Does stakeholder capitalism contribute to human flourishing?

 

Many people reading this are likely to view the use of stakeholder terminology by business leaders as little more than a public relations tool. That is certainly how I have viewed it in the past. If you are a business owner, or executive, who wants to encourage employees, suppliers, customers, and community members to feel loyalty to your business, it makes sense to acknowledge that they may also have a stake in seeing it prosper. And it does no harm to remind governments of their stake in the prosperity of your business via its contributions to tax revenue.

However, I have recently come to associate stakeholder terminology with stakeholder capitalism. That ideology has close links to the concept of corporate social responsibility (CSR) and the increased tendency of businesses to seek rewards from governments for pursuit of environmental and social goals (ESG). Reading about stakeholder capitalism has added to my previously expressed concerns that such interactions between business and governments are leading liberal democracies more deeply into a corporatist quagmire.

Stakeholder capitalism

Michael Rectenwald’s book, The Great Reset and the Struggle for Liberty, has persuaded me that in advocating stakeholder capitalism, Klaus Schwab, the founder of the World Economic Forum (WEF), has in mind a corpus of ideas and policies that are fundamentally opposed to free markets and classical liberalism. Moreover, the WEF may have sufficient influence among powerful elites to eliminate the already dwindling influence that classical liberalism has been having on public policy.

Rectenwald’s book was written in response to a book by Klaus Schwab and Thierry Malleret entitled Covid-19: The Great Reset, which was published in 2020. Rectenwald draws attention to the open espousal of policies opposed to free markets in that book. Schwab and Malleret welcomed the possibility that governments might take advantage of the pandemic “to permanently increase their role”, and eliminate classical liberalism, which they refer to as neoliberalism. They write:

“COVID-19 is likely to sound the death knell of neoliberalism, a corpus of ideas and policies that can loosely be defined as favouring competition over solidarity, creative destruction over government intervention and economic growth over social welfare. For a number of years, the neoliberal doctrine has been on the wane, with many commentators, business leaders and policy-makers increasingly denouncing its “market fetishism”, but COVID-19 brought the coup de grâce.”

They go on to predict:

“Shareholder value will become a secondary consideration, bringing to the fore the primacy of stakeholder capitalism.”

Klaus Schwab has been advocating stakeholder capitalism for over 50 years, and has been influential in having that concept endorsed at international meetings of powerful people from business and government. The first Davos Manifesto, signed in 1973 states:

“The purpose of professional management is to serve clients, shareholders, workers and employees, as well as societies, and to harmonize the different interests of the stakeholders.”

The 2020 Davos Manifesto is titled: “The Universal Purpose of a Company in the Fourth Industrial Revolution”. It includes similar sentiments to the 1973 Manifesto, but goes on to state, among other things:

“B. A company is more than an economic unit generating wealth. It fulfils human and societal objectives as part of the broader social system. Performance must be measured not only on the return to shareholders, but also on how it achieves its environmental, social and good governance objectives. Executive remuneration should reflect stakeholder responsibility.”

Some CEOs would welcome a long muddled list of performance objectives because it offers them the opportunity to “do their own thing” and provide ready-made excuses for poor performance. Others would prefer to see governments pursue social and environmental objectives by more efficient mechanisms, and to have their own performance judged according to more tangible benefits to shareholders. How does the WEF propose to encourage compliance with its Manifesto?

The WEF’s ESG Index

The WEF published a report in 2020 setting out metrics for measuring company performance with regard to ESG goals. The title of the report is  Measuring Stakeholder Capitalism: Towards Common Metrics and Consistent Reporting of Sustainable Value Creation.

A mechanism for grading companies in terms of their environmental, social, and governance practices and plans might be thought to offer useful information to investors and consumers who concerned about the environmental and social impacts of their decisions. However, Rectenwald points out that it also has potential implications for interactions between business and government:

“Woke planners wield the Environmental, Social, and Governance (ESG) Index to reward the in-group and to squeeze non-woke players out of business.”

Ideological reach

In a recent Newsweek article, Jon Schweppe asks, Why did corporations go ‘woke’? His response, in brief, is that “this is part ideology, part price of admittance to an elite club, and part protection racket – doing everything one can to avoid upsetting the mob”.

Rectenwald’s book suggests to me that the WEF should come to mind following any mention of “ideology” and “an elite club” in this context. The corporate partners of the WEF include over 1000 of the world's largest business organisations. The annual meeting of the WEF in Davos is an invitation-only event but is widely reported in the media. Many notable political leaders, journalists etc. have been members of the Forum of Young Global Leaders, which is reserved for people under 40 years of age who show promise of global leadership. In addition, the WEF’s Global Shapers movement, a training camp for young change-makers (under 30 years old) has over 10, 000 active members.

