 (12.62%) who did not vote or whose vote was not counted (I+DNV). If this group were considered as a “negative candidate” or a “negative party” it would have placed 3rd behind the two major parties and ahead of the Greens with a combined vote of 2,172,775 (12.62%).
  • 40 of the 76 Senates seats were contested with the Greens winning 6, Labor 11, and Liberal/National 17. Who knows how many seats my “negative political party” might of won in this election.

[See a larger version


The large number of disaffected, disillusioned, and indifferent voters in Australia is large and increasing as voters turn off the mainstream political parties and either look elsewhere among the smaller parties and independents, or give up and could no longer be bothered with voting at all. My “negative political party” is one way to measure this disaffection. All this party needs now is a “negative prime minister” to whip it into shape.

On Making the Argument/s for Liberty

[Honoré Daumier’s “Le Défenseur (Council for the Defense),” c. 1862-1865.]

Note: This is part of a collection of posts on “The Current State of Liberty and the Threats it faces”.

In this post I want to discuss the following issues:

  1. the multi-dimensional nature of Liberty requires a multi-dimensional approach to arguing for it
  2. the main kinds of arguments we can use: moral, economic, political, historical
  3. identifying those who might be sympathetic to arguments for Liberty
  4. identifying those who are likely to be resistant to arguments for Liberty
  5. the impediments we face in making the argument for Liberty

The Multi-Dimensional Nature of Liberty requires a Multi-Dimensional Approach to arguing for it

I will quote again here the important observation of the French political economist Frédéric Bastiat (1801-1850) who most eloquently made the point that “Liberty” is made up of a collection of other “freedoms”:

[French original] – Et qu’est-ce que la Liberté, ce mot qui a la puissance de faire battre tous les cœurs et d’agiter le monde, si ce n’est l’ensemble de toutes les libertés, liberté de conscience, d’enseignement, d’association, de presse, de locomotion, de travail, d’échange; d’autres termes, le franc exercice, pour tous, de toutes les facultés inoffensives; en d’autres termes encore, la destruction de tous les despotismes, même le despotisme légal, et la réduction de la Loi à sa seule attribution rationnelle, qui est de régulariser le Droit individuel de légitime défense ou de réprimer l’injustice.

[my revised translation 13 Aug. 2021] – And what is “Liberty,” this word that has the power of making all hearts beat faster and of moving the entire world, if it is not the sum of all freedoms? — freedom of conscience, teaching, and association, freedom of the press, freedom to travel, work, and trade, in other words, the free exercise by all people of all their non-aggressive abilities. And, in still other terms, isn’t freedom the destruction of all despotic regimes, even legal despotism, and the limiting of the law to its sole rational function which is to regulate the individual’s right of legitimate self defense and to prevent injustice?

In my formulation of this insight, I group these “freedoms” into 4 major categories: personal freedoms, economic freedoms, political freedoms, and legal freedoms.

[See my post on “Liberty as the Sum of All Freedoms” (26 April, 2022) here and this accompanying schematic.]


Different political ideologies may (or may not) focus on a few freedoms from this broader list (or “palette” if you like) but only the CL appreciates the importance of “the group of four” as comprising a consistent whole based upon the foundational principles of avoiding the use of coercion and respecting every individual’s rights to life, liberty, and property.

Some Thoughts on Strategy

  1. if someone expresses interest in, say, economic liberty but not so much (if at all) for the other forms of liberty, then we need to show them the necessary and logical connections between the different kinds of liberty; this of course assumes that people think that logical consistency matters; this view was shared by Milton Friedman who believed economic and political liberty were intimately connected and that you couldn’t have one without the other (the existence of Singapore might be a good reason for rethinking Friedman’s position)
  2. if someone expresses interest in one kind of economic liberty but not other kinds, we need again to show them how one liberty is connected to the others, and how they rest on the same or very similar principles

The main Kinds of Arguments we can use: moral, economic, political, historical

It is my view that there are four grounds on which the case for CL rests: moral, economic, political, and historical grounds. These grounds can be used as the basis for different kinds of arguments we can use to advocate CL. Very briefly they can be summarised as follows:

  1. the moral grounds: CLs believe that there is a strong moral argument for having respect for the individual as a unique and important person with rights to themselves (self-ownership), and also rights to property and liberty; and that the use of coercion violates these fundamental rights
  2. the economic grounds: letting people be free to engage in all kinds of non-coercive economic activity, to trade with each for mutual benefit, is the best way we know how to increase prosperity for both these individuals and for the broader society in which they live and work
  3. the political grounds: “liberal democracy” operating within a constitutional framework and “the rule of (just) law” is the best means we know to limit the power of the predatory state in order to allow individuals to live their lives and go about their business as they fit, to guarantee the ownership and enjoyment of property, and protect the functioning of “civil society” [note here Hayek’s important distinction between “law” and “legislation” – the “rule of law” is completely different from the “rule of legislation”.]
  4. the historical grounds: in spite of the fact that I think that the old “Whig interpretation of history” and the more recent arguments of Francis Fukuyama about “the end of history” are incorrect, it is true that after centuries of often bitter and bloody conflict some countries were able to build fairly liberal societies which protected individual rights to life, liberty and property (what I have called “the Great Emancipation”), which was the precondition for “the Great Enrichment” the benefits of which we still enjoy today. The fact that this actually occurred in “liberal societies” and not authoritarian or communist ones is a very important factor in the case for CL. The other side of the coin, which CLs should not tire of telling people about, are the catastrophic results of central planning, whether attempted on a universal scale in the Soviet Union and Communist China, but also on a more modest scale by all governments around the world (in Australia the National Broadband Network is a good example, as was the attempt during the Covid lockdowns to bureaucratically decide which was an “essential industry” and which was not).

