On the (im)Possibility of finding a “Third Way” between Liberalism and Socialism

[Note: This post is part of a series on the History of the Classical Liberal Tradition]

Some people can see the logic in applying political, moral, and economic principles consistently and avoiding contradictions which make being consistent impossible. Thus for example, if you really do believe that profit, interest, and rent are immoral (as many early socialists did) because they are “unearned” by the capitalist / factory owner, the banker or money lender, and the land or property owner, and which is paid at the expense of those who do in fact “work” (or “labour”), then this is immoral and a form of exploitation which must be stopped.

If you really do believe, as another example, that the payment of wages to workers by a profit-making factory owner or employer is also a form of exploitation since the worker never receives the “full value” of what their labour produces, the difference going to the owner in the form of “profit”, then this too must be stopped because exploitation is immoral.

If you really do believe that “capitalism” is riven by internal contradictions that lead inevitably to periodic economic recessions and depressions, that the workers’ standard of living is doomed to gradually decline through unchecked population growth and the decline in their wage rates, that the exploitation of nature for profit leads inevitably to environmental destruction, pollution, and global warming, that “overproduction” of consumer goods leads to rampant and degrading “consumerism”, that “globalisation” of markets creates a race to the bottom as countries with cheap labour drive out of business those countries where wage rates are much higher, if you believe these things then logic tells you that you have to oppose them because they are immoral and damaging to the welfare of ordinary working people and possibly will also lead to the end of the world. Hence the passion held by supporters of “Extinction Rebellion”.

On other other hand, radical liberals / libertarians believe none of these things are true but they do have a similar desire to see their principles put into practice in a logical and consistent manner, namely the idea that individuals by their nature as human beings have rights to life, liberty, and property which pre-date the creation of the state and which trump (no pun intended) any claim the state may have to take away or infringe upon these rights; that the non-aggression principle should apply in all social and economic relations between people; and that when states, groups, or other individuals use aggression to interfere with these natural rights they engage in the unjust exploitation of others which is immoral and thus should be brought to an end as soon as possible. [I will not go into these claims in any detail here. See other sections of this collection of posts for more information.]

Thus it would seem that there is and can not be any “third way” or compromise, at least in terms of theory (but perhaps not in terms of actual policies), between the logically consistent socialist/communist and the logically consistent radical liberal / libertarian. Either the payment of wages by a profit-seeking factory owner is exploitation or it is not; likewise, either the seizure and confiscation of a person’s justly acquired property by the state is unjust or it is not. However, this is exactly what those who are less attracted to logical consistency from both sides want to believe is possible. People from both the “liberal side” and the “socialist side” have thought that there must be a way to avoid the “problems” (as they see them) of the logical extremes of both ends of the political spectrum [See the post on this.]
Thus we have seen attempts at creating a “Third Way” for liberals in the emergence of “New Liberalism” in the late 19thC and “neo-liberalism” after WW2, both of which tried to “soften” the extremes of laissez-faire free market capitalism, the appearance of large “monopoly” firms, and rampant “anti-social” individualism with the injection of just enough “socialism” to remove its rough edges.

We have also seen socialist and Labour Parties do something very similar, with Tony Blair’s Third Way for the British Labour Party in the late 1990s (or “New Labour” as his campaign slogan called it); the pragmatists and “economic realists” in the Australian Labor Party under Bob Hawke and Paul Keating in the 1980s, who wanted to remove the extreme measure of traditional socialist calls for the “nationalisation” of industry by the state and to allow a sizable dollop of “privatisation”, private ownership, free market pricing, and competition.

In spite of the logical contradictions this attempt to find a “Third Way” inevitably produces, this has not stopped political parties from pushing these theoretical problems to one side and to nevertheless try to create what I have called a “smorgasbord” of policies which have elements of both liberalism and socialism in them. [See my post on “The Success of Liberal Ideas has led to the Decline of Radical Liberal Parties” (6 Sept. 2021) ) where I discuss the problems this has caused in creating parties which are LINO (“Liberal in Name Only”) and SINO (“Socialist in Name Only”).]

If we too just push aside the theoretical contradictions this creates and just focus on the policies we can see that the result is not a good one. The Austrian economist Ludwig von Mises (1881-1973) has called these policies “middle of the road” policies, by which he means both parties try to avoid being a consistent and radical liberal party on the right hand side of the road, as well as trying to avoid being a consistent and radical socialist party on the left hand side of the road, and thus follow a “middle of the road” policy which is supposed to be a bit of each but works out being neither one nor the other. For a variety of reasons I cannot go into here , Mises believes the steady pursuit of “middle of the road” policies will end up inevitably taking the party which follows them to the left hand side of the road. See his The Middle of the Road Leads to Socialism) given to the University Club of New York, April 18, 1950 and which was later published in his book Planning for Freedom (1952) [available online .]

Thus, as I see it, the problem boils down to the following problems:

  1. “new” liberalism or neo-liberalism is not consistent in its adherence to and application of liberalism and thus becomes LINO (“Liberalism in Name Only”)
  2. the same is true for “New Labour” or what we might call “neo-socialism” which is not consistent in its adherence to and application of socialism and thus becomes SINO (“Socialism in Name Only”)
  3. and attempts to follow a “middle of the road” policy between these two political and economic ideologies will drive both LINOs and SINOs eventually towards a more interventionist “centrist” position, as they bid for voter support in elections by offering them more and more “handouts” and subsidies to special interests, as the desire to win and stay ion office overpowers any ideological conviction they once might have had as “liberal” or “socialist” parties.

The Multi-Dimensionality of Classical Liberalism

[Note: This post is part of a series on the History of the Classical Liberal Tradition]

[See also another post on “Plotting Liberty: The Multi-Dimensionality of Classical Liberalism and the Need for a New ‘Left-Right’ Political Spectrum” (17 April, 2022) here.]

Another aspect to consider is the multi-dimensional nature of liberalism. The one dimensional political spectrum with two end points of total liberty at one end and total state power is better than the traditional “left-right” spectrum which hides this important feature, but it too has its limitations. As Bastiat and others recognized in the mid-19th century, liberty could take many forms or dimensions, and that “true liberty” was the sum of all these different forms freedom might take. To simplify matters, one could limit the analysis to just three dimensions which would include “political” freedoms (like freedom of speech, assembly, rule of law, constitutional limits on the power of the state, representative government, and so on), “social” freedoms (such as all kinds of voluntary and cooperative activity, freedom of religion, marriage, drug-use, behaviour, dress), and of course “economic” freedoms (such as free trade, choosing one’s career, property rights, free markets, freedom/protection of contracts, free market pricing).

More specifically:

  • political/legal freedoms
  • economic freedoms
  • social/individual freedoms

(One might have “legal freedoms” as the 4th dimension, but I have kept the list to three dimensions to make it easier to visualize.)

Political/Legal Freedoms:

  • freedom of speech and assembly (religion)
  • constitutional limits on the power of the state
  • representative government
  • the rule of (just) law
  • equality under the law
  • protection of private property and contracts
  • right to emigrate/immigrate

Economic Freedoms:

  • free markets
  • laissez-faire or minimal intervention/regulation
  • right to choose and enter a trade/profession
  • the division of labour
  • free trade & exchange
  • free movement of capital and people

Social/individual Freedoms

  • all kinds of voluntary and cooperative activity (family, civil society)
  • marriage
  • drug-use (“capitalist acts between consenting adults” (Nozick))
  • religion
  • toleration of different behaviour and dress

Thus, according to this way of looking at liberalism, one could say that “radical” liberalism embraces all three dimensions of freedom to their maximum extent; “moderate” liberalism might be strong on two out of the three dimensions, but allow for considerable restriction in one of the dimensions (such as paternalistic controls on private behavior, or tax-payer funding for unemployment benefits, or state compulsory education). Finally, what I have called “ersatz” liberalism (“false” liberalism, or LINO liberalism, i.e. liberalism in name only) would be that form of liberalism where the restrictions in all three dimensions of liberalism are so extensive that it has been transformed into some other kind of political philosophy.

The question then becomes how to determine the boundary line between “radical” and “moderate” liberalism (which I consider to be forms of “true” liberalism) from the “false” liberalism. This is a mater of personal judgement perhaps.

The various forms of “ersatz” liberalism which have emerged since the late 19th century are in many ways like a political smorgasbord, where politicians take a little bit of economic freedom, a pinch of social freedom, and combine it with a dollop of “political” freedom (“democracy”) and call this mixed plate “liberalism”. But is this “liberalism” in any meaningful sense of the term? How is it to be distinguished from welfare state socialism with some aspects of liberalism (usually social and political freedoms but not so much economic ones)?

