An excellent book, brief, to the point, a great help in focusing on the essential, and a powerful and incisive refutation of the errors in fashionable/progressive constitutionalism. Though focusing on specific issues like "judicial activism", Sandefur provides a comprehensive account of the basic tasks and features of the Constitution.
Particularly interesting are his accounts of
the tug-of-war on the issue whether to vest citizenship and sovereignty in the states or on the federal level,
how state precedence was an important shield for the anti-abolitionists,
how the 14th amendment was intended to bring about an appropriate balance between state and federal power that would give citizens, in Madison's words, "a double security" as "the different governments will control each other,"
by giving the federal government "power ... to protect by national law the privileges and immunities of all the citizens of the Republic and the inborn rights of every person within its jurisdiction whenever the same shall be abridged or denied by the unconstitutional acts of any State," [p.63], and
"the Slaughter House Court removed the most potent protection against state overreaching and threw that double security out of balance." (p.70)
I am looking for similar books, preferably not too voluminous, that give the reader a concise notion of the essence of the American Constitution and the arguments behind it. I will be grateful for recommendations in the comment section.
I venture the hypothesis that many libertarians who engage in the "denunciation of public authorities" are stuck in a doctrinal trap that colours their perception.
Unlike Richard Epstein, from whom the above quote stems, they are not usually in the habit of figuring out the often difficult questions of how to fit public authorities into the framework of a free society, let alone appreciating their fundamental role in creating freedom.
Instead they work on a strong presumption against the state.
From that point on, negative perceptions become a foregone conclusion.
Mainstream libertarianism suffers from the lack of a serious theory of the role of politics and the state in an open society, betraying a derivative paucity of interest in the vital minutiae of intermediary conditions between principles and outcomes, i.e. libertarians are not prone to look carefully into the ways in which state agencies work in detail and on a day-to-day basis to buttress the freedoms we enjoy. This attitude encourages simple stereotyping that builds up pent-up demand for events that seem to prove the grim presumption against the state.
We urgently need more libertarians in positions of political responsibility. Ours is a theory in desperate need of sobering practice.
How do I know which is the proper libertarian policy? Can there be something like THE proper libertarian policy? Or will a spontaneous order emerge from the competitive deliberations and disparate approaches that different parties take concerning the political and technical implementation of their preferred policies?
Will policies not be altered by the very process that makes them advance from the visionary stage to open-ended fruition?
I would tend to argue that if you do not factor into your policy proposal a realistic account of the intermediary conditions created by scientific and political competition - that is: how to register and analyse these intermediary conditions, how to instrumentalise them, how to deal with opponents and the need for compromise - what you offer is not really a policy proposal, but a mere expression of wishful thinking.
Attempts at overcoming hard and manifold theoretical and political resistance are just as important a source of realistically informed policy as is the ability to open up to competition and compromise, to try out, and alter the scheme in operative reality.
Successively, Friedrich Hayek supported at least three different, mutually exclusive policies to deal with the overall money system: the gold standard, a commodity-backed-currency, and freely competing private currencies.
Which one of these is more libertarian than the others?
What this puzzle confronts us with is the peculiar logic of scientific competition as well as political competition. These non-market arenas of competition form a vast delta of path-defining parameters, a system of intricately ramified intermediary conditions from which contingent results emerge that need to be acted upon as they appear. These intermediary conditions cannot be built into and dealt with appropriately in advance by a set of initial premises.
Intellectual competition requires and, indeed, forces admission of diverging views, by which dynamic the issues fit to be pursued are defined, i.e. accepted for handling by the political machinery and the public behind it. Political competition is inevitable, if only to organise scientific and economic competition and transform their results into concrete policies. Political competition requires and forces admission of widely diverging views and policy aims, opening up another vast area of contingent ramifications, i.e. intermediary conditions determining the path along which outcomes will be arrived at. This process and its results cannot be preempted by libertarian precepts. They are embodiments of the indeterminacy of freedom, which keeps advancing by bursting her banks.
2. The Hayekian Deficit
Although Friedrich Hayek is often credited with initiating the resurgence of research in alternative monetary systems, his own proposal received sharp criticism from Milton Friedman (1984), Stanley Fischer (1986), and others at the outset and never gained much support among academic economists or the wider population. According to Friedman, Hayek erred in believing that the mere admission of competing private currencies will spontaneously generate a more stable monetary system. In Friedman’s view, network effects and switching costs discourage an alternative system from emerging in general and prevent Hayek’s system from functioning as desired in particular.
Hayek simply assumes that a competitive environment "will spontaneously generate" the desired outcome. But he disregards important "intermediary conditions" on which the set of realistically attainable outcomes depends.