[See my posts on “Classical Liberalism as a Revolutionary Ideology of Emancipation” (13 Oct. 2021) here, and “A Balance Sheet of the Success and Failures of Classical Liberalism” (21 Apr. 2022) here.]

Since different people respond differently to different kinds of arguments, it is important to choose the right kind of argument to suit a particular person’s interests and inclinations.

Some Thoughts on Strategy

  1. Some people find “economic” arguments repulsive / heartless and respond better to ones based on moral or ethical arguments
  2. Other people reject ethical arguments (say based on natural law and natural rights principles) and thus are more interested in “hard headed” economic or utilitarian arguments which stress the waste and economic inefficiency of government intervention, or the impediments intervention erects in front of economic expansion and development
  3. if people insist that in a crisis “the government has to do something” we can point out how similar efforts have failed in the past (historical), how such efforts are usually doomed to failure (economic), and how such efforts usually result in an increase in the size and power of government which is very hard (if not impossible) to remove afterwards (political, historical)
  4. people often argue that there are certain “public goods” which only the government can provide; this argument can be countered with the many historical examples we have of non-government, voluntary, and for profit market solutions to these problems (historical)

Identifying those who might be sympathetic to arguments for Liberty

In spite of the pro-state and anti-market stance taken for decades in the school curriculums and adopted for the most part in the universities, there are still a few individuals who are sympathetic to the ideals of the free market and the limited state. Many have become disconnected from the political mainstream (and do not vote at all or vote “informal”, i.e. in non-state approved methods) or are resigned to choosing the “least-bad” alternative in elections, and therefore “hold their nose” when they are in the voting booth.

Here is my list of those who might be sympathetic to arguments for Liberty and on whom we might focus our limited time and resources:

  1. the disconnected voter or the “swinging” voter who is “shopping around”; it is the job of a CL political party to find these people and persuade them to vote for candidates who truly believe in individual liberty and free markets. [See my post on this group in “Some Thoughts on the May 2022 Federal Election in Australia” (26 May 2022) here.]
  2. people who are still forming their political and economic opinions, such as students, or those who have become disillusioned with the status quo and are looking for an alternative; this is the job for groups like Mannkal, CIS, IPA, or FEE in the US
  3. educated people who might be swayed at the margin to vote for lower taxes and more limited government; they are not “true believers” but might be persuaded to become one in time (CIS, IPA, the Cato Institute in the US)
  4. sympathetic academics and intellectuals such as journalists, writers, artistic types (if there are any!) (IPA, CIS, Liberty Fund in the US)
  5. those groups who resent paying more in taxes than they receive in benefits, who are appalled at the waste and inefficiency of government, or who disapprove of some of the recipients of government subsidies and transfer payments; some of these people have been attracted to anti-establishment parties like One Nation or United Australia; whether they can be persuaded to join a more consistent CL group remains to be seen as they have “populist” economic notions which run against free market principles

It helps in identifying political groups which are close to CL on some issues and thus potential allies, to have a more sophisticated way of positioning political parties than that provided by the traditional “left-Right” spectrum.

[See my posts on “Plotting Liberty: The Multi-Dimensionality of Classical Liberalism and the Need for a New ‘Left-Right’ Political Spectrum” (17 April, 2022) here and “The Spectrum of State Power: or a New Way of Looking at the Political Spectrum” (10 Aug., 2021) .]

I prefer a 4-way matrix like the following. It is my attempt to place Australian political parties in a matrix made up of “economic freedoms” on the y-axis and “social freedoms:” on the x-axis. There is a clustering of parties in the “Populist” quadrant, the “Centrist” position is populated by both the two major parties which are hostile to both sorts of freedoms, and there is only one party in the “Libertarian” quadrant which supports both kinds of freedoms. This shows how “interventionist” all the Australian political parties in fact are. The “Liberal” and Labor Parties are circling each other in the centre trying to attract the same set of voters.

Some Thoughts on Strategy

  1. I have indicated above which organisations might be the most appropriate ones to focus on these different groups of potential supporters of the ideal of liberty
  2. Given the small size of the CL movement in Australia it is important that we focus our limited resources according to a division of labour and expertise
  3. as my “Four-Way Political Matrix” shows, CL or libertarian political groups have more in common with “the left” on many social freedoms (gay rights, same-sex marriage, decriminalization of drug production/sale/use) than they do with “conservatives”; on the other hand they have more in common with populist groups who have a strong distrust in and dislike of traditional political elites and high taxes; and with the “Old” Liberal party when it came to deregulation and cutting taxes and when it has a so-called “Dries” faction which seems now to have become thoroughly “wet”.
  4. the tactic which a small group of CL elected representatives could adopt in Parliament is a version of Bill Clinton’s policy of “triangulation” where the CL politicians side with “the left” on social issues which promote liberty and with “the right” on economic issues which promote liberty.

Identifying those who are likely to be resistant to arguments for Liberty

I believe that there is a strong correlation between the ideas one holds and the interests one has, and that this connection cuts both ways. One’s interests often influence the ideas (and values) one holds – for example if one sees that there is easy money to be had by selling something to the government or getting a government privilege (like a monopoly or a protective tariff), then one quite likely has political views which support the right and duty of the government to provide these benefits and the obligation of taxpayers to pay for them, and to vote accordingly at election time. Conversely, if one has strong beliefs in the need for a powerful and interventionist welfare state one is probably inclined to work for an institution which makes this possible, such as in a government department dispensing welfare to the people, or in a university teaching students about the benefits of a welfare state and the evils of unregulated “capitalism”, thus one’s job provides one with an “interest” to protect, such as salary, retirement benefits, psychic satisfaction, and so on, which one will defend at the polling booth at election time.