I think the boundary between the two kinds of liberalism is much easier to see from a natural rights perspective than from a utilitarian one. Utilitarian calculations of what the state should or should not do can become very blurred with no sharp and clear ways of determining where the beginning and end points are. The exceptions to the NAP can be rather numerous and open-ended which results in a blurring of the political spectrum where there is no longer a clear distinction between non-coercive voluntary activity and state- sanctioned or state initiated coercion. A natural rights perspective brings the nature of state actions into much sharper focus as the use of coercion (or its threat) against individuals (life, liberty, property) I think is a much more objective thing (though not absolute as threats can be disguised or hidden or not always immediately apparent). But the radical liberal who wants to see the NAP applied as broadly as possible (absolutely and with no exceptions??) makes no distinction between coercive actions by the state or its representatives and other private individuals. All such acts, by whomsoever committed, are immoral, criminal, and should be banned, without exception. This perhaps is the sharp distinction which separates “radical” liberals and all other kinds of liberals. All other kinds of liberals, from “moderate” to “new” or “ersatz” allow (even require) varying degrees of state coercion as part of their political philosophy. The “radical” liberal does not do so. The issue for those “liberals” who do not want to go down the path of the “radicals” is to decide upon a non-arbitrary place to stop state coercion. How far does this path can one go and still remain a “liberal” in any meaningful sense of the word?

This also raises the question of “practicability”, is such an absolute form of liberalism even possible? or does necessity and practicability require coercive actions by the state from time to time (the moderate position), or always and constantly (the conservative and ersatz liberal) if society is to be prevented from falling apart (the conservative) or if society is to be a more just and fair one (the ersatz liberal and the socialist)?

Note: See also my previous posts on “hyphenated liberalism”:

  1. “ ‘Hyphenated’ Liberalism and the Problem of Definition” (9 Aug. 2021) here
  2. “Hyphenated Liberalism Part II: Utopian, Democratic, Revolutionary, and State Liberalism” (12 Oct. 2021) here
  3. “The Conservative and Revolutionary Faces of Classical Liberalism” (11 Aug. 2021) here

Plotting Liberty: The Multi-Dimensionality of Classical Liberalism and the Need for a New ‘Left-Right’ Political Spectrum

[Note: This post is part of a series on the History of the Classical Liberal Tradition]

The Multi-Dimensional Nature of Liberty

The full richness and complexity of the nature of Liberty is not well appreciated by most observers, especially mainstream media journalists and political scientists.

In other posts I have explored the relationship between the main components of a CL or Libertarian theory of Liberty which I will not repeat in detail here, only to assert that it is “multi-dimensional” in nature, consisting of at least three, and possibly four different threads or streams:

  1. political liberty
  2. economic liberty
  3. individual/personal/social liberty
  4. and sometimes legal liberty (if I don’t want to conflate this with the category of “political” liberty)

(See these posts for more information.)

In this post on “The Key Ideas of Classical Liberalism: Foundations, Processes, Liberties” I discuss the meaning of this “concept map” of CL which I created:

Note: I have an updated version of these mind maps from April 2022 which is not yet online.

One can do the same for other political ideologies, determining what their position is on what they consider to be the proper power of the state, how much this power should be used to intervene in the affairs of the ordinary person, and how this might impinge upon the three kinds of liberty outlined above. This comparison can be done “qualitatively” (or “relatively”) by means of a “spectrum” (in one dimension) or a “political compass” or “matrix” (in 2 dimensions) which shows visually whether a society is more or less free in very general terms; or it can be done “qualitatively” by giving a score (say out of 10 or 100) for each of these liberties (perhaps in 2 or 3 dimensions) and then ranking the different regimes according to how much or how little freedom their citizens are able to exercise as measured by these scores.

I will discuss here some of the attempts to measure how much freedom a society “enjoys” (or “allows” its citizens to enjoy) and how successful I think these measurements are. Most are “qualitative” or “relative” in nature, such as

  1. the traditional Left-Right political spectrum with its 1 dimension
  2. my own “new political spectrum” between Liberty and Power (also 1 dimensional)
  3. David Nolan’s “Libertarian Spectrum” (1969) in 2 dimensions – Left (“liberal”) vs. Right (conservative) and Libertarian vs. Authoritarian
  4. a “simplified” Nolan chart in two dimensions and four quadrants – “Social” freedom and “economic” freedom
  5. the “Political Compass” which also uses “quadrants” and 2 dimensions, this time “Left” vs. “Right” and “Authoritarian” vs. “Libertarian.”
  6. David Boaz’s “Four-Way Matrix” in 2 dimensions – “social liberalism” and “economic conservatism” – which results in 4 quadrants of Populist, Liberal, Conservative, and Libertarian
  7. my own version of the “Four-Way Political Matrix” revised for Australia politics – economic and social freedom – with the 4 quadrants of Conservative, Libertarian, Populist, and Socialist

My last example is a much more ambitious attempt at the “quantification” of the amount of “Human Freedom” by a team from Cato and the Fraser Institute. In their Human Freedom Index they try to quantify the amount of liberty (from 0-10) enjoyed in 165 countries across 82 different “indicators” of personal and economic liberty (thus using 2 dimensions). The results are then ranked by combining the individual scores of “personal liberty” and “economic liberty” into a “Human Freedom” total. One of the very interesting measurements they also provide is to show how different countries have risen or fallen in the rankings over time, giving the index a dynamic aspect which other political spectra or compasses do not.

The Traditional “Left-Right” Political Spectrum (1 dimension)

What is wrong with this picture?

This is the most common depiction of the Left-Right Political Spectrum with “communism” and “socialism” on the far “Left” and Fascism on the far “Right”. However, there are many serious problems with depicting in this fashion the different political ideologies and the regimes they give rise to. For example,

  • Libertarianism, almost as an afterthought, is placed next to “Fascism” as they are both thought to be be “right-wing”, which is absurd
  • there are extreme forms of state power at both ends of spectrum; this implies that CL or “freedom” is somewhere in the “Moderate” centre, and denies CL’s revolutionary and emancipatory heritage

Side Note: since this spectrum was drawn up for an American audience,

  • the colours are “wrong”, since the colour red traditionally has been associated with socialism
  • there is no “Classical Liberal” position; “Conservatism” is the modern American equivalent
  • It uses the American meaning of “Liberal” to mean “left of centre” or “social democracy”, i.e. Democrat

The Origin of the Terms “Left” and “Right”

I have often asked myself this question: When the Revolution comes, on what side of the Chamber/House should the Libertarians sit? On the Left or the Right, or somewhere in between, or should they refuse to take a seat entirely? (for those of you who are anarchists or “voluntaryists”) Of course, part of the answer depends on who is already sitting in the Chamber and who controls the government and for whose benefit.

The terminology we use today to distinguish “left” and “right” along a political spectrum has its origins in the French Revolution (as many things do). Those who sat on the Left side of the Speaker in the Chamber opposed the status quo of “throne and altar”, the monarchy (plus the aristocracy and the military) and the established Catholic Church, who sat on the “Right” of the Speaker. Those on the Left supported a range of alternative ideas ranging from crackpot socialism and Rousseau-ianism, to English-style constitutional monarchism, to moderate American style republicanism, and advocates of laissez-faire and the free market. There was a complication to this practice which introduced a vertical component to the seating arrangement. The most radical of the socialists sat as a group high up on the back benches on the Left and so were naturally called “The Mountain” or the “Montagnards” (or Mountain People). Hence my new term of “up-wing” to add to “left-wing” and “right-wing”.

Frédéric Bastiat didn’t know where to sit in the Chamber in 1848

Here is another example of the problematical seating arrangements libertarians face when they get elected. When classical liberalism became a more potent force in the 1840s in England and France and yet another revolution broke in February 1848 the radical classical liberal economist Frédéric Bastiat was elected to the Constituent Assembly to represent his home Département of Les Landes and had to sit in the middle of the Chamber, voting sometimes with the Right to oppose high taxation, government funded make work schemes for the unemployed, and redistribution proposed by the socialist Left; and sometimes with the Left to oppose restrictions of free speech, association (trade unions), and high taxation on basic food supported by the conservative Right. Thus, it would appear Bastiat’s ideas were neither completely of the “Right” nor of the “Left” and this left him in a rather lonely position in a Chamber of 900 elected representatives.