According to the above paper opponents of Hayek's proposal argue that economic actors are not likely to desert an established money in favour of newly created competing private monies owing to inordinate switching costs, negative network effects, and rational expectations - for more see here. Milton Friedman supports this contention by pointing to a lack of empirical evidence that economic actors would react to the offer of competing monies in the way Hayek predicts (e.g. in the face of a weak and volatile Dollar, Americans did not typically switch to German or Swiss money). Hayek replies that people tend to be discouraged to switch currencies owing to legal restrictions; if the latter were lifted, his predictions would prove correct. Regardless of Hayek's objection being pertinent or not, characteristically, he does not address the essentially political condition on which he expressly claims his policy proposal hinges.
3. The Libertarian Non-Policy Bias
The entire spectrum of libertarian thought espoused from anarcho-capitalists to crypto-anarchists to Hayek-type of classical liberals are united in systematically avoiding analysis of politics as a means both representing and structuring intermediary conditions that ultimately link up or decouple initial premises (e.g. competition is good, so currency competition must be good) and final outcome (the operative monetary system).
(i) Anarchists live in total denial of the need of politics and the state (henceforth simply "government" or "state"), which is the most convenient and least convincing way of dealing with the issue.
When it comes to policy proposals,
(ii) crypto-anarchists like von Mises ascribe such a minute role to government that in its reduced night-watchman-format it appears as a factor hardly relevant to the policies in question. The policies can either somehow go ahead without government involvement, or the state's support for libertarian goals is simply assumed to be forthcoming, notwithstanding a view of the state practically incompatible with such compliance or neutral to affirmative midwifery.
(iii) Hayek, oscillates between contradictory views of government, which latter he is happy to enlist for the management of his vision of a minimalist welfare state ("Hayek's socialism," in Richard Epstein's provokingly paradoxical formulation), while at the same time figuring out at great effort a system of currency competition whose purpose it is to decouple money from the odious import of government.
What is not clear is how it is possible to fruitfully enlist and control government for the one purpose, but not for the other. Why should government not abuse its powers to expand far beyond a minimalist welfare state, when it cannot be trusted with the monetary system?
My message in a nutshell: you cannot have an effective policy that is supposed to organise the monetary order of society unless you have the intellectual and practical means to understand and participate in the processes of civic competition through which the monetary order is implemented and enforced.
Libertarians do not seem to be able to pursue effective policies in this area because they adhere to a truncated view of spontaneous order, which reflects only the self-organising features of market processes, ignoring an even broader dimension of spontaneous order that does not grow as analogous to market interactions, but follows its very own logic.
The cow on the old wall: Since there was lots of excellent grass on the old wall, some of the citizens of Schilda proposed to let a cow graze on it. A rope was put around the cow's neck and a group of strong men hauled her up. In the process, the cow got strangulated. When the citizens of Schilda saw that the cow was sticking her tongue out, they would jubilate: "Look she's grazing!
The federal government is moving towards abolishing the Renewable Energy Target rather than scaling it back in a move that will cost almost $11 billion in proposed investment and which is at odds with the views of its own Environment Minister.
Let’s parse this sentence bit by bit.
Scaling back the RET is described as “a move that will cost almost $11 billion in proposed investment”. “Investment” is one of those hurrah words so that anything that can be described as investment is automatically given a warm reception. What cutting the RET will actually do is cut almost $11 billion dollars of waste. Eleven bil on more windmills and solar panels would not get you back ten cents in the dollar. Stopping such expenditure dead in its tracks will only promote future economic growth, or at least it will if the government doesn’t decide to spend the money itself in some other totally useless way.
Here is the message: DO NOT SPEND MONEY ON ANY SINGLE INVESTMENT THAT WILL NOT OF ITSELF AND ON ITS OWN PROVIDE A POSITIVE RETURN ON FUNDS EMPLOYED IN A REASONABLE PERIOD OF TIME (LET US SAY THE NEXT THREE YEARS). If you can’t see a return, and prove it in a published cost-benefit study, don’t do it.
I don’t say you shouldn’t provide welfare. By all means provide welfare. Let us look after the sick, the aged and the disabled. But here, since the demands are near infinite, judicious allocations of funds will be required. But while welfare expenditures may be important for those who are unable to work or are too old to work, none of these expenditures will promote economic growth and future prosperity.
We do not have an infinite pool of productive resources. We must prioritise. Removing renewable energy targets is pure profit for the economy, a 100% benefit. So would getting rid of paid parental leave. Get rid of them both at once. I wish the NBN was also up for grabs since getting rid of it would also be a net positive.
