The liberal bloc is in need of a vigorous defence of economic liberalism, free markets and an open society if it wants to stay relevant against the rising tide of anti-liberal and anti-globalization movements.
After the independence of the British colonies in America, there was considerable debate over the form the new state was about to take. The new constitution of the United States was at the centre of that debate.
Three clear-sighted public intellectuals stood up to the task of defending the constitution to ensure its ratification: these men were John Jay, Alexander Hamilton and James Madison.
Their essays, today known as the Federalist Papers, were an inspiring contribution to the political debate that echoes in US court rulings on constitutional matters even today. Some of these papers laid out the basic principles of the nascent democracy: Madison’s Federalist No. 10 is considered one of the best essays from the Anglo-Saxon sphere on the protection of minorities from the majority in a democracy. Others tackle democratic foundations such as “checks and balances” and the judicial review of laws. They defended their idea of a strong central democracy against the Jeffersonians who wanted a more decentralized country – a historical conflict that doesn’t mirror today’s political struggles. So why should it still be important for us? Today, politicians and political movements that contradict conventional political wisdom are on the rise. The past year saw the British vote to leave the European Union and the election of Donald Trump as president of the United States. Both events were followed by a spike in crime motivated by racial hatred and xenophobia. The coming year brings elections in France, where the far-right Front National stands a significant chance of winning; and in Germany, where for the first time in the history of the Federal Republic, a far-right party is bound to enter the federal parliament. These movements and politicians have in common that they disparage globalization and reject the idea of an open society, which have been the hallmarks of Western political tradition at least since the end of the Cold War. Critical journalists have attributed these successes to all sorts of reasons, from the anger of the left-behind to ideologically filtered newsfeeds. Liberal, centrist media (or “mainstream media” as their opponents label them) do not lack in debate on how to explain this political trend, nor does it lack in appeals against racism, Islamophobia or any other perceived threat of their liberal worldview. I argue that what the liberal movement lacks is the positive case for the open society.
“Nowadays, few European politicians dare to openly run on a platform that embraces international trade, migration, international cooperation (not just on security, but also in environmental and human rights issues).”
Even the left, who commendably holds up progressive views on human rights and anti-discrimination, is quick to heap blame on capitalism, international trade or any other conveniently capitalistic-looking scapegoat for all the perceived ills of our time. The problem is that the left tends to only consider the working poor, by claiming that they are representative of the “99%”, including everyone who is not “filthy rich”. This view obviously loses sight of the middle class, all those ¾ of the population that are not poor, according to a 2013 EU-wide survey. Much of the left’s argument for more redistributive social policy relies on a post-factual view on income inequality, usually revolving around the myth that income inequality was rapidly increasing because of greedy bankers and disappearing middle-class jobs. The true changes are due to increasing inter-household inequality from different marriage patterns (educated high-income men and women marrying among themselves as a result of more women working high-income full-time jobs) and to demography (an ageing population has more capital concentrated in the form of lifetime savings from old people). These changes call for answers beyond redistribution: for example, providing high-qualification jobs for the best educated generation of young people the world has ever seen. A broader point about political parties can be made here: they often represent political cleavages (or conflict lines, such as church vs. unions, rural vs. urban) that are outdated. As long as old parties, especially formerly popular centre-left and centre-right parties, represent milieus that have massively shrunk in number and relevance in the political debate– such as unionists, churchgoers, landowners– they will continue to fight an uphill battle against young upstart movements on the political fringes, because these movements make use of communication that is tailored to their respective audiences. And angering people by telling them how much these old elites have stacked the economic system against them, adhering to a so called “neoliberal” agenda, has proven to be an effective communication strategy. Where are the defenders of economic liberalism, the cornerstone of liberal convictions? Where are the public intellectuals who, like Milton Friedman in his TV show “Free to choose”, unapologetically demonstrate to the public that private enterprise and capitalism are not necessary evils, but the only safeguard of political liberties? Prominent liberals of our day that have not succumbed to leftist or anti-capitalist populism include former Belgian prime minister Guy Verhofstadt in the European Parliament, French presidential candidate Emmanuel Macron (sometimes described as a sort-of progressive left, while rejecting left and right labels himself) and German liberal white knight Christian Lindner. Yet no one provides a broader, more basic justification of why we need economic liberalism to guarantee political freedom. This is where we need a liberal remake of the Federalist Papers: a series of essays that, by force of logic and conviction, make the case for an economically open and free society. The task of these essays would be to collect fundamental insights into the necessity of a capitalist society as a safeguard of political freedom and the further benefits that could be enjoyed by the people in a society that allows the greatest possible freedom for people, capital, goods, services and ideas to move across borders and to reformulate these insights in a way that is fitting for our time.
Long-forgotten arguments that need to be revived and re-injected into the political debate include:
- Only in a capitalist society can there be political opposition. Milton Friedman argued his case in “Capitalism and Freedom” by stating that no government can be effectively incentivized to finance subversive forces. Political ideas that go against government doctrine can only exist if people can put their own money into politics. This argument is important against the loud criticism of money in politics, which is an especially contentious issue in the United States.
- Only in a capitalist society people are free to choose non-materialistic endeavours. This surprising but brilliant insight was also popularized by Friedman in the aforementioned book. It follows the observation that the non-capitalist societies of his time like the Soviet Union or China were extremely materialistic: The purpose of its citizens was to fulfil production quotas; the purpose of education was to advance the national economy; jobs were allocated according to political and economic considerations. Only when personal economic freedom and property are held up high, citizens have the choice to reject materialistic endeavours and, for example, decide to become an author instead of a business consultant, choosing self-fulfilment over money.
- Only in a capitalist society can government be kept in check from assuming ever more control in the lives of the governed, restricting their personal freedoms. This argument was most prominently defended by Friedrich August von Hayek in “The Road to Serfdom”, where he argues how the bureaucratic political decision process of the non-capitalistic countries was prone to grow ever bigger. There is neither competition nor the possibility of disrupting and dethroning an economic behemoth if it is identical with the government.
- In an open and economically competitive society, competition will provide the most effective pressure towards an integrative, tolerant society and restrict undue discrimination. Milton Friedman argued during the time of the Civil Rights Movement in the US that any business that discriminates against black customers, employees etc. hurts itself more than those it is targeting. This is a versatile argument that can be levied against explicit and implicit racism and discrimination against many minorities and that has therefore lost nothing of its relevance today.
I argue that a series of anonymous essays such as the Federalist Papers is the most promising way of re-injecting liberal thought into the public debate, because each of these arguments can be made in a self-contained way and in an easily digestible length to accommodate the attention span of the modern reader. Anonymity will guarantee that the discussion stays clear of ad-hominem arguments and that the claims are evaluated on their own merits. This is especially necessary in this case, as the most outspoken defenders of capitalism are its winners; when it should be argued that a shift towards a more capitalistic society can benefit especially those who are currently kept in poverty, for example by the sclerotic labour markets which we observe in France. This necessitates the realisation that economic freedom and competition are not just under threat from leftist paternalists, but also from global investment firms and the ubiquitous internet monopolists. Let this be a rallying cry for all those who look behind the clichés levied against the free and open world by populists on the left and the right. With more means of publishing than ever before, it is up to every freedom loving citizen to defend the society they want to live in.
By Philip Hanspach