Implications

Rectenwald points out that because ESG is “an impressionistic, qualitative, metric” it exposes business leaders and companies to the whims of woke arbiters. He cites the recent experience of Elon Musk who has been unfairly besmirched because he may have benefited from an emerald mine owned by his father in South Africa during the apartheid era. He sums up:

“In today’s political economy, satisfying shareholders, employees, and customers to earn profits has become less important for corporations than ingratiating the woke cartel and the governments that support it.”

Rectenwald’s book goes on to discuss possible implications for individual liberty of potential innovations such as an individual carbon footprint tracker, but in this essay I want to stick with the implications of stakeholder capitalism.

The Hayek quote at the beginning of the essay suggests another important implication of stakeholder capitalism. The quoted passage is from Law, Legislation, and Liberty (v3, p 82). The context of the quote is a paragraph in which Hayek is responding to the idea that large corporations should be required to consider the public or social interest. He suggests that “as long as the large corporation has the one overriding duty of administering the resources under its control as trustee for its shareholders its hands are largely tied; and it will have no arbitrary power to benefit this or that particular interest”. The paragraph ends by suggesting that obliging large corporations to consider the public interest gives them uncontrollable power that “would inevitably be made the subject of increasing public control”.

There is also reason for concern that obliging corporate managers to adhere to ESG will make them less accountable for productivity performance of enterprises because it will be difficult for company boards to assess the veracity of claims that performance has been adversely affected by ESG. Wokeness can be expected to provide a cover for inefficiency.

I acknowledge that stakeholder capitalism may have some positive implications for human flourishing, that should be offset against the negative implications discussed above. For example, in my book Freedom, Progress, and HumanFlourishing, I note that the difficulty that governments have been experiencing in agreeing upon concerted international action to combat climate change was ameliorated by the actions of business organisations in planning for a carbon free future.

Nevertheless, as I also argue in that book, there is more reason to be concerned about the implications of declining productivity growth than about climate change. By further reducing productivity growth, stakeholder capitalism seems likely to cause a great deal of economic misery.

Unfortunately, major economic crises will probably need to be endured before political leaders inspired by classical liberalism emerge once again to implement the public policy reforms that are needed to restore free markets.

What's wrong with people?

 

This question is posed in the title of Chapter 10 of Steven Pinker’s book, Rationality: What it is, Why it Seems Scarce, Why it Matters.

I enjoyed reading the previous 9 chapters but didn’t learn much from them. Those chapters were a painless way to refresh my memory about definitions of rationality, rules of logic, probability, Bayesian reasoning, rational choice, statistical decision theory, game theory, correlation, and regression analysis.

I particularly liked the approach Pinker took in discussing the research of Daniel Kahneman and Amos Tversky which documents many ways in which people are prone to fall short of normative benchmarks of rationality. Pinker makes the point:

“When people’s judgments deviate from a normative model, as they so often do, we have a puzzle to solve. Sometimes the disparity reveals a genuine irrationality: the human brain cannot cope with the complexity of a problem, or it is saddled with a bug that cussedly drives it to the wrong answer time and again.

But in many cases there is a method to people’s madness.”

A prime example is loss aversion: “Our existence depends on a precarious bubble of improbabilities with pain and death just a misstep away”. In Freedom Progress and Human Flourishing, I argued similarly that loss aversion helped our ancestors to survive.

Pinker doesn’t seek to blame the propensity of humans to make logical and statistical fallacies for the prevalence of irrationality in the public sphere. He is not inclined to blame social media either, although he recognises its potential to accelerate the spread of florid fantasies.

The mythology mindset

Pinker argues that reasoning is largely tailored to winning arguments. People don’t like getting on to a train of reasoning if they don’t like where it takes them. That is less of a problem for small groups of people (families, research teams, businesses) who have a common interest in finding the truth than it is in the public sphere.

People tend to have a reality mindset when they are dealing with issues that affect their well-being directly – the world of their immediate experience – but are more inclined to adopt a mythology mindset when they are dealing with issues in the public sphere.

When economists discuss such matters, they may refer to the observation of Joseph Schumpeter that the typical citizen drops to a lower level of mental performance when discussion turns to politics. They reference the concept of rational ignorance attributed to Anthony Downs and Gordon Tulloch. They may also refer to Brian Caplan’s concept of rational irrationality. (For example, see Freedom, Progress, and Human Flourishing, pp 114-115).