This problem of the etiquette of the proper seating arrangements in the Chamber speaks to a broader issue of what exactly is “libertarianism” or “radical classical liberalism” (I use the terms interchangeably)?

  • Is it a leftwing political position (radical in the sense of challenging the status quo) or a rightwing one (in the sense of wanting to “conserve” some or all of the status quo)?
  • What are libertarians trying to change and what are they trying to conserve?
  • What happens if some of their views are considered to be “leftwing” while others are considered to be “rightwing”?
  • Have the ideas of these liberals/libertarians changed over time (or have societies changed)?
  • Is the tradition “leftwing-rightwing” political spectrum broad enough to include libertarians, or do we need another dimension or “wing” (“up-wing” or “up-mountain” for example) do do them justice?

A new “Left-Right” Political Spectrum (1 dimension)


What I want to argue here is that the traditional one dimensional left-right political spectrum is completely inadequate both because,

1.) it ignores the complexities of political views and policies in general; most political ideologies are a “bundle” of views of political, social, economic, and other matters, which are linked together more or less consistently ; this is true for the “major” political traditions like “socialism” and CL [see my essays on “What Classical Liberals were For” (13 Aug. 2021) hereand “The Key Ideas of CL” here]. For example, a country might be quite “liberal” when it comes to economics but be very poor when it comes to social and political freedoms (Singapore); alternatively, a country might have considerable political and social freedoms but have high taxes to fund a welfare state (thus reducing its economic freedoms). Even within liberalism itself, I believe we can identify three different sub-traditions (radical, moderate, and “new” liberalism) each of which has a different view of the what the power of the state should be.

2.) in particular it leaves no place for the libertarian position (what I consider to be the heir of the CLT, especially the version I call “radical liberalism”) since libertarians hold some views which are regarded as “rightwing” or “conservative” (low taxes, small government, gun ownership, rule of law), as well as those that are better described as “leftwing” (freedom of speech, association, sexual preference), and those that don’t fit in at all (anti-war, drug laissez-faire, political orneriness / general hostility to everything the government does).

3.) in addition, there are different kinds of “liberty” which need to be taken into account when making these distinctions, both between radically different political ideologies (such as Fascism, Communism, Bonapartism, Welfare State “Liberalism”, Classical Liberalism); as well as within the CL tradition itself (between radical liberals, moderate liberals, and “new” or “LINO” liberals).

Related to this is how the power of the state is exercised. The use of power can be categorised by how extensive its use is, how ruthlessly it is exercised, and by whom it is exercised (and against whom). Regarding extent, power/coercion can be applied comprehensively to every single aspect of our lives (Communism) or only partially in that some things are left relatively free but others are not (modern “Liberal Democracies”). Regarding its ruthlessness, the state can imprison and kill millions of dissenting individuals (Stalinism, Maoism), or governments can threaten, fine, or imprison dissenters but rarely kills them (modern “Liberal Democracies”). Regarding for whom/ on whom, power can be exercised by a particular class (such as aristocrats, crony capitalists, slave owners), or by politicians elected by “the people”.

To help understand these different types of power it is necessary to examine how they impact the different aspects of our lives and “liberties”, or in other words how they impinge upon our political/legal freedoms, economic freedoms, and social/individual freedoms.

My new “Left-Right” Spectrum of State power

Let me offer here my own revised one-dimension “political spectrum” which attempts to resolve some of these problems by using the two end points of the spectrum as “Liberty” and “Power” instead of “Left” and “Right”.

My “ranking” is based upon a “qualitative” judgment on my part about how “interventionist” or “coercive” different political regimes and the ideology upon which they were based were . It would be useful to “quantify” this like the Cato/Fraser Institute’s do in their “Human Freedom Index” for countries today, but it is beyond my ability at the moment.

On the “Left” (I do this deliberately) there is complete “Liberty” and represent the position which challenges the status quo) and complete “Power” (or Statism) on the right which represents the position which wants to defend the status quo or to create a new one).

The types of states/regimes which I list here include, at the CL “Liberty” end of the spectrum:

FULLY PRIVATISED OR VOLUNTARIST “STATE”: private production of security, all state activities deregulated, privatised, or abolished [H. Spencer, Gustave de Molinari 1 (younger), Murray Rothbard]

ULTRA-MINARCHIST OR “NIGHT-WATCHMAN” STATE: defence, police, with considerable private or local provision of security [J.B. Say, Frédéric Bastiat, G. de Molinari 2 (older)]

CLASSICAL LIBERAL or MINARCHIST STATE: defence, police, some public goods (broadly defined), and sometimes education [A. Smith, J.S. Mill, F.A. Hayek, L. Mises, A. Rand, R. Nozick]

In contrast, the types of states/regimes which I list at the “Power” end of the spectrum:

fully planned economy; state controlled society; rule by a single Party (Stalinism, Pol Pot, China)

state directed private industry; adulation of leader; war & conquest (Italy. Germany 1930s-40s

state provision of health, welfare, education; significant regulation of economy (Western Europe)

significant state intervention in health, education, welfare; significant regulation of economy; Military-Industrial Complex; war & empire (USA)

authoritarian rule by populist elected leader; rule by plebiscite and decree; hostility to traditional elites; replaced by new elites; importance of army (France 19thC)

Royal court; privileged aristocracy; established church; standing army; serfdom (17-18thC France)

protection & subsidies for domestic industry; controls on exports; colonies with monopoly access to metropole; navy & empire (France & UK 18thC)

I find this quite useful as a way of showing how societies have changed over time regarding how free or unfree they are. For example as a result of the “liberal revolutions” of the 18th and 19th centuries American and European societies moved from being less free to more free – thus moving from “right” (statist) to “left” (liberal)., via Absolute Monarchy to Mercantilism to various forms of Limited Government such as Constitutional Monarchy (UK) or Republicanism (US).

In the late 19th and 20th centuries the movement was in the other direction towards increasing state power, so from a Monarchist state (limited government) to Bonapartism, to an increasingly Welfare State and then a variety of state forms such as Fascism, Communism, the Welfare/Warfare state.

The key question for modern-day CLs is whether the direction of the past century can be reversed so that we can resume the movement (progress) towards liberty which took place in the late 18th and 19th centuries.

Admitting a Second and Third Dimension into the Picture: Charts, Compasses, Matrices, a Triangle, and a Cube

David Nolan’s Libertarian Spectrum” (1969)

Given the acknowledged weaknesses of the traditional “Left-Right” 1-dimensional spectrum, one solution is to use a 2 or 3-dimensional diagram (or more dimensions if you can understand the higher mathematics of multi-dimensional spaces), such as one dimension for economic liberties, another for political liberties, and a third for “personal” or “social” liberties. Two examples of this approach is David Nolan’s “Chart” (1969) and the commonly used today “Political Compass”.

David Nolan was one of the founders of the American Libertarian Party and it was an attempt to show how the libertarian ideology fitted into the broader political picture of America in the 1960s and 1970s, since it was largely ignored by the mainstream journalists and political scientists. Nolan’s Chart has come down to us in two versions, his original Chart of 1969 and a “simplified version which followed soon afterwards.

Nolan’s original Chart had 2 axes: a horizontal x-axis which was “Left” (Liberal) or “Right” (Conservative) and a vertical y-axis which had “Libertarian” vs. “Authoritarian”. Rather confusingly, there it also depicted two different kinds of “Freedom” (Personal and Economic) which sloped at an angle

A “simplified” version of the Chart was created to untangle some of this confusion. The main square was rotated to the right and had as its two axes a horizontal x-axis showing the degree of “Economic Freedom” (from 0-100) and a vertical y-axis for “Personal Freedom” (from 0-100) . The main square was divided into rough quadrants with a large square in the centre for the “Centrist” position. The four quadrants include the traditional categories of Liberal (Left), Conservative (Right) , as well as two new ones Authoritarian and Libertarian.

The “Political Compass” (2001)

Quite similar to Nolan’s Chart is the commonly used “Political Compass” which also uses “quadrants” in which political parties are placed. The horizontal x-axis is again “Left” vs. “Right”; and the vertical y-axis is “Authoritarian” vs. “Libertarian.” An Australian “Political Compass” was created by for the 2019 election in which the main political parties are labelled. Most of the parties are clumped together in the top right quadrant (Authoritarian-Right. The libertarian Liberal Democrat Party is all alone in the Libertarian-Right quadrant.

Another version for Australian political parties is below. It is more nuanced in that it tries to show the factions within the Greens (the main party and the “Left Renewal”), Labor (the right and left factions) and the Liberals (Dries (economic “rationalists”) and Wets). Another difference is that they locate all the main parties around the centre, thus identifying them as “Centrist”.