And I should finally mention since I am throwing it all into the pot, do not raise taxes on anything in any part of the economy. If the kinds of revenues you are in receipt of are insufficient to pay for everything in the basket, then take some things out of the basket.
Bad news for the wailing libertarian, bad news for those whose belief in liberty makes them feel menaced and inundated everywhere by arbitrary power and injustice, decline and misery, evil and peril.
Depending on how you look at her, freedom is either a concept, or an aspect of reality, a vast and pervasive one, if we are lucky. As a concept it demands perfection and completeness, as part of reality it must accept a position, however prominent, next to other phenomena many of which may not square with the demands of liberty.
The best that we can hope to achieve for freedom is an open society which gives her plenty of space to unfold. However, an open society will never be congruent with freedom. An open society will always be a mixed society in terms of liberal and illiberal elements. With their countless different views of freedom, liberals are among the first to feed the blend of contrasting components that make up an open society.
"The truly great social catastrophes do not arise from a misapplication of the basic principles of a market economy. They arise from a wholesale disrespect for individual liberty, which is manifested in tolerated lynchings and arbitrary arrest, and from a total contempt for private property, through its outright seizure by government forces intent on stifling its opposition or lining its own pockets. The reason why Great Britain and the USA did not go the way of Germany and the Soviet Union in the turmoil of the 1930s was that the political institutions in both our countries were able to hold firm against these palpable excesses even as they went astray on a host of smaller economic issues."
If there are good things happening in this world, we cannot ascribe them to freedom alone, as if all the hindrances in her way no longer matter. If there are good things happening in this world, then this is because of a tolerable, perhaps even felicitous mix of freedom and unfreedom. Thus, a more complete view of freedom ought to accommodate the manner and means by which freedom and unfreedom coexist to bring about a world that gives us Reasons to Be Cheerful.
It is easy to pick up a newspaper, watch television or look on a blog and assume the end is nigh. Between foreign affairs crises, demographic time bombs, debt icebergs and having only hours left to save the NHS (more on that another time…), it would not be unreasonable for us all to assume the world has got a lot worse – that capitalism has failed, inequality has sky-rocketed, and we are living shorter, sadder and more violent lives.
Happily, this is not so. Thanks to capitalism, free trade and globalisation we live in the most prosperous, healthy, safe, equal and free period in human existence. Across the globe, as liberal economic policy and capitalism have left communism and command economies in the dustbin of history, we are seeing remarkable falls in worldwide poverty, hunger, disease, inequality and (despite current humanitarian disasters) deaths from war and natural disaster.
It is worthwhile (as Free Enterprise Award winner Matt Ridley does) looking at the reasons to be happy with our world today and to be optimistic for the future.
Interesting in its own right, the below lesson in breaking open parmesan cheese strikes me as providing a graphic analogy of how spontaneous order and man-made order interlock fruitfully. To adapt to and use the possibilities of a self-generating order to your advantage you must study and understand its nature, and learn to find an interface between its features and your needs. Respect for and insight into emergent order will tend to enhance the range of wholesome applications for conscious intervention. It would be rather a surprise if people, on being given more liberty, were not to extend their efforts at controlling their environment and making it accord ever more closely with their needs. For that reason alone, politics and freedom are inseparable twins of great potential and ambivalent effects.
See also my post on Greed versus Self-Interest, in which I argue that what defines man is the urge to adapt to his environment by developing and satisfying new needs. This fundamental anthropological condition explains the incidence of the entrepreneur and free markets, no less than the presence of political ambition and creativity. Proper stewardship of liberty requires participation in the vast areas in which politics rather than market based activities determine the nature and extent of freedom in a society.
The two major problems with modern liberalism (European meaning) are a lack of
(1) theoretical fortitude to generally deal with the vast fields of contingency and indeterminacy opened up by greater freedom, and more specifically, a lack of
(2) doctrinal maturity to guide it in political participation.
Both deficiencies have a common source. The model of social order underlying modern liberalism is the market. But the market is only a subset within the broader social order.
Hume or Smith were never in danger of reducing the system of liberty to a mechanism that describes free markets. But when Hayek speaks of spontaneous order, he is already propagating the narrower vision.
I do not know when and why it occurred, at any rate, the tragic turn of liberalism looms when sight is increasingly lost of the spontaneous order of society at large.
Why would liberalism suffer such constriction? Maybe because its roots lie in a precapitalist world, and more importantly in a world where government could not possibly be anything but very small by later standards. Maybe because its heyday coincided with the breakthrough of commercial society. Small government and commerce looked like the essence of liberalism. They appeared to offer liberalism's ultimate formula for success.