Here is my list of those who are likely to be the most resistant to arguments for Liberty for the reasons given above:

  1. those who work for the state, such as politicians, senior bureaucrats, and their advisors; this group is commonly known as the “political class”
  2. another important group of people who work for the state are school teachers who work in the pubic schools
  3. those who benefit from the state, such as those who receive government privileges (subsidies, monopolies), and who receive benefits (welfare, pension) – the former are known as “crony capitalists”, the latter as the “dependent class” of welfare recipients
  4. those who are ideologically committed to a powerful state and large-scale government intervention in the economy, such as avowed socialists, Greens, Left wing academics and journalists (the ABC??)

Some Thoughts on Strategy

  1. The sad conclusion I have reached is that it may not be worth sacrificing our limited resources in appealing to most of these groups as they are made up of committed interventionists and statists who are adamantly opposed to free markets.
  2. some public sector school teachers (of economics, history, geography) might be reachable if they had alternative sources of information concerning the benefits of free markets (“capitalism”), the harms caused by state intervention, and the myths (both scientific and historical) concerning “the science” of catastrophic climate change; I do not know of any groups in Australia who are undertaking this important task of “re-educating the educators”; I have given some talks over the years to high school teachers and others about how they might better teach free market ideas to their students; I have done this via the Bastiat Society in the US [see some of my lectures here] as well as David Schmidt’s group at the University of Arizona – link. We need a branch of the Bastiat Society in Australia to find and reach out to people in the community who might be sympathetic.
  3. English high school teachers need to be provided with intellectual ammunition in order to defend the teaching of the classics or “Great Books”of the Western Tradition, which I believe has a very strong CL component within it [see my website]; I have been active for many years with the Association of Core Texts and Courses which is the professional association of college teachers of great books programs in the US; the Ramsay Institute has recently been set up in Sydney to promote the teaching of and learning about “Western Civilisation” which has been met with strong opposition from within the universities; I do not know if they have a program to reach out to high school teachers; so far they have largely ignored me in spite of many emails
  4. for decades Liberty Fund has organised small-group conferences (15 people) for academics who are sympathetic to CL ideas but who are “trapped” within very hostile academic institutions where they work on a day to day basis; many Australian academics have been fortunate to attend LF conferences both here (organised by Geoff Brennan) and in the US; there is nothing like that here in Australia and whether we have enough resources to do something similar for our academics is a moot point; I worked for LF for nearly 20 years building the Online Library of Liberty website to promote its publishing, conference, and Great Books of Liberty programs; it was getting millions of hits and downloads every year when I was summarily sacked in late 2019 and forced into early retirement.

The Impediments we Face in making the Argument for Liberty

The impediments we face in making the case for a more liberal society have been created by a combination of economic “interests” and false thinking (the “ideas” which they hold). Those who earn a salary paid for by taxpayers, enjoy a subsidy or monopoly, receive a welfare benefit, and so on will be very reluctant to relinquish these if a true CL party ever came to power and began dismantling the welfare/administrative state. People are likely to dismiss the intellectual arguments for a free market out of hand if they have deeply held misunderstandings about the benefits of free markets and the harms caused by government intervention. Thus, the combination of having a vested interest in the continuation of the status quo, as well as having false ideas about the government and free markets, is a very potent obstacle to the creation of a free society.

Some of the beliefs that people hold (both people in government as well as the voters) about the legitimacy of what the state does and what the people who work for the state do to deserve their position, are as follows:

  1. the state and the people who work for it are doing good things for society at large that would not be done at all if left to the market (public goods, HEW)
  2. that the free market (capitalism) is a dangerous rapacious force which tends towards monopoly and exploitation unless held tightly in check by the government and the regulatory state
  3. that although the state can make “mistakes” they are minor compared to the harms caused by “unfettered capitalism” and can be controlled by good people working within a well-intentioned government and bureaucratic structure
  4. that things can continue as they are, or continue to steadily improve indefinitely, with more government and bureaucratic intervention when necessary, regardless of the tax burden on tax payers, the regulatory burden on producers, and the financial burden on everybody caused by government borrowing and artificially low interest rates.

The following is a list of four key ideas which I think are common to many if not all forms of justifications for state control and intervention in the economy and in people’s lives in general; the morality of using coercion, overstating the extent of “market failure”, ignoring the extent of “government failure”, and the widespread ignorance of economic principles. To undermine or refute any one of these key ideas would, I think, take us a long way to persuading people to rethink their faith in government intervention in our lives:

  1. the morality of using coercion: traditional CLs (both “radical” liberals and “moderate” liberals in my terminology) believe that the initiation of the use of coercion against individuals is immoral and should be banned (note: some “modern” liberals reject this view as too “absolutist” and accept a considerable use of coercion by the state as an unfortunately “necessary evil” but this should be kept to an minimum if possible). Most people however see the state’s use of coercion as not only necessary but just if certain socially desirable results are to be achieved – this is the policy of “expediency”. Most people also do not see the actions of the state as coercive in the first place. To them, the coercive “iron fist” of the state is not visible – which leads me to conclude that here we have, to rephrase Adam Smith, the problem of “the invisible fist” of the state. This widespread belief has resulted in what I call “the normalisation of state coercion”. By this I mean the acceptance by the vast majority of the people that the use of state coercion is normal, necessary and inevitable in order to solve our social and economic problems. They thus hardly ever question this belief and demonstrate strong opposition when CLs/libertarians do question it.
  2. the frequency of market failure – there is a widespread belief that the market has inherent flaws which inevitably lead to serious problems unless “corrected” by government action (i.e government coercion). These “market failures” are typically thought to be things like the monopoly and predatory power of large corporations, the boom-bust economic cycle, environmental “degradation” caused by any industrial activity, and the inability to provide all kinds of “public goods”.
  3. ignoring the extent of government failure – the theoretical counterpart to the concept of “market failure” is the notion of “government failure” which is largely ignored; there is a near universal belief that governments and “experts” (technocrats) employed by the government can solve problems, “manage” the economy, and provide services which private individuals cannot; this belief has been maintained in spite of the many disastrous attempts by government in the 20th century to “plan” or “manage” the economy, and the theoretical work of the Public Choice school of economics, whose insights are almost universally ignored by the economics profession
  4. there is near universal public ignorance of basic economic insights which makes points 2 and 3 possible; for example, that there are opportunity costs for every economic decision one makes; that there are “the seen and the unseen” consequences of economic actions (especially government intervention in the economy); the idea that every action has a cost and a benefit which is different for different people and groups; the inevitability of “unintended consequences” of government regulations, and so on

