This essay is one of a series exploring the topic: What
impact does political entrepreneurship have on freedom and flourishing? The
series commenced with a Preface which provides a synopsis of the series and
explains why I think it is important to obtain a better understanding of
political entrepreneurship.
-----
Can
strong political leadership bring about institutional change leading to greater
economic and personal freedom? That idea
is easy to challenge. It recalls the oft quoted passage by Lord Acton:
“Power
tends to corrupt and absolute power corrupts absolutely. Great men are almost
always bad men, even when they exercise influence and not authority: still more
when you superadd the tendency or the certainty of corruption by authority”
(Acton 1887).
Yet,
powerful leadership has attractions to many citizens. I don’t think the question
of whether strong political leadership could be consistent with greater economic
and personal freedom should be dismissed out of hand.
Restoring
order
The
attraction of strong leadership is most understandable in chaotic situations
where social order has broken down and lives, liberty and property are
threatened by groups that have resorted to violence to pursue nefarious ends.
Under such circumstances there may be grounds to hope that a strong leader will
be able to restore order and protect the rights of individuals.
As
Vincent Ostrom pointed out, the ubiquity of coercion means that order and
organization in human societies depends upon a Faustian bargain involving use
of organized force (Ostrom 1997, p.121). As explained by Paul Aligica
and Peter Boettke:
“The implication is that social order and its
institutional dynamics are perceived as shaped by and operating under the
shadow of the ongoing tension between the threat of chaos and the threat of
tyranny” (Aligica and Boettke 2009, p.61).
Benevolent
despotism
Some
of the best advice for despots who wish to promote freedom and flourishing was
provided by Lao Tzu:
“Govern
the state by being straight forward; wage war by being crafty; but win the
empire by not being meddlesome” (Tzu 1963, LVII p.64).
Aristotle’s
politics is somewhat more challenging to libertarians, but Fred D. Miller makes
a strong case that it is not anachronistic to attribute to Aristotle a concept
of individual rights and support for a moderate degree of liberalism. (Miller 1995,
pp.373-378).
Robert
Faulkner observes that Aristotle ranks greatness of soul as the
"crown" needed to perfect all the virtues, including justice. He
writes:
“Aristotle
calls greatness of soul a kosmos. It is an ornament of good character that is
also an exalting order: an ordering heightened by an awareness of the grand
activities such a soul calls for and is owed” (Faulkner 2007, loc. 250/3375).
According
to Faulkner:
“Aristotle's
diagnosis comes to this: the great-souled man is at once drawn above humanity
and drawn to humanity. He exhibits his superiority by aiding his fellows, and
yet his wish is less to aid them than to avoid being or appearing dependent on
them” (Faulkner 2007, loc. 565/3375).
Faulkner
suggests that while Nicomachean Ethics seems to imply that
greatness of the soul is a desirable attribute of political leaders, Aristotle
moderates that view elsewhere in his writings. In Ethics, Aristotle
suggests that greatness, especially great power, is overrated: “it is possible
for one who is not a ruler of land and sea to perform noble action” (Faulkner
2007, loc. 692/3375).
In more recent times, Max
Weber’s argument that effective leaders must have charisma may be relevant in
considering the potential role of leaders in restoring liberty. Weber argued that
effective leaders must have a charismatic form of authority because that is the
only form of authority capable of overcoming the constraints of organisation,
legality and tradition:
“Devotion to the charisma
of the prophet, or the leader in war, or to the great demagogue in the ecclesia
or in parliament, means that the leader is personally recognized as the innerly
'called' leader of men. Men do not obey him by virtue of tradition or statute,
but because they believe in him” (Weber 1946, p.79).
Weber argued that charismatic
authority is required for leaders to be effective in their struggle against the
impersonal forces of bureaucratization. It tends to appear in moments of
crisis, when the leader performs a ‘miracle’ for a group that feels otherwise
impotent and deeply threatened. Xavier Márquez suggests that Weber's conception
of charismatic authority allows some demagogues to play a
genuinely democratic role in modern societies when viewed through contemporary
theories of representation (Márquez 2024).
Thus far, the discussion
suggests that it is not possible to rule out the possibility that a benevolent
despot could promote freedom and flourishing if he or she wished to establish supportive
institutions and had appropriate leadership qualities. However, that seems
unlikely to be a frequent occurrence.
Does autocracy support economic freedom?
The point was made
earlier in this series (Part II) that it is easier to identify individual
political leaders who have contributed to low or falling freedom levels than
those who have contributed to high or rising freedom levels. That is because political
entrepreneurship tends to be less focused on individual leaders in countries
where governments have greater regard for individual liberty.
Nevertheless, the idea
that autocrats have sometimes helped produce better outcomes may not be
entirely fanciful. There may be some substance lying behind folklore that
attributes improvements in economic freedom to autocrats such as Lee Kuan Yew
in Singapore, Park Chung Hee in South Korea, Chiang Kai-shek in Taiwan and
Augusto Pinochet in Chile.
