Welcome to Quadrant Online | Login/ Register Cart (0) $0 View Cart
Menu
January 21st 2017 print

Nick Cater

It’s Freedom, Stupid

Allowing people to decide what to do with their own money and to strive after the station they wish to attain has proved a far more effective system of running human affairs. Far from protecting the powerful, capitalism actually makes them vulnerable

freedomThe good news is that the cause of freedom can draw a crowd any night of the week in an Australian capital city. It will be a young crowd too, particularly if the nature of freedom and the cost of maintaining it remain sufficiently ambiguous.

At the Friedman Conference Gala Dinner in Sydney last May, the keynote speaker challenged the New South Wales government’s lock-out laws as a grievous assault on liberty against which true libertarians must rally. Think of the consequences for the start-up economy, he implored. How could we possibly lure those Silicon Valley prodigies to the dowdy streets of Wowserville when the freedom to imbibe was implacably denied?

Milton Friedman would have found it rather strange. He understood the insidious effect of petty regulations more than most, but the freedom to hit the squirt at 3 a.m. would not, one suspects, have struck him as a first-order issue. Not when the forces of illiberalism are active on many fronts at home and abroad; not when freedom of speech and ultimately freedom of thought are under sustained attack from the academic Left; and not when we’re being challenged by far more crippling economic interventions than a curfew slapped on Kings Cross.

It is fitting, however, that the Millennials should pay homage, in whatever fashion, to the intellectual leader who contributed so much to enlarging the world they will inherit. But for the advances of economic freedom that Friedman inspired, they may not have grown up in the most prosperous time in history and would not now be anticipating a fulfilling career in one of the most successful nations on the planet.

Economic freedom—the freedom to produce, trade and consume, free of coercion from the state—underpinned by the rule of law is the source of the affluence and empowerment we now enjoy. It drove the exceptional post-war economic growth under Sir Robert Menzies and inspired the deregulatory reforms of the 1980s and 1990s that equipped Australia for the twenty-first century.

“The freedom to do our best and to make that best better,” said Menzies in 1947, was “a freedom that goes deep into the very dignity of man”. He returned to the theme of economic freedom time and time again. “The greatest function of a democratic government is to create a climate in which enterprise will flourish,” he reflected three years after his retirement.

It would be understandable if today’s up-and-comers were to take this freedom for granted; they would have to be in their forties at least to have worked through a recession, to have experienced the closing horizons, uncertainty, diminution of savings, the fear of repossession and the loss of dignity that come when an economy starts going backwards. They would have to be in their late thirties to have any meaningful memories of the Cold War and to understand the hunger for economic as much as political freedom that finally tore down the Wall.

Economic liberty is the key to explaining not just the cultural battles of the past but also the challenges of the present. It is the key to identifying our opponents at a time of political disruption, and to deciding which side of the trenches we should occupy. The post-Cold-War consensus may have tempted us to believe that economic freedom had been won. Yet for the Millennials, like their parents, it is a freedom for which they must continually fight.

The agendas of Jeremy Corbyn, Bernie Sanders and, on his worse days, Bill Shorten, show that the Left has certainly not given up the fight. The defining characteristic of the New Left, like the Old Left, is an opposition to capitalism driven by a conviction that markets left to their own devices are incapable of serving the broader public interest.

The preferred manner of state control may have changed in the light of experience but the authoritarian instinct remains. Taxation pays the salaries of apparatchiks and funds the handouts that enslave the poor. Regulation ensures that the industrialists play according to your rules. Political correctness enforces a monopoly of truth.

Our understanding of the intellectual Left’s abiding aversion to capitalism is assisted by the writing of Ludwig von Mises. Not all of Mises’s observations withstand the test of time, but his 1956 work The Anti-Capitalistic Mentality describes the credo of the intellectual Left with exceptional clarity:

The fundamental dogma of this creed declares that poverty is an outcome of iniquitous social institutions. The original sin that deprived man of the blissful life in the Garden of Eden was the start of private property and enterprise. Capitalism serves only the selfish interests of rugged exploiters. It dooms the masses of righteous men to progressing impoverishment and degradation. What is needed to make all people prosperous is the taming of the greedy exploiters by the great god called State.

For those who see evil flowing from Adam Smith’s invisible hand, redemption comes through central planning which will, it is assumed, deliver abundance for all:

Those eager to accelerate this great transformation call themselves progressives precisely because they pretend they are working for the realisation of what is both desirable and in accordance with the inexorable laws of historical evolution. They disparage as reactionary all those who are committed to the vain effort of stopping what they call progress.