[See below for my version of this for Australian political parties.]

There is also a variation of this used by the ABC called the “Vote Compass” which has 2 dimensions: “Social” (conservative vs. progressive) and “Economic” (left vs. right). They have updated it for the 2022 election for the 2022 election – Election season has arrived and Vote Compass is back – ABC News.

I completed the questionnaire, and was ranked 100% “right” on the economics x-axis and zero on the “Social” y-axis.

David Boaz’s Four-Way Matrix

David Boaz (VP at the Cato Institute) further developed Nolan’s Chart in order to measure the “libertarian” vote in American elections which was not being captured by tradition ways of measuring voter’s values, since the mainstream continued to divide the political world into two main camps – liberal vs. conservative; or Democrat vs. Republican.

Boaz created a modification of David Nolan’s “simplified” chart in his article analyzing the state of play in the US in 2006:

David Boaz and David Kirby, “The Libertarian Vote” (October 18, 2006) Cato Policy Analysis No. 580.

The two axes are “Social Liberalism” and “Economic Liberalism” but the chart is not well designed (the x and y axes usually start at zero at the bottom left)

I have reworked this slightly to make it clearer and to use Australian political terms. Here is my version which I call the “Four-Way Political Matrix”:

And here is my attempt to place Australian political parties in this matrix. There is a clustering of parties in the “Populist” quadrant, the “Centrist” position is populated by both the 2 major parties, and there is only one party in the “Libertarian” quadrant. This shows how “interventionist” all the Australian political parties are

Nick Kastelein’s Political Triangle

As many commentators have pointed out, none of these “compasses” are very useful as they do not capture the complexity of political belief or voter behavior on a variety of issues. See for example in the Australian context, the critique by Nick Kastelein writing in The Spectator in 2018, who argued that the libertarians (the “other right” as he calls them) were once again being left out.

Nick Kastelein, “The other right: what’s wrong with the Political Compass” The Spectator Australia (17 Oct. 2018) Online.

However, his “political triangle” designed to reveal this “other right” is not very adequate either:

A common problem for these “compasses” and “matrices” is that they persist in using the Left-Right spectrum as their starting point, even though as I have tried to show above, this is problematical and mostly unhelpful in understanding the true/real differences between CL and other political ideologies.

A 3-Dimensional “Spectrum” or “Cube”

One enterprising author, Kelley Ross, has tried to create a 3-dimensional political spectrum (or rather a “cube”) in order to plot political ideologies according to the three main kinds of freedoms/liberties we are interested in: economic liberty (on the x axis), personal liberty (on the y axis), and political liberty (on the z axis)

Kelley L. Ross, “Positive & Negative Liberties in Three Dimensions” (1996) . Online.

This was an heroic effort but ultimately unreadable. I hope someone skilled in graphic art and design might be able to do a better job because the underlying idea is a sound one.

Quantitatively Speaking: The Cato/Fraser “Human Freedom Index”

The work of Vásquez et al. for the Cato and Fraser Institute’s annual “Human Freedom Index” is sensitive to this problem of complexity in their ranking of 165 countries according to the amount of freedom they enjoy.

The Human Freedom Index 2021. A Global Measurement of Personal, Civil, and Economic Freedom. Ian Vásquez, Fred McMahon, Ryan Murphy, and Guillermina Sutter Schneider (Cato Institute and Fraser Institute, 2021). Online – Human Freedom Index: 2021 | Cato Institute and PDF. Note: the Introduction to the volume is well worth reading.

The HFI uses a libertarian Lockean definition of liberty in their assessment. They state that :

pp. 9-10: The contest between liberty and power has been ongoing for millennia. For just as long, it has inspired competing conceptions of freedom. … Freedom in our usage is a social concept that recognizes the dignity of individuals and is defined by the **absence of coercive constraint**. … Freedom thus implies that individuals have the right to lead their lives as they wish as long as they respect the equal rights of others.

The IHF uses a rough 2-dimensional approach, ranking each country according to “Personal Freedom” and “Economic Freedom”, based upon 82 “distinct indicators” which fall into the following 12 areas:

  1. Rule of law
  2. Security and safety
  3. Movement
  4. Religion
  5. Association, assembly, and civil society
  6. Expression and information
  7. Relationships
  8. Size of government
  9. Legal system and property rights
  10. Sound money
  11. Freedom to trade internationally
  12. Regulation

Here are some of the findings of the Index.

The Top 30 Countries (note NZ is no. 2, Australis is 8 (down 4), UK is 14 (down 3), and US is 15; Singapore is quite low because of its lack of political and social freedoms at 48 (economic freedom is 2, but personal freedom is 88))

The Freedom Index for Australia:

Again, this is an heroic attempt to bring some order and understanding to a very complex state of affairs. I would like to see two additional main categories of assessment, namely “Political Freedom” and “Legal Freedom” to make it a bit more finely detailed and complete.

The authors admit that their ranking is incomplete because it leaves out a number of factors which I think are important if we want to get a better picture of the state of freedom in the world.

The editors admit that they can’t assess freedom to use drugs as they do not have consistent data. They also leave out (or do not specify up front) other examples of “prohibition” (like alcohol, cigarette advertising, or abortion) which I believe are serious violations of individual liberty. They also leave out other things like

  • conscription (a form of temporary slavery)
  • deliberately punitive taxes on (or outright prohibition of) so-called “sin” or “vices” like alcohol, cigarettes, and increasingly petrol in order to discourage their use and thus modify people’s behaviour
  • states which invade, bomb, blockade other countries (another kind of “intervention”)
  • compulsory voting

I think any true assessment of “freedom” needs to take these additional factors into account.

The Consequences for CLS today

There are several consequences which follow from thinking about the political spectrum and the multi-dimensional nature of liberty in these ways:

  • it helps us identify better who we are, what we believe, we we came from, and where we are heading
  • it helps us see how we differ from other political groups and ideologies, what we have in common, and what we do not; who are our potential allies and who are are main opponents
  • it shows us where there might be opportunities for alliances between libertarians and other groups who share one or two of our ideas but not all of them; there are opportunities to align with those on “the left” on some issues, and with “the right” on others; I call this “triangulation” (based upon the tactics of Pres. Clinton)
  • it provides a strategy for arguing with friends and colleagues; if they come from “the left” begin talking to them about things we share with them and once you have won their trust it might be time to gently broach “right wing” issues which they reject but you believe in (and vice versa for those on “the right”)

Until libertarian ideas are accepted by the majority (an unlikely event in my view anyway) this might be best we can hope for in the medium term if we want to spread our ideas to a broader audience and to engage our political opponents in debate.

The Prospects for Liberty: The Threats it faces and how to counter them

Table of Contents

  • (1.) The threats which confront the liberty movement
  • (2.) The task ahead
  • (3.) Looking for the “Golden Thread” to unravel justifications for state intervention
  • (4.) Choosing the right kind of arguments to use
  • (5.) Where we are now and what we need to do next
  • (6.) Conclusion

(1.) The Threats which Confront the Liberty Movement

II have taken the roughly 15 year period following the end of the Second World War as my starting point in this paper as this is when there was a concerted effort to build organisations to defend liberty and oppose the expansion of state power which had taken place in the first half of the 20th century. I have in mind

  • Leonard Reed and the Foundation for Economic Education founded in 1946
  • Friedrich Hayek, Milton Friedman, et al. and the Mont Pèlerin Society founded in 1947
  • Anthony Fisher and the Institute for Economic Affairs in 1955
  • Pierre F. Goodrich and Liberty Fund in 1960
  • F.A. Harper and the Institute for Humane Studies in 1961

Long-standing and on-going threats to liberty

Some of the serious threats to liberty which they identified at that time (the 1950s and 1960s) are still with us, which says something about how difficult it is to shift opinion (both public and academic) and to reverse or even slow down the ever increasing expansion of the power of the state. Furthermore, there are numerous new threats which have appeared over the ensuing decades which I think makes our task even more difficult than it was for the Fisher-Goodrich-Harper generation of CL/libertarians.