Pinker doesn’t refer to those economists’ perspectives but offers interesting insights about factors that might lead people to adopt mythology mindsets. In summary, as a consequence of myside bias, attitudes to the findings of scientific studies often have less to do with scientific literacy than with political affiliation. The opposing “sides” are sometimes akin to “religious sects, which are held together by faith in their moral superiority and contempt for opposing sects”. Within those sects the function of beliefs is to bind the group together and give it moral purpose.

What can we do?

Pinker’s suggestions for combatting irrationality in the public sphere are summed up by his subheading “Re-affirming Rationality”. He advocates openness to evidence, noting the findings of a survey suggesting that most internet users claim to be open to evidence. He suggests that we valorize the norm of rationality by “smiling or frowning on rational and irrational habits”.

Pinker identifies institutions that specialize in creating and sharing knowledge as playing a major role in influencing the beliefs that people hold. Since “no-one can know everything”, we all rely on academia, public and private research units, and the news media for a great deal of the knowledge which forms the basis of our beliefs. Unfortunately, these institutions are often not trustworthy.

In the case of the universities, Pinker suggests that the problem stems from “a suffocating left-wing monoculture, with its punishment of students and professors who question dogmas on gender, race, culture, genetics, colonialism, and sexual identity and orientation”. News and opinion sites have been “played by disingenuous politicians and contribute to post-truth miasmas”.

It is easy to agree with Pinker that it would be wonderful if universities and the news media could become paragons of viewpoint diversity and critical thinking. However, movement toward that goal will require large numbers of individuals to enlist for a ‘long march’ to re-establish norms of rationality in institutions that specialize in creating and sharing knowledge.                                                                    

Where is the soul of libertarianism?

 

Matt Zwolinski and John Tomasi have contributed an excellent history of libertarian ideas in their recently published book, The Individualists. The question I pose for myself is related to the subtitle of the book: “Radicals, Reactionaries, and the Struggle for the Soul of Libertarianism”.

The reason Zwolinski and Tomasi refer to individualists rather than to libertarians in the main title is presumably because they believe that a commitment to “individualism is at the core of libertarianism”. They also note that many of the most intellectually active friends of liberty in Britain were known as individualists before the term libertarian caught on.

Synopsis

The authors spend some time discussing who is, or isn’t, a libertarian. They note that “libertarian” has been used in both a strict sense, to refer specifically to those who see liberty as a moral absolute, and in a broad sense, to include classical liberals who view liberty as a strong presumption. The book discusses the views of contemporary classical liberals, such as Friedrich Hayek and Milton Friedman, as well as those of “strict libertarians”, but doesn’t devote much attention to historical classical liberalism.

Zwolinski and Tomasi identify six markers which form the core of a libertarian world view: private property, skepticism of authority, free markets, spontaneous order, individualism, and negative liberty. They observe that while libertarians don’t necessarily view those principles as absolutes, they typically see them “as a tightly integrated system of thought, with each commitment being supported by, and lending support to, the others”.

After providing a historical overview, the book discusses the history of radical and reactionary libertarian ideas relating to private property, libertarian anarchism, big business and free markets, poverty and spontaneous order, racial justice and individualism, and global justice and noninterventionism. Much of this information was familiar but I was surprised about how much was new to me.

Zwolinski and Tomasi’s final chapter focuses largely on the battle between bleeding heart libertarians, left libertarians and paleolibertarians for control of the libertarian party in the United States. The authors conclude that libertarianism is “intrinsically a diverse ideology”, and that “the struggle between libertarianism’s progressive and conservative tendencies, a struggle for the soul of libertarianism, is likely to go on”.

That may be an appropriate way to end a history of ideas directed to an audience composed largely of people who live in the USA. As a person who doesn’t fit into that category, however, I am concerned that describing differences of opinion as “a struggle for the soul of libertarianism” may generate more heat than light. As I see it, libertarians should be encouraged to acknowledge good ideas whether they are espoused by conservative or progressive libertarians. I would have preferred to see the book end by acknowledging that libertarians are engaged in an ongoing struggle against authoritarianism as people on opposing sides of the culture wars seek to enlist the coercive powers of the state to pursue their interests.

More fundamentally, the struggle the authors describe - about which set of political prescriptions will come to be most closely identified with the ideology – seems to me to be conducted without much reference to the soul, or essence, of libertarianism. The book left me wanting to promote the view that the soul, or essence, of libertarianism stems from the nature of human flourishing. Zwolinski and Tomasi may have good reasons for not exploring that idea more fully in their book, but it seems to me to be an idea that deserves to be given more attention.