However, even if it can
be shown that in some instances autocrats have fostered greater economic
freedom, and that this has been followed by improvements in personal freedom,
it does not necessarily follow that a period of autocracy was necessary or
justified. People in the countries concerned are better placed than foreign
observers to make judgements about the use of force by autocrats in particular circumstances,
but the idea that autocrats are more likely to make positive contributions to
economic growth than democratic leaders does not stand up to scrutiny. William
Easterly tested the proposition by relating economic growth outcomes to the
periods during which autocratic and other leaders were in office. He found that
“leaders matter very little” (Easterly 2013, pp. 308-26).
There is also strong
empirical evidence that democracy, and the personal freedom associated with it,
is compatible with high levels of economic freedom.
Which democracies are
supporting economic freedom?
Vincent Geloso and Alex
Tabarrok have assembled evidence that democracy and economic freedom are highly
correlated. Except for Singapore and Hong Kong there are no jurisdictions with
high levels of economic freedom that are not also democracies (Geloso and
Tabarrok 2025, p.116). Countries which have experienced the greatest democratization
(Peru, Taiwan, Portugal, Spain, and Greece) have also experienced improvements
in economic freedom. There have also been substantial improvements in economic
freedom in the countries of Eastern Europe which experienced democratization
following the collapse of communism in 1989 (Geloso and Tabarrok 2025, pp. 125-8).
Geloso and Tabarrok provide
some strong arguments to explain the correlation between democracy and economic
freedom that they observe.
It seems to me, however, that none of the explanations offered for the
observed correlation between democracy and economic freedom provide grounds to
allay concerns, discussed in the preceding essay, about the future of economic
freedom in the long-standing democracies.
Economic freedom levels are beginning to slip in some of the
long-standing democracies. While many of the newer democracies have been experiencing
increased dynamism, the increasing entanglement of government, industry and
community organisations in the long-standing democracies has been associated
with a decline in dynamism.
There is not much evidence that either the progressive or conservative
sides of politics in the long-standing democracies are currently offering policies
to advance economic freedom. The progressive side of politics is tending to
pursue social and environmental agendas without regard for their impact on
economic freedom, or growth in productivity or incomes. The conservative side
of politics is tending to pursue economic nationalist agendas without regard for
their impact on economic freedom, or growth in productivity of incomes.
Experience suggests that substantial political support for economic
freedom will return only after economic crises threaten to cause widespread
misery. That raises the issue of what kind of political entrepreneurship might
help to make economic freedom more secure in the long-established democracies.
Learning from previous
reform experience
Some prominent political
leaders in democracies have been able to pursue reforms directed toward expansion of economic freedom. During
the 1980s, Ronald Reagan pursued such reforms in the USA, as Margaret Thatcher
did in Britain. The reforms currently being pursued by
Javier Milei in Argentina seem to be similarly motivated, but at the time of
writing it is too soon to judge how highly Milei’s reforms will rate in terms
of broad libertarian criteria. The
economic problems confronting the United States and Britain in the 1970s and
80s provided the context in which political leaders could initiate substantial
changes in the direction of economic and social policies. That is even more
true of the economic circumstances in Argentina prior to Milei’s election.
The reform efforts by Reagan and Thatcher can be viewed as examples of
heroic leadership which increased economic freedom. However, heroic leadership
of that kind is not solely the prerogative of presidents and prime ministers.
Similar reform efforts in New Zealand and Australia were led by government
ministers responsible for economic policy, Roger Douglas and Paul Keating
respectively, with prime ministers adopting a facilitating role.
Political leaders can rarely claim to be the authors of their reform
strategies. Policy development that has led to greater economic freedom has
drawn heavily on the ideas of prominent academics including Milton Friedman and
Friedrich Hayek, on policy analysis in think tanks and on contributions of a
few journalists who understand the issues.
In some instances, advisers within government bureaucracies have also
played an important role in policy development. Roger Kerr, who held the
position of Executive Director of the New Zealand Business Roundtable following
a career in the New Zealand Treasury, provided a highly relevant comment about
the need for advisors to focus their advice on their fields of expertise rather
than on politics:
“Economists of all people should be conscious that the performance of
bureaucrats in trying to pick winners and losers in the policy-advice market is
likely to be as unimpressive as in the industrial domain – and for much the
same reasons, namely lack of information and incentives. Perceived policy
constraints are not always immutable. They can be shifted by reasoned analysis
and well-constructed strategies for policy change, developed by interaction
between political managers and technical advisers. Second-guessing political
reactions can lead to narrowing of policy options and does less than justice,
in recent New Zealand circumstances at least, to the intelligence of a number
of politicians, on both sides of the political fence, who have been more aware
of the gravity of New Zealand’s economic problems and prepared to tell the
story like it is than many of their advising bureaucrats” (Kerr 1987, pp.
144-45).