Long-standing and on-going threats to liberty include:

  1. the rivalry (“cold war”) between the major nuclear powers and the threat of MAD (mutual assured destruction): the US, Soviet Union (now Russia) and China
  2. the expansion of the welfare state
  3. inflation and the expansion of the money supply by Central Banks (now called “quantitative easing”)
  4. the expansion of state-funded universities and the dominance of left-wing and Keynesian ideas within the academy
  5. the expansion of the regulatory state (now known also as the “nanny state”)
  6. the many “small” wars fought by the US/NATO and their allies (like Australia) to achieve “regime change” or promote the spread of “democracy” or fight “communism” (now “terrorism”)

New threats to Liberty over the past 20 Years

I would also add the following list of new threats to liberty which have emerged over the past two decades, especially as a result of the attacks of 9/11 2001, the global economic crisis of 2008-9, and the Covid lockdowns of 2020-22:

  1. the rise of the “surveillance state” after 9/11 with the monitoring of all telephone and email communication, and now the censorship of so-called “disinformation” spread via social media companies; it should be noted that Australia has played an important role in the emergence of the surveillance state by its membership in the Five Eyes intelligence alliance which is made up of Australia, Canada, New Zealand, the United Kingdom, and the United States
  2. the use of ”quantitative easing”, the government bailout of the banks and large investment firms, and the massive rise of government debt as a result of the global economic crisis of 2008-9
  3. the rise of a radical “Green” environmentalist movement which is demanding massive government intervention in and regulation of the economy in the form of a Green New Deal, government subsidies for “renewable energy,” and policies of carbon “neutrality” or “net zero”
  4. the rise of “neo-protectionism” and “industrial policy” which is a key platform of various nationalist and “populist” leaders such as Pres. Trump
  5. the resurgence of explicit interest in and support for “socialism” especially by young people which was noticeable at the time of the anniversaries of the birth of Karl Marx (1819) and the Bolshevik Revolution (1917); this also includes the respect some intellectuals and commentators have for the policies of the Chinese Communist Party as another path for economic development to take, or to control the spread of the Covid virus
  6. the emergence of the “Lockdown State” and what I call “Hygiene Socialism” during the Covid panic of 2020-2022; this has resulted in the acceptance by the general public that our lives should be controlled by “experts” and that governments can and should centrally plan key sectors of the economy
  7. the continued domination of the universities and schools by leftist intellectuals who have among other things promoted “woke-ism”, identity politics, the de-platforming of divergent opinion, and the promotion of Critical Race Theory

(2.) The Task ahead

When one adds all these up the list is a formidable one (the above contains 13 items) and it is so daunting for the future of the liberty movement that one wonders where to begin. For each of these threats to liberty there are some common elements and some common tasks which those in the liberty movement will have to undertake:

  1. there are the theoretical ideas which are used to justify these policies: these ideas are typically developed and propagated in the economics and politics departments of universities and colleges and so this is the arena where they need to be challenged and refuted
  2. there are the entrenched vested interests (both political and economic) which will vigorously defend their continued existence and even their expansion: this is a political problem which has to be addressed at the legislative level
  3. there is an ignorant or misinformed public who either tolerate these policies or demanded them in the first place: this problem has to be addressed by a broadly based campaign to popularise sound economic thinking

Each one of the threats to liberty I have listed above individually would require a small army of academics, intellectuals, journalists, agitators, and sympathetic politicians and voters to challenge the policies and to begin the long task of repealing them. Multiply this by 13 and one can get a sense of the task ahead.

It is my suggestion that there are several possibilities we need to consider:

  1. there is a need for a division of labour in the liberty movement , where those with special interests and skills apply themselves to opposing one of these threats. This happens to a considerable extent already today with groups which focus on environmental issues, war and peace, government regulation, and so on. For new entrants, the question then becomes whether or not to join an existing organisation, or found their own organisation (say in a region or a country which does not have such a group)
  2. there is a need for “movement investors” and “intellectual entrepreneurs” who have the skill to identify an emerging new problem which needs addressing, finding the people and the funding to organise them into a coherent group, and guiding them through the labyrinth of practical politics to get the changes which are required.
  3. there need to be be “feeder organisations” which can identify young and emerging talent, help them to be trained in the theoretical and political skills needed to be effective advocates and agitators for liberty. These feeder organisations should be directing the young talent they identify and train into various paths such as think tanks, lobby groups, existing political parties (“infiltrating the enemy’s camp”), or a separate “Libertarian” or “Classical Liberal” party. A related path which requires a different set of organizational skills leads to academia.
  4. there needs to be organisations or research centres to support academics who are interested in free market ideas and CL political philosophy; these people need to be found, cultivated, and supported as they move through what is a very hostile intellectual environment (the “academy”)
  5. there needs to be “outreach programs” to take the message about political and economic liberty to the masses; this effort will require skillful writers and speakers who can made complex ideas, especially about how markets operate, accessible to non-expert audiences whose minds are filled with misconceptions and errors which they have learnt at school or via social media
  6. finally, there needs to be coordination among the various groups in order to avoid unnecessary and expensive duplication, and to identify gaps in the movement which might need to be filled, or to address a new threat to liberty which might suddenly emerge as a result of a crisis

The problem for a small and relatively insignificant country like Australia is to figure out what it can do to contribute to the broader, international liberty movement and where it fits in. One possibility is for it to become a “beacon of liberty” now that Hong Kong is in the process of losing that status as it is gradually swallowed up by the CCP, and given the fact that the government of Singapore has strongly authoritarian bent. Imagine there being a truly liberal nation which is independent of “entangling alliances”, highly productive and competitive in world markets, and fully open to the free movement of goods, services, and people.

(3.) Looking for the “Golden Thread” to unravel justifications for State Intervention

Is there a “golden thread” which links all these disparate threats to liberty together, so that unraveling or cutting this one thread will end many of these threats in one blow so we don’t have to fight each one individually.

On the other hand, there may not be just one “golden thread” we have to cut, but a bundle of them. 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. 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
  2. misperceptions and exaggerations about the extent and cause of market failure
  3. the lack of understanding of the extent and cause of government failure
  4. public ignorance of basic economic insights which makes points 2 and 3 possible

The morality of using coercion

There is an almost universal belief that there is a difference in the sort of behaviour states and their agents can engage in compared to ordinary mortals like us. The common belief is that states are “justified” in the use of coercion to compel compliance with regulations, to seize our property in the form of taxes, and to kill other people in war, whereas ordinary people are not justified in using coercion in this manner.

In Australia, which lacks a strong tradition of thinking about natural rights and this a Bill of Rights to enshrine and protect them (unlike the US) the dominant political ideology is one of “expediency”, where the use of coercion is considered to be essential in order to “get things done”. This belief makes it possible for the emergence of a government based upon “technocratic managerialism”, which is supported by both major parties who take it in turns to be be the “manager.”

There would be much less tolerance for the government’s use of coercion if more people thought that the use of coercion by anybody is immoral. If they believed this, then they would feel outrage or contempt for those politicians and bureaucrats who used coercion every day to achieve their goals, they would feel ashamed and guilty if they personally sought and got handouts from the state which are financed at taxpayer expence (and thus got by means of coercion through compulsory taxation) ; or if they sought privileges from the state like monopolies or subsidies for their business.

For those who defend “limited government” the argument has to made that the sole legitimate function of government is to protect the the life, liberty and property of citizens by minimizing the use of coercion by one person against another (such as robbers, fraudsters, rapists, and murderers), and that the coercive actions of the state and its agents must also be strictly limited in scope, otherwise it in turn will become a threat to the life, liberty and property of the very people they are supposed to be protecting.

We should also make the case for the virtue of “self-help”, that instead of seeking government organized and tax-payer funded “charity” in times of economic hardship we should take steps on our own to avoid or prepare for economic hardship, or organise with others (family, neighbors, like-minded people) to help those in genuine need. We also need to use social ostracism against those who receive tax-payer funded handouts, subsidies; and those who seek to rule others, in order to discourage them from continuing these practices.

Misunderstanding the nature of “Market Failure”

It is crucial for us to disabuse people of the mistaken idea that the market has inherent flaws which inevitably lead to serious problems unless “corrected” by government action. 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”.

There is thus a need for a better theoretical and historical understanding of what constitues “market failure”, why and how they happen, and what can be done to rectify them. Free market economists have produced many studies which have examined why markets “fail” but these are not well known among the general public: that “failure” is due to previous or continuing government regulation, the prohibition of competition, the lack of clear property rights; the absence of free market price signals. There are also many historical works which show that “public goods” have been provided privately on the market in the past and can be provided again in the present if they are allowed to do so.

Ignoring the even greater Problem of Government Failure

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 in the economics profession.

There is an entire gamut of public choice insights which need to be better appreciated by the public. These include the self-interested behaviour of politicians and bureaucrats; the inevitable capture of the state (parliament) and its regulatory bodies by powerful vested interest groups; the problem of “perverse” institutional incentives, and the issue of “political” rent-seeking by vested interests .