Some Thoughts on Strategy

  1. making visible “the invisible fist” of the state – it should be the role of journalists to expose the true nature of state regulation by showing how those regulated and those who oppose this regulation are in fact coercively treated by the state and its officers; some coercive acts by the police were brought to our attention during the almost fascist lockdown in the state of Victoria last year, but it was largely ignored by the public (which in itself, shows the depth of the problem CLs face); the problem then is for us to find those journalists who are sympathetic to the free market, cultivate and encourage their work, and to educate them further in sound thinking about liberal political economy
  2. making the moral case that the use of coercion is wrong – in the 19thC in Britain there was widespread popular belief in moral principles such as “self help” and “minding one’s own business” and leaving others free to go about their business, as well as the utter immorality of slavery; this provided the moral backbone to the broader liberal movement of that period; we need to cultivate a similar set of moral principles in Australia but how this might be achieved in a moot point; such moral principles used to be part of dissenting church doctrine like the Methodists and the Quakers; however, most churches today preach a version of “the social gospel” which in my view is a form of socialism not liberalism;
  3. teaching the public about basic economic theory – especially concerning the benefits of the free market, the harms of government intervention, the myths about “market failure”, and the pervasiveness of “government failure; we need something like an Australian version of the “Bastiat Society” organised at the grass roots level to help teachers, self-employed people, and professionals learn more about economic ideas; if we were looking for the Australian equivalent of Bastiat we might look at William Hearn (1826-1888) the first professor of economics at the University of Melbourne, who was in fact a follower of Bastiat, or Bruce Smith (1851-1937) who was a member of the NSW Parliament and a radical liberal [I have put some of their work online at my personal website]; Bastiat made a name for himself by writing short articles for newspapers in an attempt to expose the fallacies of economic thinking which were widely held by the public and government officials; we need something similar today – a good modern example of someone working in the tradition of Bastiat are the “letters to the editor” written by Don Boudreaux at the Café Hayek) website.


The above comments paint a rather bleak picture of the threats which face the liberty movement and the enormous difficulties which we face in trying to resist them. I will conclude by saying that my recommendation is that we in the liberty movement should constantly stress the following two points, namely to emphasize the benefits of liberty to both individuals and the communities in which they live, and the harms caused by the use of state coercion and intervention.

One might hope that if these alternative visions of the benefits of liberty and the harms of state coercion can be presented to enough people in a form they find appealing and persuasive, then we in the liberty movement might be more confident about the future of liberty.

The Threats to Liberty Part 2: The Size and Power of the State

[James Gillray, ”More PIGS than TEATS, or the new Litter of hungry Grunters sucking John Bull’s old Sow to death” (1806)]

Note: This is part of a collection of posts on “The Current State of Liberty and the Threats it faces”.

In Part 1 I discussed state expenditure now and historically in “The Threats to Liberty Part 1: Government Expenditure” (29 June, 2022) here.

In this post I want to discuss “The Size and Power of the State” by looking at a few indicators concerning public sector employment and the bureaucratic structure of the government, especially in Australia.

The size and power of the state can be measured in a number of ways. In a previous post I listed the following indicators as important:

  • how many people worked for the state in institutions such as the military, the courts, the customs service, the police, the diplomatic service, the post office, and so on
  • how many people received benefits or privileges from the state in the form of monopolies, subsidies, restrictions on competitors, hand-outs, pensions, “civl lists”, and so on
  • how much money was taken by the government from the people in the form of taxes, excise, tariffs, fees, and in kind (such as forced labour)
  • how much did the government spend on its various activities in the form of income received from taxes, sales of goods and services from government owned enterprises, fees, and borrowings from government banks (Central banks), private banks and investors.
  • how much burden (cost) did the government place on people in the form of prohibitions on work, buying and selling, entering an occupation of one’s choice, and regulations in general
  • how many people did the state kill or imprison for engaging in economic and other activities which the state did not approve of

In this post I want to look at how many people work for the state and in what capacity, and how states are organized to employ these people to administer, regulate, and redistribute people, money, and economic activity to achieve its goals.

  • How many people work at “the sharp end” of government, i.e. in the military, and how much does the state spend on this
  • How many people work for the government in its other capacities, i.e. HEW, regulating private and economic life, and how much does the state spend on this
  • How the government is structured to carry out these tasks, i.e. the number of departments and other entities under its control.

Countries Ranked in Size by Total Revenue and Expenditure

This table gives us some idea of which are the biggest and most powerful states on the planet, ranked by total revenue and expenditure. The US is by far the biggest and most powerful state with total expenditure close to $10 trillion; Germany is 3rd with $2 trillion; France 5th with $1.6 trillion; Britain 6th with $1.4 trillion; and Australia is a surprising 12th with close to $600 million.

Military Personnel and Expenditure

One indicator of a country’s power is the size of its military, the number of its military personnel, and how much the state spends on this. The table shows that the US is by the far the most powerful state when it comes to military spending at $801 billion p.a. which is 3.5% of its GDP. Australia comes in at no. 12 with $31 billion p.a. which is 2.0% of its GDP.

A second indicator is the number of military personnel. China and India have the highest number, which is not surprising given the sheer size of their populations. The US is ranked 3rd with 1,388,100 active military, and Australia is ranked 59th with 58,600; NZ is ranked 129th with 9,000 personnel.