Alf Rattigan is a prime example of a public servant who played a major
innovative role in driving economic reforms in Australia. Rattigan was chairman of Australia’s Tariff
Board from 1963 to 1974 when it was replaced by the Industries Assistance
Commission (IAC). He stayed on as chairman of the IAC until 1976, when he
retired with ill health. Rattigan used his influence in those positions to play
a pivotal role in terminating Australia’s long history of industry protection,
which in turn, helped open Australia to the global forces that drove further market-based
economic reforms. In a lecture presented in 2016, Paul Kelly, Editor-at-Large
for The Australian and Australia’s most scholarly journalist, outlined
the main elements that contributed to the success of Rattigan’s reform efforts
(Kelly 2016). One element of Rattigan’s success was his integrity in taking
seriously his legal responsibility as chairman of an independent statutory
authority, in the face of opposition from the government of the day which believed
that he should “accept the overall tariff policy of the government as given”
and work within that framework. Another element was the ability of his
professional staff to draw upon the methodology for measurement of effective
rates of protection developed by Professor Max Corden. A small group of economically
literate journalists played a crucial role in giving publicity to analyses demonstrating
the costs of protection. Some groups, including farmers and miners, recognized
that their members were disadvantaged by high levels of protection provided to the
manufacturing sector and formed a free trade lobby. David Trebeck, an
influential figure in the National Farmers Federation, said: “We fired the
‘bullets’ made by the IAC.” More politicians because advocates of free trade
and political leaders eventually showed leadership by recognizing that “good
policy is good politics”.
Unfortunately, looking back today on the economic reform efforts of the
1980s and 90s, it is apparent that the important reforms in the rules of the
game made at that time have not become deeply entrenched. Political leaders obtained sufficient electoral support to
implement market-friendly policies, but there does not seem to be much evidence
that members of the public improved their understanding of the benefits of free
markets in any of the countries in which reforms were undertaken.
Mass movements
The problem of ensuring adoption of
government policies that more consistently advance economic and personal
freedom is not merely a question of how to elect political entrepreneurs with their hearts in
the right place to national leadership positions. Experience has shown that the
longevity of reforms cannot be guaranteed even when they are supported by a
strong coalition of interest groups and result in more favourable economic
opportunities for a large majority of the population.
In
recent years, centre-left and centre-right governments which have followed
policies that are broadly consistent with relatively high levels of economic
and personal freedom have become vulnerable to competition from populist
political entrepreneurs who prophesy catastrophic environmental and social
consequences if their radical policy proposals are not followed. Populist policy
innovators on the left and right sides of politics tend to promote vastly different
fears, and to offer vastly different policies. However, one common feature of those
populist policy innovators is their attempt to exploit a
systematic anti-market bias among electors.
The pertinent question is how the anti-market bias of
public opinion can be reduced.
History suggests that this has
occurred to some extent in the past via complex processes involving, among
other things, political entrepreneurship in social movements. For example, Joel
Mokyr notes that the move toward free trade in Britain in the first half of the
19th century involved the influence of post-Smithian political
economy, the growing political power of the new industrial elite, and debates
about income distribution and food supply. He writes:
“The careers of Victorian free-traders such as Richard Cobden and John
Bright and the liberal Tories of the post-1815 era represent the kind of
mixture of economic interests and liberal ideology that eventually secured
victory for free trade” (Mokyr 2009, p. 153).
Mikayla Novak has noted the importance of entrepreneurship in propelling
social movements to extend the effective domain of freedom.
In that context she notes that “people such as William Lloyd Garrison, Emmeline
Pankhurst, Mohandas Gandhi, Martin Luther King Jr., Lech Walesa, and Nelson
Mandela” played an important role in “opposing unsatisfactory institutions and
situations” although they, themselves, were not necessarily classical liberals
by orientation” (Novak 2021, p. 45).
Is it possible that at
some time in the future a broad social movement promoting classical liberal
views could become sufficiently influential to ensure that children are offered
as much tuition about the spontaneous order of the free market as they are currently
offered about the workings of ecological systems in the natural environment? If
that ever happens it will occur because of the actions of individuals. As Edward W.
Younkins has suggested, the task of building a free society depends on individual
advocates of liberty who are “dedicated to preserving and strengthening the
ideological and moral foundations of a free society”. Younkins notes that it is
especially through the “numerous interactions with individuals” during their
everyday lives that advocates of liberty can “transmit the freedom philosophy
to the general public” (Younkins 2011, pp. 168-69).
Please see the final part of this series: Summary and Conclusions
References
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Lord (John Emerich Edward Dalberg-Acton) Acton-Creighton Correspondence (1887)
Acton-Creighton Correspondence |
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Geloso, Vincent and Alex Tabarrok. “Two Peas in a Pod:
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Democracy and Capitalism be Reconciled (Oxford University Press, 2025).
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Australian and New Zealand School of Government, 2016).
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Xavier, “Max
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