There are also important insights which have been made by the Austrian school of economics, especially by Ludwig von Mises and Friedrich Hayek, such as Mises on the “impossibility” of rational economic calculation under socialism due to the absence of free pricing (especially of capital goods), and Hayek’s “problem of knowledge” which is that central planning can never have the widely dispersed local knowledge of consumer needs, the availability of resources, and the constant changing local conditions which are necessary for production of goods and services to take place.

These insights mean that any government attempt to “manage” or “centrally plan” an economy is doomed to failure, whether this be the “total or universal” central planning which the Soviet Union attempted to do, or whether it be “partial or sectoral” central planning which many so-called “liberal democracies” attempt to do with industrial policy, renewable energy production, or vaccine development.

Public ignorance of basic economic concepts

Time and time again we see how deep the general public’s ignorance of basic economic ideas is. Every time there is a major storm or flood and the price of bread or bottled water goes up the public denounces shop keepers for “price gouging” and calls for government regulation and price controls.

The mid-19th century French economists Frédéric Bastiat was the most brilliant populariser of economic ideas who has ever lived, but even he could not disabuse the French public of these commonly held economic “fallacies” or “sophisms”: 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.

The persistance of these economic “fallacies” in the mind of the public indicate that we need a new Frédéric Bastiat to popularise economic ideas, not to mention better trained economic journalists who also share these false economic views and spread them to the reading public.

(4.) Choosing the Right Kind of Arguments to use

Selecting the right kind of arguments in order to defend liberty and criticize government intervention and coercion is an important strategic matter as different people respond to different kinds of arguments. For example, some people find “economic” arguments heartless and respond better to moral arguments about fairness and justice. Others are driven on a more emotional level to seek safety or protection from some immanent crisis or perceived catastrophe such as climate change or a virus pandemic. Hence their demand that “the government do something” to solve the problem immediately. So, we have to identify the kinds of people we are trying to convince and to select the best kinds of arguments to suit that particular group.

I think defenders of liberty need to appeal to the following different groups:

  • the average voter (this is the job of a political party)
  • people who are still forming their opinions, such as students (Mannkal, CIS, IPA)
  • educated people who might be swayed at the margin (CIS, IPA)
  • sympathetic academics and intellectuals (journalists, writers, artistic types) – if there are any! (IPA, CIS??, Liberty Fund)

CL and libertarians have historically used a “smorgasbord” of arguments to defend liberty which include:

  1. moral arguments which appeal to justice and a particular moral theory concerning property rights, individual liberty, and the nature of political power (coercion)
  2. economic arguments which appeal to notions of economic efficiency and the greater productivity of free markets
  3. political arguments about the dangers posed by political power and the need to limit it, and how best to organise the political system in order to enable the state to undertake properly its legitimate functions (if any)
  4. historical arguments concerning the evolution and expansion of state power over the past century (Higgs’ “ratchet effect”), the nature and causes of government failure, the nature and causes of market failure, the struggle for liberty in previous centuries (the “Great Emancipation), and the vast improvement in the human condition brought about by free market “capitalism” (the “Great Enrichment”)

Moral Arguments

Some of the moral arguments which have been used to defend liberty and oppose government interventions include:

  • that the use of coercion against others is immoral and a violation of their natural rights to life, liberty, and property
  • people should be “free to choose” and then pursue whatever life goals they prefer (however they imagine them – Jeffersons’ idea of “the pursuit of happiness”) without outside interference (i.e. force); so long as they respect the equal right of others to do the same (Herbert Spencer’s “law of equal liberty”)
  • that this “freedom to choose” is what it means to be “human” and that to prevent individuals from doing this is fundamentally wrong (as it demeans their “humanity”)
  • the goal is “flourishing” both as an individual and as well the groups and communities these individuals voluntarily associate with or create
  • the means to achieve this goal is non-violence, cooperation, mutually beneficial association for production and trade, and the division of labour
  • a belief in the dignity and worth of productive labour, producing goods and services to satisfy the needs of others (McCloskey) – these activities are “morally good” and worthy of social recognition
  • conversely, the “immorality” of acquiring wealth or political privileges by the use of power, and coercion exercised over others; that seeking such power over others should be regarded as immoral, and not what free individuals should do or aspire to (how far to push this?? – this includes politicians, bureaucrats, privilege or rent-seekers, government contract seekers, wielders of coercive power (police and military))
  • the idea that it is wrong to accept “compulsory charity” or benefits from the state at the expence of others (taxpayers); people should think of this as shameful and not a “right” that is due to them from others

Economic Arguments

These are very well known in CL/Libertarian circles so I will not provide a comprehensive and detailed list here. They can be summarized as arguments about the greater efficiency and productivity for free markets (capitalism):

  • the greater wealth creating possibilities of “free market capitalism” due to mutually beneficial cooperation, the division of labour and specialization, and free trade (both domestic and international)
  • the incentives to be productive and satisfy the needs of others (consumers) caused by the private ownership of property, and the possibility of making a profit (with the corresponding disincentive of making losses)
  • the ability of free market prices to rapidly convey information about what is demanded by consumers, how pressing or urgent that demand is, what resources are available and at what cost for producers to create and then deliver these goods and services to consumers
  • the enormous innovations made possible by the free market (capitalism) which are the result of the advance of scientific knowledge, technological improvement, simple trial and error, and the existence of entrepreneurs who are able to identify new opportunities and carry them out successfully
  • the existence of “competition” between producers for new customers creates greater choice and lower prices
  • the much greater life choices made possible for individuals (especially women, and peasant farmers) by an extensive, global and international division of labour
  • the more general “creative” benefits of free, open and tolerant societies in the cultural sphere

Political Arguments

  • a liberal and democratic political system makes it possible for ordinary citizens (voters) to make their rulers accountable for their actions, and to help determine how much and what kind of taxation and regulation by the government will be permitted (although this ability is often exaggerated by supporters of democracy); the benefits of democracy is that the voters can get rid of bad politicians and bad policies without resorting to violence; the weakness of democracy is that all new governments have a strong incentive to become bad governments which introduce bad policies again in an endless cycle
  • interventions in the economy (and in private life in general) create additional problems because of inevitable government failure, the creation of perverse incentives, and unintended consequences (Bastiat’s “the seen and the unseen”); there is pressure on government by voters which pushes politicians to intervene again and again to solve the problems caused by these previous interventions ( Mises’ “dynamic of interventionism”)
  • periodic crises (economic recessions, depressions, war, epidemics) lead voters to demand that “the government do something” which usually means greater intervention in the economy, higher taxes, and more regulation of private lives; once the crisis is over the regulations and taxes may decrease but not to their previous lower level, thus leading to the gradual expansion of state power over time (Robert Higg’s “ratchet effect”)
  • power attracts unsavory types of people (predators, arrogant ideologues and would-be rulers) and “do-gooders” (perhaps naive and well-meaning) who want to use state power to achieve their ends (Hayek’s “why the worst get on top”); this can only be prevented by reducing the power and scope of the state to make it less attractive to predators and impossible for these people to act in this way
  • political power inevitably attracts rent-seekers who lobby politicians, regulators, and bureaucrats to do them favors in return for certain benefits in return (campaign funds, jobs on company boards later); this attraction to power will not end until political power is reduced or removed entirely; this is one of the contradictions of democracy, by which I mean that it has built-in incentives and an existing mechanism to enable those who wish to undermine liberty to do so
  • the welfare state inevitably creates a “dependent class” who will never vote for cuts in government expenditure; they in turn create a permanent and growing class of welfare administrators and distributors with a very strong self-interest to defend; the real danger is that if or when those who receive benefits become the majority they will always vote to protect (or even expand) these benefits (another contradiction of democracy)
  • politicians often play the “nationalism card” to persuade voters to accept considerable intervention in the economy, such as the idea of the need for “national industries” (like a car industry) or for the state to seek “energy independence” (via heavily subsidized “renewable energy”), or even “national greatness”; nationalism is usually taught in the state school system (via nationalist history) and promoted by means of “national holidays”; CL/libertarians need to persuade voters that we need to find a way to combine being a member of an internationally diverse and integrated trading system and the desire of many voters to express their feelings of patriotism (nationalism?) which can often be quite narrow and parochial

Historical Arguments

Hayek observed that people often get their economic ideas indirectly by means of the history they were taught at school. For example, the belief that “capitalism” underwent a crisis or even a breakdown during the Great Depression and that western economies were only saved by massive government intervention; or that the industrial revolution impoverished millions of people and forced them to work under nearly slave-like conditions. The task for defenders of liberty is to show that the benefits of the free market and the harms of government intervention are not just theoretical matters but can be demonstrated by many historical and present-day examples. The general ignorance of the public on these matters is truly staggering and it will require an enormous effort to rectify this massive problem.