Another indicator of military power is the number of times a state interferes militarily in the affairs of other nations. I will not go into this aspect here, only to note that Australia has been very active in fighting alongside Britain and then the US in overseas wars, and in numerous “peace keeping” actions.

Public Sector Employees

State spending on the military used to be the single biggest item in the budget until it was replaced by spending on health, education, and welfare HEW in the 20thC. The dramatic rise in “social spending” (as opposed to “anti-social” spending??) since the 1930s can bee seen in this graph.

In 2016 France spent 31.55% of its GDP on “social spending”; the UK 21.49%; the US 19.32%; and Australia 19.15%.

Another way to measure this is the number of public sector employees as a percentage of the total workforce, shown in this table:

Scandinavian countries, like Norway (35.6%), with a large welfare state rank very high in spite of the fact that other areas of their economic are highly competitive and exposed to the world market. France is also high at 28%; the UK is 21.5%; Australia is 20.4”; the US is 17.6% (although the Mercatus Insitute calculates the level as 19%); and NZ is surprisingly low at 13.4%.

The Public Sector in Australia

Turning to the size of the public sector in Australia the following tables are informative.

The above table shows the number of public sector employees and the total amont spent on their wages/salaries at the Commonwealth, State, and local levels. By far the biggest employer are the states with 1,662,400 employees (led by NSW with 495,900 employees, followed by Victoria with 399,600 employees), and with the Commonwealth employing a relatively modest number of 247,600. The total number of public sector employees in Australia is 2,100,800 which cost the Australian taxpayers a total of about $183 billion out of total revenue of $593.2 billion or 31%.

The breakdown of where these public sector employees work is interesting:

This table shows that the majority are employed in the following three areas

  1. Public administration and safety – 659,800
  2. Education and training – 641,100
  3. Health care and social assistance – 570,800

for a total of 1,871,700 or 89% of the total.

The Bureaucratic Structure of Government

The millions of public sector workers in Australia, as elsewhere, are organized into a bewildering array of departments, agencies, bodies, and “entities”, the true extent and cost of which are hard to determine. Although there is a huge amount of information is accessible online, it is often hidden in plain sight, buried under mountains of detail, or divided across more than one website. What I would like to know and have more readily available in one location is the following:

  • how many and what kind of government entities exist and what they do exactly do
  • how many people work for them and how much do they cost
  • what are the salaries and benefits of those at the highest levels

For example, I have been able to find three interesting and very densely packed summaries of some of this information. The NSW government provides a “Governance Arrangements Chart” here in PDF; the Commonwealth government provides a “FlipChart” of Commonwealth Government Entities & Companies here of here in PDF; and the Commonwealth’s online “Australian Government Organisations Register (AGOR)” here.

What struck me was the astonishing number of such entities and the complexity of their arrangement / structure.

Below is a small section of the Federal government “Flipchart” as the entire piece is too large to display in a blog post:

The Commonwealth of Australia

We learn that the Commonwealth has 16 Departments or “Portfolios” (NSW on the other hand has “Clusters”) with an additional 4 departments called “Parliamentary Departments”. These Departments are in turn made up of 187 (or 189 depending on the source of information) “Principal Bodies”, which in turn are made up of a total of 1,306 individual bodies.

For example, the AGOR reveals that there are:

  • Principal bodies (187 or 14%) – bodies connected with government policies, purposes or services which are prescribed under the Public Governance, Performance and Accountability Act 2013 and the related rules.
  • Secondary bodies (677 or 52%) – committees, councils, boards, statutory office holders, consultative bodies and working groups linked to the Australian Government.
  • Other bodies (442 or 34%) – Subsidiaries of corporate Commonwealth entities and Commonwealth companies; Joint ventures, partnerships and other companies; National Law bodies; and Bodies linked to the Australian Government through statutory contracts, agreements and delegations.

These in turn were composed of 12 groups of “bodies” known as “governance types” (labelled “A” to “L”):

  1. A. Non Corporate Commonwealth Entity – 98
  2. B. Corporate Commonwealth Entity – 71
  3. C. Commonwealth Company – 18
  4. D. Advisory Body – Policy and Stakeholder Consultation – 284
  5. E. Statutory Office Holder Offices and Committees – 224
  6. F. Non-Statutory Function with Separate Branding – 34
  7. G. Ministerial Councils and Related Bodies including those Established by the COAG – 59
  8. H. Inter Jurisdictional and International Bodies – 76
  9. I. Subsidiaries of Corporate Commonwealth Entities and Commonwealth Companies – 118
  10. J. Joint Ventures, Partnerships and Interests in Other Companies – 234
  11. K. National Law Bodies – 26
  12. L. Bodies Linked to the Australian Government through Statutory Contracts Agreements and Delegations – 64

For a total number of “bodies” – 1,306.

The State Government of NSW

Similarly with the image of the NSW “Governance Arrangements Chart”, since it too big and complex to display in a blog post, here is a snippet:

Concerning the NSW government (with the help of the Wikipedia article “List of New South Wales government agencies” here) we learn that it is bureaucratically organised into 10 “clusters” or “super” ministries, which include (the clusters in quote marks have especially inappropriate names):

  1. Premier and Cabinet – 3,835 employees
  2. Regional NSW – 4,428
  3. Enterprise, Investment and Trade – ?
  4. Treasury – 2,293
  5. Health – 124,086
  6. Education – 110,507
  7. “Stronger Communities” – 52,342
  8. Transport – 26,454
  9. “Customer Service” – 8,210
  10. Planning and Environment – 16,103

which in turn are made up of the following components:

  1. 39 departments, which are the lead agencies in each cluster
  2. 28 executive agencies, which are agencies related to the departments
  3. 4 “other services”, which include the large “Health Service” (127,156 employees), NSW Police Force (21,879 employees), the “Teaching Service” (99,702 employees), and the “Transport Service” (13,645 employees)
  4. 19 separate agencies, which operate independently of departments but can still be within clusters
  5. 8 state-owned corporations
  6. 10 universities (37,238 employees)
  7. statutory authorities, which are established under legislation but sit outside clusters
  8. subsidiaries of the NSW Government established under the Corporations Act
  9. councils under the Local Government Act (possibly 54,900 employees)

The “Big Picture”: Part 2

[The British Atlas holding up the Political Establishment.]