The intellectual Left’s assumptions have grown more ridiculous with the passage of time. Few of the centrally planned economies of Mises’s day have survived and the few that do stand are monuments to ideological folly. Most nations in the former Communist Bloc have converted to more or less free-market systems and demonstrated that they are infinitely better at meeting human needs. If we imagine the division of Germany as a controlled experiment in which the two economic systems are allowed to run in parallel for more than forty years, the results prove conclusively the superiority of capitalism. By the time the experiment was called off, West Germany had produced the BMW Z1 Roadster; East Germany had mounted a smoky two-stroke engine on wheels, covered it with a hard plastic shell and named it the Trabant. Far from being a force of oppression, capitalism has lived up to Mises’s expectations as “essentially a system of wiping out penury as much as possible”.

Allowing people to decide what to do with their own money and to strive after the station they wish to attain has proved a far more effective system of running human affairs. Far from protecting the powerful, capitalism actually makes them vulnerable. Those who think they can supply the public better and more cheaply than others are free to risk personal or borrowed capital to demonstrate their efficiency. The profit system is “a daily repeated plebiscite in which every penny gives a right to vote to the consumers to determine who should own and run the plants, shops and farms”.

In a centrally planned economy, power is vested at the top and the functionaries below are obliged to bow to superior wisdom, which frequently proves faulty. Few, if any, of the measures introduced by the state to alleviate the lot of the suffering masses met their stated intention. All came with unforeseen consequences, many of them harmful to the very people the measures were designed to protect. The outcomes Mises predicted are “even more unsatisfactory than the previous state of affairs they were designed to alter”.

Without any tenable objections to the evidence before their own eyes, and indeed with little regard for economics at all, the intelligentsia responds by denouncing opposing arguments as heresy: “The authors are called names, and the students are dissuaded from reading their ‘crazy stuff’.”

Today, having achieved almost total control of the academies and other cultural institutions, the intelligentsia’s ability to enforce its version of truth is considerable. Dissenters have become used to engaging in two conversations, one in polite company, another in the company of trusted friends and inside the privacy of one’s head. In public they tacitly assent to the platitudes on climate change, acknowledge their debt to the traditional owners of the land and keep their thoughts to themselves on gay marriage. Privately, in the company of trusted friends, they will say what they really think.

Thus, since the global financial crisis of 2008, the intelligentsia has effortlessly managed to enforce its false narrative of inequality and oppression. In their view, the crisis was the fault of bankers, not unwise state intervention. Blame is sheeted home to Wall Street and Canary Wharf instead of Washington and Brussels. The wealth gap has become the prism through which even civic challenge must be viewed.

The revival of socialism and the threat to economic freedom spawned by this delusion should restore a sense of purpose to its enemies. A quarter of a century after the Cold War, the defence of capitalism and the defeat of socialism should rightly be the defining cause for the centre-Right. There is no reason for the confusion that has lately overtaken the Liberal side of politics in Australia, no justification for division or the establishment of separate parties.

There can be no dispute in this clash of views about which side we are on; we oppose government interference and we favour competitive free markets. We do so not out of self-interest but because we see the evidence with our own eyes. We know that capitalism empowers, and that as Menzies said, “frugal people who strive for and obtain the margin above these materially necessary things are the whole foundation of a really active and developing national life”. There remains an immutable bond between economic freedom and prosperity.

The intellectual left’s anti-capitalist delusion cannot go unchallenged. State control leads, as it always has, to the tyranny of serfdom. Behind the studied arguments against free markets lies a lack of belief in freedom itself.

In interventionist economies the plan of the government is substituted for the plans of the individual citizens, depriving entrepreneurs and capitalists of the discretion to employ their capital according to their own designs. It amounts, as Mises identified, to the transfer of control from citizens to the government.

A defence of economic freedom is a defence of the individual independence of mind that leads to progress. It is a defence of the cause that united the Liberal Party under Menzies in 1944, “the freedom in this world to seek and obtain a greater reward for doing more”. Without this freedom, Menzies said, there would be no Australia. “Let us make no mistake,” he said in 1947:

It is this magnificent instinct to go out after the extra risk for the extra reward that has produced the extra results in history, to the great advantage and prosperity of hundreds of millions of people now living.

At the start of 2017, a century after the Russian revolution, let us raise our glasses to capitalism and freedom.

Nick Cater is Executive Director of the Menzies Research Centre.

 

Comments [25]

  1. Bill Martin says:

    The obvious reason why the loony left continues to hold sway in the vital layers of society is perfectly illustrated by this fragment of Nick Carter’s article:

    “In public they tacitly assent to the platitudes on climate change, acknowledge their debt to the traditional owners of the land and keep their thoughts to themselves on gay marriage. Privately, in the company of trusted friends, they will say what they really think.”

    “They” in the above extraction is us. Unless we stand up openly for what we believe and boldly challenge the charlatans, their influence will never diminish and continue to threaten our freedom. Donald Trump is the shining example to follow in confronting the shysters head on.