Thus this section will have two parts (many of the remarks made above also apply to this section):

  1. the failures and harms caused by government intervention and political privilege
  2. the successes and benefits of free markets and limited constitutional governments

The failures and harms caused by government intervention and political privilege

  • the poverty caused by hundreds of years of serfdom and slavery which were protected and enforced by the state
  • the death and destruction caused by hundreds of years of inter-state rivalry and wars
  • the suffering of people in “the colonies” who were enslaved and exploited in other ways for the benefit of privileged traders and plantation owners
  • the violation of the freedom of speech and association caused by the banning of rival religious groups by the privileged established church
  • the exclusion of working and middle class people (and of course women of all socio-economic classes) from participation in elections which enabled privileged elites to set the kind and level of taxation (and other legislation and regulations) to suit themselves at the expence of ordinary people
  • and with the massive increase in the size and scope of state power in the 20thC we have bigger and better examples of government failures on a colossal scale, such as the “Great War” (WW1), the rise of communism in Russia and China, the rise of fascism and Nazism in Italy and Germany, the “Great Depression”, Prohibition I (of alcohol in the US in the 1920s), the “War on Poverty” since the 1960s; Prohibition II (the “War on Drugs” since the 1970s), the rise of the “‘surveillance state” after 11 Sept. 2001, and most recently the attempt to eliminate or control the spread of the Covid virus by means of coerced lockdowns and other draconian restrictions of economic and social life.
  • it should be noted that probably the biggest single expansion of government power occurred during WW2
  • it should also be noted that the “War on Terrorism” since 2001 has also been a spectacular and costly failure

The successes and benefits of free markets and limited governments

The successes and benefits of free markets and limited governments can be summarised as the result of the “Great Enrichment” (Deidre McCloskey) and the “Great Emancipations” (David Hart) which have taken place since the mid-18thC. The failures and harms listed above were either eliminated or significantly ameliorated by these two great forces of emancipation and enrichment which began to exert themselves during the Enlightenment, and put into practice, with varying degrees of success, during the American and French revolutions, and then the various liberal reform movements in Europe (and Australia) during the 19th century. What needs to be stressed is that these reforms were driven by the spread and adoption of liberal ideas about individual liberty, the protection of life and property, and restrictions on the power and scope of government activity. These reforms included:

  1. the abolition of serfdom and slavery
  2. the expansion of the franchise to include first middle class votes, then more working class votes, and then eventually women voters.
  3. the introduction of written constitutions and bills of rights to limit the power of the state and protect the liberties of ordinary people, such as freedom of speech, religion, association, movement, choice of occupation; one again it should be noted that although Australia has a written constitution it does not have Bill of Rights grounded in natural law and natural rights principles; this might have happened if its constitution had been written in the 1790s instead of the 1890s, but by then it was too late. [Note: because the intellectual climate of opinion has changed so radically since the time of the writing of the American Bill of Rights (Amendments to the Constitution), the danger is that any Bill of Rights written today would not contain a list of rights derived from natural law/natural rights principles but one based on modern notions of “welfare rights”, such as a right to state provided welfare or health.]
  4. the deregulation of the economy which allowed the expansion of industrial activity, freedom of trade and occupation, the division of labour, the right to make and keep the profits one made in such activity, all of which led to an explosion of wealth creation and prosperity the like of which the world had never seen before
  5. the freedom of movement of people to escape poverty and political oppression by “voting with their feet” to go to other jurisdictions (and to enter those jurisdictions without passports or visas), either domestically by moving from the countryside to the city, or internationally to North America (the US and Canada) or elsewhere like Australia and Argentina.

The sad fact is that historically, this emancipation and enrichment was never allowed to be fully realized as the state reasserted its power in the late 19th century and during the 20th century especially during the “30 Years War of 1914-1945”. The liberal revolutions were left incomplete or unfinished as illustrated by the following:

  1. the persistance of colonies and empires by all the major European powers
  2. the retention of large standing armies and navies which required conscription, high taxation, and “war industries” run by the state, which made large scale wars possible
  3. the creation of early forms of the welfare state in the late 19th century (Bismarck’s Germany) and which were made nearly universal following WW2
  4. the emergence of ideas and policies (discussed above) which justified the introduction of the income tax, central banking and fiat currencies, the regulation of nearly every aspect of economic activity, the re-emergence of protectionism, national industrial policy, and the overly protective (or rather repressive) “Nanny state” (which might be better described as “the Nurse Ratchet state”)

(5.) Where we are now and what we need to do next

Living in a Hybrid system where there is a mixture of liberty and state coercion

The result of these partial emancipations and enrichments, combined with the reassertion of state power and regulation, is that we now live in a “hybrid” system where the gains of market productivity and innovation (technological, scientific, logistical) have been able to keep ahead of government impediments (regulation, taxation). In addition, many of the political and social emancipations which western societies gained in the past have been partially retained although significantly whittled down by regulations and controls. I call the remnants of these freedoms our “legacy freedoms”. We have now reached the point where one has to wonder how much longer can the forces of emancipation and enrichment stay ahead of the state’s insatiable desire for increased power and control?

The period of emancipation and enrichment was based upon the widespread acceptance of liberal values and ideas among large sections of the public, who used the pressure of public opinion and mass political agitation to push for liberal reforms, the best examples being the public campaigns to eliminate the slave trade and then slavery itself, and the removal of the protectionist Corn Laws in England in 1846. However, the belief in liberal values began to weaken significantly in the late 19th century and largely disappeared in the first half of the 20th century. In our “hybrid system” the belief in liberal values and beliefs has been severely weakened to the point where to a large degree they have been replaced with their opposite, namely a brief in the justice and feasibility of state coercion to solve social and economic problems. The default position for most people today is not “the presumption of liberty” but the “presumption of state intervention,” or in other words that “the government should do something.”

This shift in belief has produced 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. The problem for us is how to get enough people to begin questioning the wisdom, justice, and necessity of this belief, and if we can succeed in doing this, how to channel this doubt into reforming our society in a more liberal direction.

Crises and Tipping Points

Robert Higgs argues that the periodic crises which afflict our society (usually caused by state interventions in the economy, like recessions and depressions, or the outbreak of war, which is also the result of state activity vis-à-vis other states) has resulted during the 20th century in a “ratchet” effect , whereby the state increases its power during the crisis, relaxes those controls a bit at the end of the crisis, but retains some of the increase in its power until the next crisis, when the “ratchet effect” is experienced again. The net result over decades is the steady and seemingly irreversible expansion in state power and scope. His pessimistic conclusion is that, in the absence of any strong countervailing ideological opposition to this expansion, it will continue indefinitely or until a catastrophic economic breakdown takes place (or what Mises called the “crack up” of the economy), or when the people rise up in a bloody rebellion or revolt.

Periodic crises can create “tipping points” where people are confronted with a new and serious problem and are forced to question their existing beliefs and to look for something else to explain their current situation and to offer them a way out of the crisis. The hope for those in the liberty movement is to be able to take advantage of such a crisis and tipping point to push people in a pro-liberty direction. A good example of this was the famine in Ireland in 1845 which was a crisis used by free traders like Richard Cobden to successfully agitate for the repeal of the protectionist Corn Laws and the introduction of free trade in 1846. The sad fact is that the experience of the 20th and 21st centuries is that the various crises which have occurred and which offered such “tipping points” have had the opposite effect, namely pushing people to look for and adopt pro-state, interventionist ideas and policies to solve the crisis. The problem for us in the liberty movement is how to use crises and tipping points to move things in the other direction.

The “covid crisis” and the mass panic it induced is the most recent and perhaps most extreme example of such a tipping point we have seen in a long time. It was stunning for those in the liberty movement to see how quickly and how willingly people gave up their personal and economic liberties and, if the Higgs ratchet effect is still functioning, these liberties will not be returned in their entirety any time soon (if ever). The crisis also revealed the moral preferences of the majority of the population, showing that they did not value their personal or economics liberties very highly (if at all), that they valued the spurious promises of “security” and “protection” offered by the state much more highly than liberty, and that the people believed the state could provide this “security” at an acceptable or no cost. The sad conclusion I draw from this is that unless we can change the public’s underlying moral preference back to one which places a high value on liberty then the liberty movement will not succeed and that every time there is a another crisis the public’s default position will continue to be “the government should do something”, even if this “something” destroys liberty in the process.