The soul of libertarianism

In my view, the passage from Wilhelm von Humboldt quoted at the beginning of this review comes close to capturing the soul of libertarianism. Liberty is the best principle for the coexistence of humans because it offers conditions most favourable to self-directed individual flourishing.

Humboldt’s contributions influenced John Stuart Mill in writing On Liberty. They were also acknowledged by Friedrich Hayek in the conclusion of the chapter of The Constitution of Liberty discussing education and research:

“And we cannot think of better words to conclude than those of Wilhelm von Humboldt which a hundred years ago John Stuart Mill put in front of his essay On Liberty: ‘The grand, the leading principle, towards which every argument unfolded in these pages directly converges, is the absolute and essential importance of human development in its richest diversity’.”

Readers who are eager to know more about Humboldt will find an online article by George H Smith published on libertarianism.org to be of interest.

The discussion of egoism in The Individualists is relevant to considering the link between liberty and individual flourishing. Zwolinski and Tomasi note that in the 19^th century American libertarians, such as Benjamin Tucker, were influenced by Max Stirner, a German theorist, who held that the only standard or right was the ability to transform one’s will into action. That view is in stark contrast to the ethical egoism advocated by Ayn Rand and her followers during the 20^th century. Rand denied that might makes right and argued that egoism is compatible with recognition of universal natural rights.

The link between liberty and individual flourishing is recognized today in the writings of some classical liberal and libertarian authors. Doug Rasmussen and Doug Den Uyl deserve special mention because they have developed related ideas rigorously in their trilogy of books: Norms of Liberty, The Perfectionist Turn, and The Realist Turn.

Readers looking for a non-technical introduction to these ideas may find relevant discussion in various places including an article by Ed Younkins on The Savvy Street, and in my book, Freedom, Progress, and Human Flourishing.  Rasmussen and Den Uyl have provided a summary of their views in Chapter 2 of The Realist Turn. A quote from the conclusion of that chapter will convey the essence of their understanding of the role of liberty in the context of human flourishing.

“In essence, natural rights represent a realization of certain normative requirements that are inherent in the individualized nature of human flourishing within a social context. In particular, when thinking about rights, we are concerned with the conditions that must be secured for the individualized nature of flourishing to function. Although liberty is the key term in this context, we regard it not as the central concept for flourishing generally, but only with regard to setting the social context for flourishing. And although we reject constructivism as a foundational principle, we recognize the role of social constructs within the constraints provided by a framework of natural rights. As such, our theory is not about the whole of political and social life, but about the political/legal structure within which such life should and must be allowed to function if flourishing is our standard.”

Conclusions

My reading of The Individualists by Matt Zwolinski and John Tomasi has prompted me to present a view about the soul of libertarianism. Zwolinski and Tomasi end their excellent history of libertarian ideas by suggesting that progressive and conservative factions within libertarianism will continue to struggle over the soul of libertarianism. I put the view that the soul, or essence, of libertarianism stems from the nature of human flourishing. Wilhelm von Humboldt came close to capturing the soul of libertarianism 230 years ago when he suggested: “The highest ideal … of the co-​existence of human beings seems to me to consist in a union in which each strives to develop himself from his own innermost nature, and for his own sake”. The link between liberty and individual flourishing has been recognized by many libertarians and classical liberals, and is rigorously explained in the writings of Doug Rasmussen and Doug Den Uyl.

References

Bates, Winton, Freedom, Progress, and Human Flourishing, Hamilton Books, 2021.

Den Uyl, Douglas J., and Douglas B Rasmussen, The Perfectionist Turn: From metanorms to metaethics, Edinburgh University Press, 2016.

Rasmussen, Douglas B., and Den Uyl, Douglas J, Norms of Liberty, Pennsylvania State University Press, 2005.

Rasmussen, Douglas B., and Den Uyl, Douglas J, The Realist Turn, Palgrave Macmillan, 2020.

Smith, George H., ‘The Culture of Liberty: Wilhelm von Humboldt’, libertarianism.org, 2013.

Younkins, Edward W., ‘Rasmussen and Den Uyl’s Trilogy of Freedom and Flourishing’, The Savvy Street, 2021.

What determines how much liberty people enjoy in different countries?

 An obvious answer to the question posed above is that governments determine how much liberty people enjoy. But that response may be too glib. Some argue that much restriction of liberty reflects prevailing values of people who see individual autonomy and personal choice as a threat to collective interests of groups and nations.