  1. This is part of a collection of posts on “The Current State of Liberty and the Threats it faces”.
  2. This is part 2 of a two-part post on “The Big Picture”. See part 1

7.) We need to show the public in a more convincing way the very considerable achievements of CL over the past 200 years

We need to show the public in a more convincing way the very considerable achievements of CL over the past 200 years. The achievements of CL have been enormous since CL first began challenging the Old Order of the monarchical/absolutist state (Throne) and the established church (Altar) in the 17th century, with most of its successes coming in the late 18th century (the American and French revolutions) and their aftermath in the 19th century.

These achievements can be summarized as the Great Emancipation, and the Great Enrichment. As a result of CL reforms and revolutions much of western Europe, America, and the English colonies were emancipated:

  1. from coerced labour such as slavery and serfdom (abolition)
  2. from the arbitrary authority of kings and princes (constitutional limits to state power, the rule of law, freedom of speech, low taxation)
  3. from “cruel & unusual punishment”, such as torture, the death penalty, arrest without court order, imprisonment without trial (trial by jury, independent judiciary, habeas corpus, punishments which “fit the crime”)
  4. from violations of property rights (legal protection of property, enforcement of contracts)
  5. from the arbitrary power of the Church (freedom of religion, freedom of speech, freedom from paying compulsory tithes)
  6. from restrictions and bans on associating with others on a voluntary basis (marriage and divorce laws, private clubs and associations (“civil society”))
  7. from restrictions on trade and industrial activity (free trade and deregulation, freedom to enter and practice a profession or trade)
  8. from restrictions on the movement of people, goods, and capital (freedom to move within the country, freedom to emigrate, free trade)
  9. from strict limits on who could participate in political activity such as voting and standing for election (democracy, freedom of association, freedom of speech)
  10. from war and conscription into the army (peace, low taxes and debt, laws of warfare, international arbitration)

The great emancipation led directly to an explosion of wealth creation (market driven innovation, greater productivity of free production and free trade) which in turn led to longer life expectancy, lower infant morality (and childbirth deaths of mothers), reduction of disease, less demanding physical labour (mechanization), and greater home comforts for the first time in human history, especially for ordinary working people (piped water, sewers, heating, light). Although these emancipations and enrichment completely transformed European and American society and laid the foundation for our modern world they were left incomplete and unfinished, and, as a result, other ideologies less friendly, even very hostile to CL, have become dominant (socialism, welfare statism, fascism/populism).

Also see these related posts:

  1. “A Balance Sheet of the Success and Failures of Classical Liberalism” (21 Apr. 2022) here

8.) We need to be honest with ourselves about the failures of CL and the incomplete nature of the “liberal emancipation project”

We need to be honest with ourselves about the failures of CL and the incomplete nature of the “liberal emancipation project”. In spite of the considerable successes of the liberal “emancipation project” and the ensuing “great enrichment”, much was left undone, unfinished, and incomplete, which left the political and intellectual door open for other political ideologies to step in. These competing ideologies which replaced liberalism were nationalism and “social democracy” (interventionism), both of which had moderate and more extreme (i.e. violent and coercive) versions. These failures can be summarized as the inconsistent application of basic liberal principles, some complacency about the inevitability of liberal reform, several weaknesses or gaps in economic theory to explain certain problems, considerable political naïveté, and the loss of what had once been an inspiring liberal “vision” of the kind of society they wanted to create.

The emancipation project was left incomplete. This was a result of the inconsistent application of basic liberal principles to all members of society. The most glaring examples of this were unequal economic and political rights for women, indigenous people or ex-slaves, and gays and lesbians. Furthermore, the fact that there could be a group who could call themselves “liberal imperialists”, given the violence and privilege inherent in they way in which colonies and empires were created and maintained, suggests liberalism was changing into something which would soon become unrecognizable to its radical and even moderate founders. There was also a strong attitude of complacency about how the liberal project would continue as a result of the inevitable “evolution” of societies and institutions to an ever more “advanced” and liberal form. Why should liberals struggle to spread liberal ideas and practices if “evolution” would do this for them? and why even bother when it came to the “inferior” races and cultures who were literally the “subject” of the European Christian “civilizing mission”?

CL political and economic theory suffered from several weaknesses or gaps which made it difficult to understand or solve certain problems. We have already mentioned the problems posed by exaggerating the extent of and misunderstanding the reasons for “market failure”, and the related problem of ignoring the extent of and reasons for “government failure”. These theoretical problems would only be explained by developments in liberal political economic theory in the 20th century with the emergence of the Austrian and Public Choices schools of economic. Perhaps the most serious theoretical problem for CLs was their inability to offer a good explanation for the repeated occurence of the business cycle with its boom and bust, with the latter causing economic depressions and so much suffering for the poor and working classes. This theoretical failure meant that alternative theories such as the “new liberal” theory of “underconsumption” (Hobson) or the Marxist theory of the inevitable collapse of capitalism as monopoly and ruthless competition destroyed it from within, became increasingly attractive to workers, intellectuals, and politicians.