Now, let me explain what I mean by "the vast fields of contingency and indeterminacy opened up by greater freedom."
(1) Freedom brought about capitalism. (2) Capitalism brought about wealth. (3) Wealth required and enabled mass political participation, and wealth made possible government endowed with unprecedented resources. (4) Mass political participation brought about unheard of demands on the state. (5) Unheard of demands on the state brought about big government.
Freedom brought about big government.
It is useful to think outside the usual box, for a moment, and admit that there are not only silly and objectionable grounds for a larger state to happen. At least from stage (3) on, the delta of implications deriving from mass political participation and unprecedented publicly available wealth becomes much too broad and complicated, too contingent and indeterminate to simply wipe away any consideration of larger government as an expression of base doctrinal dazzlement.
However, this is exactly the error committed by the liberal movement. By its very structure, the liberal doctrine was conditioned, or at least predisposed to heavily underweight political processes and the dynamics of state institutions and government. Liberalism yields to this propensity at a time when these are becoming the most powerful forces in society, next to free markets and civil society, by which latter I mean the growing independence of humans and organisations from the tutelage of the powers-that-be.
The irony, nay, the tragedy is that liberalism becomes a creed of political abstention, just at the time when liberty is taking off in the biggest possible way. This is the dawn of the era of the paradox of freedom. Liberty proliferates and grows all over the world, but liberals hardly participate in shaping her fate. Those among them ready to accompany liberty in the political realm quickly amalgamate with other political schools uninhibited to regard politics as a welcome tool to bring mankind advances that the smaller governments of yesteryear were utterly incapable of. This is the reason why, for instance, the German liberal party has become yet another branch of social democracy a long time ago. A liberal party, a strong liberal force in politics is simply not conceivable under the core paradigm. A liberal must cheat or desert in order to become politically effective.
I must use the word for the third time: it is a tragedy that the audacious vision of perhaps the greatest liberals ever, and the unparalleled success of their political activism have not become the guiding light of modern liberalism. Instead, liberals live estranged from and often embittered by a time characterised by more freedom than has been experienced in any period before ours.
It has been frequently remarked that it seems to have been reserved to the people of this country, by their conduct and example, to decide the important question, whether societies of men are really capable or not of establishing good government from reflection and choice, or whether they are for ever destined to depend for their political constitutions on accident and force.
(Federalist 1, par. 1)
The answer to this puzzle is not a foregone conclusion - it is an ongoing process of political activity producing partial answers.
Edward Elgar publishers, in association with the Institute of Economic Affairs, are about to launch a revised Second Edition of the must-read-book by my favourite economist Steven Kates: Free Market Economics. An Introduction to the General Reader.
The author gives us a little personal background information on the book's cover:
That is very likely the mill from which the plaque has been modelled. I wished to have a cover that showed a water mill made of clay because the two most important influences on me have been John Stuart Mill and the English economist, Henry Clay. My wife, bless her, found just such a combination on the net as the plaque was being sold just then. I therefore bought it, photographed it and now the clay representation of a mill is on the cover. I also like it because it is both nineteenth century and part of the productive apparatus of an economy. And it fits in with my understanding of Jean-Baptiste Say whose factory producing textiles was driven by a water mill. Finally, I just think it’s beautiful. I could not think of a better cover. My profound thanks to Ant for conjuring the origins up.
Make sure to read the article to which the image credit links.
Economic reinvention is at the heart of business cycle recovery and economic dynamism. In the depths of an economic downturn, entrepreneurs take advantage of cheap, used capital facilities and idle workers to launch them in new uses. The productive supply-side reinvention leaves behind the broken economic model and unveils a creative venture of greater social value.
The failure to appreciate this core economic dynamic lies behind the failures of big-government attempts to micromanage the economy. Discretionary Keynesian stimulus is built on the notion of propping up the existing firms, labor market relationships, and purchase patterns. In the aftermath of the Great Recession and Obama Administration stimulus efforts, new-firm creation dropped dramatically in the U.S. and the recovery proved modest at best. This is not a coincidence. Interfering with the core mechanisms for reinvention harms the capacity of the economy to transform itself for the future. [...]
Flexible markets, a ceaseless commitment to innovation, the capacity to organize and reorganize skills, risk capital, and technologies are the mechanisms of economic reinvention. Personal freedoms, religious freedoms, and small non-intrusive government are the mechanisms of social, cultural, and personal reinvention. Our policy future should be built on these principles, and not on top-down, one-size-fits-all regulatory and discretionary fiscal approaches.