  2. ianl says:

    A spirited enough defence of capitalism, I suppose, although not necessarily containing much that is exactly new.

    But it avoids the real, central question – so obvious in it’s “elephant in the room” status that avoiding it says there is no palatable answer.

    And the question ? Given the demonstrated superiority of a capitalist system over socialism for improving the common lot (as someone remarked, never mind if he has a Merc, as long as most have good cars), why has the left been so successful in capturing the MSM, the academe and the polity ?

    As a more pointed comment, which in my view actually answers that question, is: the Robin Hood myth never dies. That is, appealing to envy always wins, eventually. Given that, essays such as this one, as well meaning as may be, will fall by the wayside.

    • whitelaughter says:

      so, completely unrelated to the fortune that the Soviets spent bankrolling idiots? Hardly. And worth watching the flow of money from the Saudis, which I imagine is a major reason that Islamophilia is required on campus.

  3. Bwana Neusi says:

    Very well put Nick. Now we have a minority of Free Capitalists in a sea of State controlled socialism. Even the Wanabe merchants like Leyonhjelm espouse smaller government whilst advocating that those who paid for their pension, don’t deserve it – but the politicians do!

  4. rosross says:

    Capitalism is like religion, best in moderation and with sensible regulation. Unchecked capitalism hurts everyone. Unchecked socialism hurts everyone. The mistake people make is that they use the term Capitalism in the same way that people would use the term Religion or Communism, as if it is all good. It isn’t. It needs to be regulated and managed.

    • Lacebug says:

      As a laissez faire capitalist I disagree RosRoss. I see no need for ‘sensible regulation’ or any regulation at all. The market will decide.

      • Ian MacDougall says:

        Lacebug, that’s all very well. Except that no laissez faire theorist has ever worked out how to have capitalism sans regulation.
        And that in turn has to be because private property is the most basic regulator of human economic behaviour of them all.
        It’s even there in the Ten Commandments (No. 8 from memory.)

        • Jody says:

          And the people who are AGAINST regulation are too young to remember why regulation was important in the first place. I don’t like over-regulation, though, and I think our country suffers from that – a consequence of too many tiers of government, IMO.

  5. rosross says:

    Communism failed because it did not take human nature into account. Capitalism fails when it does not take human nature into account.

    Unregulated Capitalism will see the least ethical, most aggressive drag everyone else down to their level. There is no perfect system because there are no perfect human beings.

  6. Salome says:

    People keep posting and sending me a Gone with the Wind poster with the caption ‘She promised to follow him to the end of the world–he promised to arrange it for her.’ It stars President Trump and Mrs May. Strange, but I recall the old communist shop in Swanston Street in the 80s had the same poster, but bearing the images of President Reagan and Mrs Thatcher. Perhaps Mrs May can learn to ‘do business’ with Mr Putin the way Mrs Thatcher said she thought she could ‘do business with Mr Gorbachev’. The end of the Reagan–Thatcher–Gorbachev period in the 80s was, of course, 1989 (which was a huge improvement on both 1789 and on 1988). What new avenues of liberation will open up if we can get the present stars to align and talk civilly with each other?

  7. Bill Martin says:

    Sadly, the general tone of the above comments indicate the very poor understanding of the term “capitalism”. Commenters appear to believe that capitalism means a lawless, dog-eat-dog, free-for-all, Darwinian survival of the fittest. The only regulation that needs to be applied to capitalism is the already well-established legal system of western democracies. The most salient aspect of that system applicable in this case is that no force, fraud or coercion is permissible in the conduct of commerce. What problems there are with capitalism are the result of failure to enforce the relevant laws, most often due to corruption.

    • Lacebug says:

      Totally agree Bill. And as for the prats in the Greens that are calling for an end to capitalism. What are we to do with them?

    • ianl says:

      > “What problems there are with capitalism are the result of failure to enforce the relevant laws, most often due to corruption.”

      Sorry Bill, but my comment on the power of envy stands. It’s a common, widespread human failing without rational redress so I understand your reluctance to approach it.

      • Bill Martin says:

        I have no reason to dispute or deny that envy is a very real and most regrettable aspect of human nature. It happens to be an essential ingredient of socialist thought. However, I fail to see how that supposed to be some sort of discredit to capitalism.

  8. Don A. Veitch says:

    Robert Menzies was no libertarian, more a false flag. If you want the libertarian thinking go to Ron Paul Institute for Peace and Prosperity. In particular read the Neo-con watch tab.
    Friedman took away the free lunch for workers, but help give bankers a free banquet.
    Allegedly, the top 12 in the world have more wealth than the bottom half of the world entire p0pulation. Then you know T

  9. Don A. Veitch says:

    … Then you know the system is working for oligarchs,and against the common wealth. ‘Free’ markets are a fraud and a cruel joke.

  10. Keith Kennelly says:

    The Communist Chinese economy is a command economy and it will collapse.