The Problem of Intellectual and Institutional Inertia

Those in the liberty movement have to face the problem of how to overcome the “inertia” which exists at both the individual and institutional levels and which makes radical change very difficult (perhaps impossible) to achieve.

At one level there is individual inertia. Once people have settled on a particular set of ideas (often at college age) it is most unlikely that they will change their thinking later in life. Thus, it is imperative to appeal to people when they are young and looking for the ideas which will shape their behaviour for the rest of their lives. This is exactly the strategy which has been so successfully adopted by the Greens and the environmental movement to appeal to high school children for whom the young Swedish school girl Greta Thunberg was a role model and source of inspiration. For older people more set in their ways of thinking, the best we can do is to try to change their thinking “at the margin”, that is to say, if there is a proposal for an increase in taxation we might be able to persuade them to accept a lower increase rather than a higher level of increases in taxation. This of course is not an ideal solution, but it is better than nothing.

When it comes to academics and intellectuals, the strategy should be to find those who have expressed some interest in some aspect of liberty and to encourage them to see the “bigger picture” of the interconnected nature of the broader liberty philosophy in the hope they will expand and deepen their appreciation of the benefits of liberty in all aspects of our life (social, political, and economic). For those academics and intellectuals who have invested their entire careers in defending state coercion and intervention in the economy it is highly unlikely that we can persuade them to change their minds and so we should not waste our scarce resources in trying to do so.

At another level, there is institutional inertia which can take two forms. Firstly, the implications of the Higgs “ratchet effect”means that once the state has acquired a new power it (or rather the politicians and senior bureaucrats who control the state) hardly ever (probably never) relinquishes that power, thus the state has a built in tendency to expand. At another level, those who have benefited from the expansion of state power – the vested interests who get government contracts or subsidies or a protected market with limits on competition, the lower level bureaucrats who staff the administration and implement the new government policies, and the voters who get tax-payer funded benefits and services – will fight tooth and nail to protect and keep these benefits. They constitute a formidable political impediment to liberal reforms.

It is sad to say that this group of individuals who directly benefit from state coercion are probably unreachable by the liberty movement and thus we should not waste our resources trying to persuade them otherwise.

(6.) Conclusion

The above comments paint a rather bleak picture of the threats which face the liberty movement. 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. What follows is my summary of these benefits and harms:

The Benefits of Liberty

  • liberal ideas and the institutions they inspired made it possible for a wave of emancipations to sweep the western world which brought an end to a system which gave power and wealth to a privileged few and poverty and oppression to the majority of the people
  • free markets based upon private property, contracts, mutually beneficial cooperation, the division of labour, and free trade made it possible for the “great enrichment” to take place, which brought unheard of prosperity to ordinary people for the first time; the benefits of industrial mass production and innovation which this unleashed are still improving our lives to this day
  • liberty (“the freedom to choose”) makes it possible for individuals to choose and pursue whatever life goals they prefer, to be able to “flourish” and develop as individuals, to choose the people they want to associate with in families or their local communities in order to pursue common goals
  • political liberty makes it possible for ordinary people (voters) to place a check on the power of politicians and other powerful individuals, to make them be responsible for their actions, and to exercise some control over how the broader community is structured (within the limit of respecting other peoples’ equal rights to life, liberty, and property)
  • a spirit of liberty and toleration creates a society which is creative, innovative, and rich with new ideas, new products, new art and culture, and new opportunities for individuals to pursue as they see fit

The Harms of State Coercion

  • government activity is based upon the use of coercion and the violation of individuals’ rights to life, liberty, and property; that the use of coercion is immoral even if done by the state and its agents and should therefore be strictly limited or even done away with entirely
  • government failure is ubiquitous and inevitable; it wastes or destroys the wealth of its citizens; furthermore, each failure has a tendency to lead to further interventions which in turn inevitably fail or impose significant costs
  • government activity discourages the development of independent and responsible behavior on the part of individuals, and encourages a spirit of dependency upon the state; this creates a semi-permanent “dependent class” of individuals who have to rely upon government welfare and other benefits in order to survive
  • the coercive powers of the state attract individuals who wish to use those powers for their own benefit at the expence of ordinary taxpayers; this also creates a “class”, this time a parasitic “class of exploiters” who live off another “class of industrious producers”who generate the wealth needed for society to function
  • rivalry between states often results in wars which destroy lives and wealth on a massive scale, which violates the liberty of its citizens through conscription into the army and the subordination of economic activity to the needs of the “warfare state”; in the nuclear age the scope for mass destruction and killing by states is so vast that it is hard to contemplate

Some Final Thoughts

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 given the numerous threats it currently faces.

The Fading of Pierre Goodrich’s Dream to Spread the Word about Liberty

“Fade to White”

The party politicization (pro-Trump republican) of Liberty Fund and its rapid turning away from the Founder’s “original intent” of promoting long-term educational and academic goals is the subject of an article in this month’s Indianapolis Monthly magazine. As the victim of the first round of purges of those who defended that vision I learnt with dismay about the victims of the second round in May 2021 which led to my colleague Nico Maloberti taking his own life in despair and hopelessness for the cause. This is the subject of Adam Wren’s article “The Pursuits of Liberty”.

I will let Adam Wren’s article speak for itself but I will note that I was struck by the very clever and insightful graphic the magazine used to represent the fading away of Goodrich’s vision under the current Board and senior management, which I have entitled “Goodrich’s vision for LF: ‘Fade to White’.”

Note: After all that has happened over the past four years the fact that there is now a “Goodrich Resident Scholar” at Liberty Fund is one of the world’s great ironies and a travesty of justice to Goodrich’s memory.

The story of the decline of Liberty Fund has been taken up by Damon Linker in “The Week”: “A libertarian tragedy in Indianapolis: The political struggle over the libertarian soul takes a grim and telling turn” (27 January 2022) online. His sad conclusion is that in addition to its drift towards explicit “politicization” it is also a result of the Foundation’s loss of faith in the power of ideas to change the world:

However one describes it, the shift could well be driven as much by the corporate imperative to demonstrate influence as by naked political passion and ambition. The businessmen who sit on Liberty Fund’s board may be committed Republicans, but they may also have grown impatient with the absence of metrics to show their expensive conferences are making a concrete difference in the world.

In this respect, the story of Liberty Fund’s drift away from its founder’s vision may be one as much about overt politicization as it is about declining faith in the power of libertarian ideas to win the day through erudite conversation alone. And, far beyond this one organization in Indiana, that’s a loss — or, at least, a sign of a larger, deleterious shift — for our country, where once we tried to aspire toward something more reasonable.

I would add small caveat here. I do not think that it is an “either, or” choice between educating people about the history and theory of liberty, and “making a concrete (political) difference in the world.” There is after all a division of labour among advocates of any idea and its policy implications. There are some institutions which develop and promote the ideas at a theoretical level, there are those who teach these ideas to their students, there are “Think Tanks” where policies based on these ideas are developed, there are political parties which endeavour to put these policies into practice, and there are voters who vote (or usually don’t vote) to put these parties into power. If any link in this chain goes missing then the task becomes that much harder to reach.

The old Liberty Fund was situated at the top end of this long “structure of production of ideas” and was placed there very deliberately by its founder Pierre Goodrich to, as Damon accurately notes, “(foster) conversation among intelligent people from a range of backgrounds about the foundations and maintenance of a free society.” These “conversations” were often centered around one of the Great Books of Liberty which Goodrich had spent much of his adult life reading and promoting. He thought these great books provided the “soul” of the liberty movement and thus deserved close and frequent study. Liberty Fund’s place in the broader liberty movement was a unique and very important one but it is now vacant and is waiting for something else to fill it.

There are now four public statements which document what has been going on at LF:

  1. my piece “Nico Maloberti: In Memoriam” posted to my website on July 2 online;
  2. the “Letter to the Board” by long-time LF friend and supporter Chandran Kukathas which he wrote 11 July denouncing their actions and wanting to sever all ties with LF (privately but widely circulated)
  3. the article by Adam Wren: “The Pursuits of Liberty: The Tragic Death of an Idealistic Academic has brought to Light an Existential Struggle within the Halls of one of the Country’s most powerful Education Foundations, the Liberty Fund”, Indianapolis Monthly (Jan. 2022) online
  4. Damon Linker, “A libertarian tragedy in Indianapolis: The political struggle over the libertarian soul takes a grim and telling turn” The Week (27 January 2022) online