Economic Liberalism and (Re)Building Europe after WWII.

It is important to understand that economic recovery and growth in Europe after World War II is not as tied to Keynesianism, unfunded welfarism, and corporatism as is sometimes assumed.

The Glorious Thirty Years of European recovery from world war and subsequent growth were not due to ‘Keynesianism’ etc. The Thirty Years ended because the influence of liberal policies had weakened and the costs of other policies had accumulated to create an obviously dysfunctional system. Left-wingers (and communitarian-corporatist conservatives) who think ‘market fundamentalists’ overthrew a well functioning social and economic settlement which was behind all the economic growth and associated institution building (post-war national recovery and European Union construction) are in error. It is a major error to ignore the influence of Austrian School liberals (see the discussion by a leading current practitioner of Austrian economics, Peter Boettke) and the related Ordoliberalismus of the Freiburg School.

My remarks on what the major terms and schools in this paragraph refer to have become uncontrollably long, so they are relegated to the bottom of the post. I hope readers will have the patience to reach them.

The key points are that the German post-war Economic Miracle came from Ordo-liberal policies, while economic growth in France after Charles de Gaulle came to power for the second time in 1958 comes from the policies of Jacques Rueff, a civil servant, judge, and economist who participated in the 1938 Walter Lippmann Colloquium in Paris, a decisive event in the revival of liberal economic thinking attended by Hayek and many other notable liberal thinkers.

Such ideas have had a lot more influence in France than lazy propagators of clichés about statist France and liberal America understand. Of course, if we look at the French and American economies we can see notable ways in which the US economy is more liberal, but that should not obscure the reality that France has had good economic times and that these have come about because liberal economic policies were applied, even where, as under de Gaulle, the political narrative of the government was not liberal. The France of 1958 and after was able to stabilise institutionally after a real danger of the collapse of constitutional democracy and have a good economic period because of neoliberal economic ideas.

Some on the left think the relative revival of market liberalism in the 1970s can be rooted in the Chilean Coup of September 1973, after which economic policy was to some degree influenced by Chilean economists with doctorates from the University of Chicago. This revival of market liberalism is known as neoliberalism, a potentially useful term which came out of the Lippmann Colloquium (see below) that has unfortunately collapsed into an empty term of abuse for any kind of market thinking in government policy, wherein even the most modest accommodation of economic rationality is labelled ‘neoliberal’ and therefore extreme, authoritarian, and based on the narrow greed of the rich. It is sometimes accompanied by attempts to read enlightenment liberals as somehow ‘really’ left-liberal, social democratic, or even socialist.

The reality is that neoliberal ideas were first obviously influential on Continue reading

A short note from the editor

I don’t even know what to write about anymore.

The Kavanaugh-SCOTUS debacle was so bad, and so predictable, that I thought it was worth avoiding altogether, even though it’s important. I thought about writing on why it’s important to understand “the other side” of a debate. In the US, as in democracies everywhere right now, political polarization has occurred. Nobody is listening, but nobody is paying attention to the important stuff, either. There’s no mention of checks and balances or rule of law, but plenty of ink has been spilled on “legitimacy,” as if the beliefs of the mob are somehow superior to minority rights and due process in a free and open society.

Don’t people realize that the Supreme Court, in fact the whole judicial branch of government, is supposed to be somewhat anti-democratic? Wasn’t that high school civics?

The election of Donald Trump has overwhelmed libertarians, I think. He’s too vulgar for us to properly counter. He’s a demagogue and he’s immoral. NOL‘s traffic has gone up over the past two years since Trump’s election victory, but the number of posts has gone down. Even I have switched from writing about political issues to simply sharing stuff that’s mostly non-political. Again, how do you counter something so vulgar and crass using the written word and your own humble logic? I understand why Leftists have taken to the streets. I understand why they use violence and intimidation to get their points across.

The root cause of the populist surge across the democratic world is hard to pinpoint. Perhaps it never will be properly pinpointed. Yet, I see two causes: the first is a simple lack of knowledge about what liberty means. Just mention the word “liberty” in your next conversation and you’ll see what I mean. It has become archaic or even eccentric. “Liberty.” Its meaning has become lost. And in the meantime, populist demagogues throughout the West have taken a dump all over the meaning of freedom. Demagogues now assault the liberties of minorities, of refugees, and of foreigners in the name of freedom.

How did we let this happen? How did libertarians let this come to pass? Complacency is the wrong answer here. Libertarians fell under the spell of economizing. Libertarians and libertarian organizations sought to become more rational, more efficient, and more eye-catching as the medium of mass communication has moved from television and print to digital and print. Something called “data” or “metrics” convinced libertarians worldwide to bend the knee. But the hallmark of liberty has always been informality and spontaneity. Institutional and professional organizations are a great complement to libertarian activism (whatever that might be), but once rationalization overpowered the informal nature of libertarian networks, populism prospered as libertarians, too worried about their careers in Washington, took the cowardly route. I am part of the cowardly crowd. I should have spoken up more often. I should have been more a fighter.

The second cause of the populist surge is globalization and the lack of formal institutions to accompany its spread across the globe. The spread of formal markets has decreased income inequality worldwide, but has increased that same inequality within countries that have been economically developed for centuries. If a poor country is trading with a rich country, and the poor country is obviously cheating, there is nothing citizens in the rich country can do to stop the cheating other than stop trading with the poor country. If the world had better formal institutions to confront stuff like this, the populists would have remained forever on the margins of their respective societies. The World Trade Organization was seen as “good enough” by those inside Washington and by those who should have known better.

A fuller, more robust vision of the free and open society has not yet been produced. There are those in libertarian circles who argue that charter cities or “seasteading” ventures are the proper future of humankind, the proper future of liberty. Yet running away from the world does not seem like a smart thing to do. It’s certainly cowardly, and we’ve had enough of that over the past three or four decades to last us a lifetime. A better, more up-to-date, argument for the free and open society needs to be built off of the works of liberty’s past defenders. Globalization has been good for the world’s poor, but it has sidelined the voices of the world’s middle classes (who work in the world’s rich countries). To fight populism, I am going to continue to figure out how to make globalization a little bit better for everybody, instead of just ignoring the complaints of the middle classes. I think expanding the Madisonian republic territorially is the best way to go about this. I may be wrong, but I’ll never know if I don’t at least take a crack at it.

Nightcap

  1. Zombie history: a bleak vision of the past and present Sophie Pinkham, the Nation
  2. Pakistan’s elections and the precarious future of the China-Pakistan Economic Corridor Andrew Small, War on the Rocks
  3. Populism in less developed countries is somewhat different Pranab Bardham, 3 Quarks Daily
  4. The BRICS hit the wall Guy Sorman, City Journal

Nightcap

  1. Eugenics in the Progressive Era Patricia Williams, Times Literary Supplement
  2. America’s debate between scientific innovation and caution Patrick Allitt, Law & Liberty
  3. The tyranny of language Francis Wade, NY Review of Books
  4. Higher intelligence predicts left-wing social views and right-wing economic views Ludeke & Rasmussen, Intelligence

Nightcap

  1. Diversity as a right-wing ideal Chris Dillow, Stumbling & Mumbling
  2. Trumpist populism could easily linger longer than most people readily assume Francis Fukuyama, American Interest
  3. Brexit and the oral culture of journalism John Quiggin, Crooked Timber
  4. Europe’s comparative advantage in violence Philip Hoffman, Economic History Review