A more “political” weakness in CL theory was the tendency to view “democracy” as an end in itself rather than as a means to achieve other liberal ends such as the protection of life, liberty and property, and holding elected politicians accountable for their behaviour. In the late 18th and early 19th centuries liberals, especially republican liberals in America, saw democracy as a means of removing entrenched political elites who used the political system for their own ends at the expense of “the people” (i.e the ordinary working and tax-paying people). However, gradually democracy as a “process” came to be regarded as desirable in itself, and that it should be applied to more and more aspects of social and economic life. The end result would be a system where the “will of the people” should be consulted before any group decision could be made concerning every or nearly every social and economic arrangement individuals might wish to engage in.

At a more theoretical and philosophical level, we have the weakening and eventual abandonment of a belief in natural rights as the proper grounds for believing in “the right” individual had to their life, liberty, and property, and to be left alone by the government to exercise these rights, so long as they respected the “equal right” of others to their life, liberty, and property. By the late 19thC the theory of utilitarianism (Bentham, James Mill, and J.S. Mill) had replaced the natural law / natural rights perspective, with the added twist that utilitarian-minded politicians and bureaucrats could and should decide what activities or policies “maximized” a society’s “utility” or “happiness”, even if this meant taking or regulating the life, liberty, and property of some, if it could be “shown” that doing so would increase the total amount of utility / happiness of the majority. The end point would be reached when people believed that if individuals had any “rights” at all, they were the creation of “the government” or “the law” and thus were not an inherent part of what it meant to be a human being, and did not exist prior to the formation of government. Thus, these “rights” could be suspended or revoked at any time based upon the assessment of politicians and bureaucrats that in doing so the “welfare of the people” would be served. We saw this clearly during the Covid19 lockdowns and bans on travel, association, and commercial activity throughout the western world during 2020-22.

Many CLs were politically naive by placing considerable faith in the benevolence and omniscience of the state and its officials to solve pressing social and economic problems. [See the section above on “government failure” for details.] They expressed a similar faith in the ability and willingness of the “middling class” to make democracy work once they were granted the right to vote (after 1832 in Britain). Many CLs had doubts about the ability of the working class to behave “responsibly” if they were given the right to vote given their lack of education, “fickleness”, and susceptibility to being bribed by ruthless politicians. However, as democracy matured during the course of the 19thC it became clear that the middle class behaved exactly the way they had previously thought the working class would behave: they were easily misled and deceived by ruthless politicians, they voted for politicians who promised to give them “something for nothing,” and many from their ranks actively sought out other benefits from the state by lobbying for jobs and contracts. The net result is what we see today, the new democratic state was “captured” by vested interests, both old established groups who learned to adapt to and manipulate democratic institutions, as well as the newly enfranchised groups (business organisations, trade unions).

One reason why the newly enfranchised groups behaved this way was their ignorance of basic economic principles. Some of the liberal political economists tried to rectify this problem by attempting to explain basic economic ideas simply to the ordinary person via articles in the press. The most notable example of this was Frédéric Bastiat during the 1840s with his dozens of articles in which he debunked the “economic sophisms” commonly used to defend tariff protection, subsidies to industry, and handouts for the people. He failed in this task then, just as CLs today have failed to educate the public about these very same issues. Sometimes I feel that we have been trapped in a kind of “ideological Groundhog Day” where we have to keep repeating day after day the same arguments for liberty and against government intervention with no apparent success.

The “Loss” of the Intellectuals to Socialism. The group which might have persuaded the ordinary person of the moral and economic benefits of free markets were the “intellectuals”. However as the 19th century wore on the intellectual class increasingly moved away from CL and adopted socialist, nationalist, or other statist beliefs instead. Why the CL movement “lost” the intellectual class to socialism and statism in the late 19th century, and which still continues today, is an important question which modern day CLs still have to find an answer to and a way to reverse the situation. A common response is that the uncertainties of making a living in a free market where one’s work is only rewarded if consumers value your work enough to voluntarily pay for it, drove intellectuals into the apparently more certain and predictable arms of the state which provided them with secure jobs in the administration or the state funded academy. Another explanation is that intellectuals adopted the old aristocratic disdain for “productive labour” and did not want “to dirty their hands” with commerce. Why this was the case is unclear.

CLs lost their “Vision” of what a free society should be like, why this was desirable, and thus “lost” the moral high ground to the socialists and statists. Their loss of vision made their ideology less attractive to the young, who found an alternate and more attractive and inspiring vision in socialism/Marxism, nationalism, and fascism, and now environmentalism. One of the reasons why radical liberals in the late 18th and early 19th century were able to put forward an inspiring vision of what emancipation might achieve, and thus attract many people to the CL cause, was their passionate sense of justice, or rather their hatred of the injustice which they could see all around them. This passion came out in their polemical writing, best exemplified by Thomas Paine whose “Common Sense” (1776) and “The Rights of Man” (1791) inspired CLs on both sides of the Atlantic. Who in the late 19th century was writing similar inspiring essays to attract a new general of young people to CL? Very few – perhaps only the aging members of the last generation of “old liberals” like Gustave de Molinari (1819-1912) and Auberon Herbert (1838-1906). This loss of “vision” was pointed out by Friedrich Hayek, James Buchanan, Murray Rothbard, and Robert Nozick in the second half of the 20th century, and again by Richard Ebeling and Peter Boettke in the 21st.

Also see these related posts:

  1. “Classical Liberal Visions of the Future I” (27 August, 2021) here
  2. “Classical Liberal Visions of the Future II: The Contribution of Gustave de Molinari (1819-1912)” (29 Aug. 2021) here
  3. “Classical Liberal Visions of the Future III: Liberal Experiments, Frameworks, and Archipelagos” (11 Oct. 2021) here
  4. “Hayek on a Liberal Utopia” (11 Sept. 2021) here

9.) We need to be clear eyed about what still needs to be done if we truly wish to complete this great “liberal emancipation project” FOR ALL PEOPLE

We need to be clear eyed about what still needs to be done if we truly wish to complete this great “liberal emancipation project” FOR ALL PEOPLE. In my view CLs need to do the following things:

To complete the liberal “emancipation project” for all individuals. The “great emancipation” seemed to have stalled sometime in the late 19thC before its work had been completed. We need to restart the engine and make sure this time it gets applied to all groups equally, regardless of gender, race, or nationality.