    With growth less than 6% pa the return of citizens from the cities to rural poverty will accelerate.

  11. Ian MacDougall says:


    In public they [ie “the intelligentsia] tacitly assent to the
    platitudes on climate change, acknowledge their debt to the traditional owners of the land and keep their thoughts to themselves on gay marriage. Privately, in the company of trusted friends, they will say what they really think.

    Going by this piece, life in intelligentsia land is a bit on a par with Nazi Germany or Stalin’s Russia.
    However, though solidly opposed by fossil-carbon interests, ‘the platitudes on climate change’ are supported by a fair slab of the governing Coalition. The fudge here rests on the assumption that the mainstream climatology and the scientific organisations which endorse it – CSIRO etc – are irrational. (Maybe from the viewpoint of the blowflies of the fossil-carbon lobby, that is correct.)
    As for the rest of the article, my only complaint is that it leaves out too much of the history of modern times.
    I am presently a capitalist, but have spent much of my life working for wages/salaries. Most of my male relatives have been likewise; eg my maternal grandfather was a bushman living in Henry Lawson’s Australia, who got into prospecting right at the tail end of the gold rush. He kept on staking claims and digging holes long after it was all over. If the current hole proved less than golden, he got out of that and into something else, like opals or driving horse teams for others. When his money ran out, he worked as a stockman on one of the stations. In other words he went from the working class to the entrepreneurial capitalist class and back again as a matter of course. So did a helluva lot of his contemporaries.
    Also left out is any reference to colonialism, and to the people of the colonies out of whose labours the modern western capitalist economies were largely built, and who declined to be the ‘white man’s burden’ beyond AD 1945. That was after the Imperial Japanese had exposed the colonialist bluff. By 1975 and the US’ catastrophic defeat in Vietnam, it was all over for colonialism and neo-colonialism in Asia, and for that way of accumulating capital.
    .
    But apart from all that, not a bad piece.

    • Bill Martin says:

      Ah! The grievous sins of colonialism!

      Those preoccupied with that conveniently ignore – or perhaps are unaware of – the reality of the situation prevailing in those times. The concept of “might is right” was universally accepted then, not only by the powerful colonisers but also by those being colonised. Practically all the lands being colonised were occupied by tribal societies where the more powerful tribes prevailed over the lesser and inter tribal conflict was a permanent state of affairs, nowhere more so than in the Great Southern Land. The colonisers merely acted in accord with the standards of the times and derived substantial benefits as a result. At the same time, the colonies also benefited enormously. Modern methods of governance were introduced, including the “rule of law”; vast infrastructures, such as railways, were constructed; public health and educational institutions were created. The list is endless. A good measure of the validity of the above is to consider the state of affairs in countries that achieved independence last century. The degree of their success in the meantime is mostly directly proportional to the extent they carried on with the systems they inherited. The ones which reverted to the “traditional” tribal ways are generally the most wretched places on Earth.

      • Ian MacDougall says:

        Bill:
        So Gandhi Nehru & Co in the Indian National Congress were wrong; or perhaps misguided? Also Imre Nagy and the other leaders of the Eastern European states who preferred not to be Soviet colonies?
        “The colonisers merely acted in accord with the standards of the times and derived substantial benefits as a result. At the same time, the colonies also benefited enormously.”
        Perhaps true in some of the less ungrateful parts of the British Empire, but I doubt too many residents of the former Belgian colonies in Africa (remember Patrice Lumumba?) would support you.

  12. [email protected] says:

    An excellent article thank you, Peter. However, as have posted before, I think you have left out capitalism’s most effective possible defence against the hyper-emotional appeal of socialism which is based totally on the strongest of all human emotions – jealousy, and that defence is merely a simple and short definition of what capitalism actually is.
    I have never seen an adequate definition of what capitalism actually is anywhere. My simplistic definition would be that it is a system of governance in which people are allowed to individually own things and where, as far as possible, all agreements are to be conducted on a voluntary basis. That definition is short enough and should be clear enough to survive most leftist attempts to ‘redefine’ words to suit their purposes such as they have done with – ‘progressive’, ‘liberal’, ‘gay’, ‘misogynist’ etc. etc.

    • Jody says:

      As Mark Latham said today on “The Outsiders” (on Fox)..’Identity politics is a dead-end”. So, labels have divided people but now that Trump is in the ascendant they’re furiously trying to re-apply the old axioms and labels. It will be interesting to see if The Donald can re-fire the capitalist engine in the USA and he has already alluded to that with his comment about the nation becoming ‘enterprising’ (I think that was the word).

      The nanny state has infantilized the people and they are sapped of the initiative to do as Ian has said about his ancestor – move onto other work when one avenue closes up, create your own opportunities etc. etc. At least move to a place where the work is – that would be a good start!