To remove all the remaining impediments to the full flowering of “the great enrichment”. Similarly, the other great project of CL reform and betterment, the “great enrichment,” has stalled in the west (especially in Europe) and is hampered in other parts of the world by the clumsy and heavy handed approach taken by interventionist governments in places like India and China. We need to remove all the remaining impediments to the full flowering of “the great enrichment” so that all people everywhere can benefit.

To remove the institutional incentives which encourage predation (both private and public). We need to reform or abolish political institutions in order to remove the incentives which encourage “predation” – both public and private. The great temptation for “predators” of all kinds is the enormous wealth which the state controls and can dispense to the well-connected few, or the most vocal voter blocks during election campaigns. To remove the temptation we need to cut the resources which the state can dispense, this means drastically cutting taxes and the size and power of the administrative and welfare state.

To challenge the ideological arguments used to legitimize / justify this predation and redistribution of wealth. These arguments are put forward by academics, intellectuals, and the press, and are widely shared by educated people. CLs need to offer counter arguments (which they have done for a couple of centuries) and to present them in a way which will win back the intellectual class to the cause of liberty. How best to do this is open to discussion.

To find a solution to the serious political problem of dependency on the state. This dependency has taken the form of the large number of people who work directly for the state (“civil servants”), those individuals and firms which sell their goods and services to the state, those individuals and firms who have been given special privileges or monopolies from the state in order to earn a living, and those who are dependent on state transfer payments to survive (pensions, medicare, income support, unemployment benefits). Because so many people have now become dependent on, or beneficiaries of, the modern state the return to Liberty in a democracy has become a very difficult, perhaps impossible task. A tipping point of “no return” may well be reached when the number of voters who are dependent on the state for all or a large part of their income is greater than 50%. This will means that it becomes increasingly difficult for a CL party to persuade voters to cut or end their own source of income and financial support.


My quite depressing, but I think realistic, conclusion is the following:

1.) There has been a collapse / failure of the Liberty movement in the 20th & 21st centuries (both ideologically & politically). The rot within CL became apparent towards the end of the 19thC with the emergence of a “new liberalism” which accepted the need for the creation of a large and powerful welfare and regulatory state. After a period of near total eclipse of the Liberty movement during the Thirty Years War of the 20thC (1914-1945) there was an attempt to revive CL (the Mont Pelerin Society in 1947) which had some limited political success in the 1970s and 1980s (Thatcher and Reagan) before petering out. All so-called “liberal parties” today are dominated by “neo-liberals” whom I believe are “no-liberals” at all, i.e. they are LINOs (liberal in name only). Both the major blocks of political parties all support a form of “social democracy”, i.e. a form of “socialist” or “interventionist” democracy.

The revival of CL has been more marked in the ideological realm, where we have never seen so many CL scholars, intellectuals, and policy analysts and activists, which bodes well for the future. The problem seems to be the mismatch between the ideological growth of CL on the one hand and political failure of “liberal” parities (or advocates of Liberty within these existing parties) on the other hand.

2.) The rise of the modern warfare / welfare / regulatory / Keynesian / surveillance / hygiene state is unprecedented and seemingly unstoppable. The nearly universal “first response” of voters and governments to “crises” (whether real or manufactured) is to call for the government “to do something”. There is a majority who believe in the legitimacy and ability of “experts” to provide solutions to these crises and to implement them by any means possible. Far too many of those who expressed support for free markets and individual liberty abandoned their liberal principles and joined the statist band-wagon, thus severely weakening the Liberty movement. The most recent “crises” I have in mind are the terrorist attacks of 9/11 2001, the wars in Afghanistan and Iraq (2001, 2003), the Global Financial Crisis 2008, the Covid19 panic and lockdowns of 2019, and the ever growing “Global Climate Catastrophe”.

3.) So many people have become dependent on, or beneficiaries of, the modern state that the return to Liberty is a very difficult, perhaps impossible task. In democracies like ours we are seeing the convergence of two forces which work in favour of the state and its power. The first is ideological, where a majority of the people are hostile to free markets and support government intervention; the second is political, where a very large percentage (perhaps eventually a majority) of voters are dependent on the state for all or most of their income and act politically (electorally) to protect this interest. When the two forces pushing to maintain or expand the power of the state meet, CLs face a very, very difficult task if they wish to reverse course.

4.) There are serious practical / political problems in creating a “limited (protective) government” and then keeping this government truly “limited” over time. I believe this is a problem CLs have not faced up to adequately in the past and still do not have a satisfactory solution. The history of the Liberty movement shows us that there have been successful efforts to turn a big “predatory” State into a limited “protective” State. [See above for specific examples.] However the events of the 20thC and the first two decades of the 21stC have also shown us how a “limited government” can slowly but steadily become increasingly “unlimited”. This process of the expansion of state power is the result of another convergence of interests: the demands of the electorate, lobby groups, and rent-seekers who want government solutions to their problems, and the ambitious and self-interested behaviour of politicians and bureaucrats who step forward to provide these solutions and advance their careers at the same time. The traditional response of CLs has been that the power of the state can be kept in check by the following four things:

  1. constitutional limits on the actions of the state,
  2. a vigilant high or constitutional court to enforce these limits,
  3. a vigilant free press to expose and denounce those who violate these limits to power, and
  4. a vigilant and informed electorate who will vote to protect Liberty.

I think the course of the last century has shown how weak these four components to limiting the power of the state have been. “Vigilance” seems to have turned into “negligence.” How these limiting forces might be revived , or replaced by something else, is moot.

Atlas may eventually shrug, or he may not. Only time will tell.