When I began the research which led to this article, I sought to explore the extent to which international differences in personal and economic freedom can be explained by deep-seated cultural values. My conclusion is that there is a large residual variation which is attributable to ideologies of governments that support or oppose free markets and personal liberty.

This conclusion is illustrated in the graph shown above. However, you will need more information about how the graph was constructed before you can get the picture.

• The graph shows the levels of economic and personal freedom for 85 countries using the Fraser Institute’s latest data (for 2020). There are 165 jurisdictions covered by the Fraser indexes, but relevant data on values from the latest round (2017-22) of the World Values Survey (WVS) was only available for 85.
•  The vertical axis of the graph is in reverse order – low values of personal freedom at the top, high values at the bottom. The reason stems from use of personal political compass data which is constructed in that way in an earlier article on this blog. 
• The horizontal and vertical axes are positioned at the median levels of economic and personal freedom for the 165 jurisdictions covered by the Fraser indexes. The countries not covered by the WVS tend to have lower freedom ratings than those which are covered. The median ratings for the 85 countries represented in the graph is 7.2 for economic freedom and 7.6 for personal freedom.
• I have only labelled data points that have freedom ratings that are substantially different from predictions based on deep-seated cultural values. The methods used to obtain predicted values for personal and economic freedom were explained in preceding articles on this blog (here and here). If you live in a high-income liberal democracy, that country is likely to be represented by one of the unlabelled points in the south-east quadrant - with relatively high levels of economic and personal freedom.
• The colour of the labelled points depends on whether freedom is greater than or less than predicted on the basis of values – green if greater than predicted, red if less than predicted. The size of the labelled points is larger if both personal and economic freedom are greater than or less than predicted.

 It is apparent from the graph that it is difficult to explain why countries have low personal and economic freedom ratings simply by reference to prevailing values in those countries. Most of the countries in that category have freedom ratings that are lower than predicted on the basis of values. The political ideologies followed by the governments of those countries provide an obvious explanation for their suppression of liberty.

The graph also shows that a substantial number of countries with relatively high personal and economic freedom are performing better in that regard than can readily be explained on the basis of prevailing values.

More detailed information for the countries which have freedom ratings substantially different from predicted levels is shown in the graph below.

 

Of the 34 countries with freedom ratings that are substantially different from predicted levels, Argentina is the only one to have one category of freedom greater than expected and the other category of freedom less than expected.

Questions to ponder

Are relatively high levels of human freedom less secure in countries in which freedom is greater than prevailing values seem to support? If a high proportion of the population feels that existing policy regimes are not aligned with their personal values, these regimes could be expected to be fragile, other things being equal. However, much depends on those “other things”. The growth of economic opportunities could be expected to be greater in the presence of relatively high levels of economic freedom. That could be expected to foster values that support economic freedom. The growth of economic opportunities also tends to encourage development of emancipative values which support personal freedom.

Are relatively low levels of human freedom less likely to persist where prevailing values support greater freedom? Again, policy regimes giving rise to such outcomes could be expected to be fragile, other things being equal. Unfortunately, however, the “other things” often include use of coercion to suppress opposition to existing policy regimes.

Postscript: 16 June, 2023

I have now made an effort to explore whether some of the above speculations have empirical support. This involved repeating the exercise of obtaining predictions of personal freedom - using WVS data from the 2010-14 to obtain predictions of personal freedom for 2012. It was possible to obtain matching data for only 53 countries. 

There is some evidence that personal freedom is less secure in countries in which freedom is greater than prevailing values seem to support. Of the 6 countries in which personal freedom was much greater than predicted in 2012, only one had higher personal freedom in 2020, another had unchanged personal freedom and the other 4 had lower personal freedom.

The exercise provided no support for the proposition that relatively low levels of personal freedom are less likely to persist when prevailing values support greater freedom. Of the 6 countries in which personal freedom was much less than predicted, none had higher personal freedom in 2020, and 2 experienced a further decline in personal freedom. Unfortunately, over this period none of the repressive regimes were displaced or became more responsive to prevailing values of the people.

To what extent do international differences in economic freedom reflect people's values?

 

This is a companion piece to the preceding post in which I considered the extent to which international differences in personal freedom reflect people’s values.

The extent to which international differences in economic freedom reflect different values is of interest because it has bearing on the extent of popular support likely to be given to policy proposals involving expansion or restriction of economic freedom. If people feel that existing economic policy regimes are aligned with their personal values, they are less likely to support radical change.

The accompanying graph suggests the existence of a positive relationship between an index of facilitating values and economic freedom. As suggested in the label of the horizontal axis, the index of facilitating values reflects the priority that people in different countries place on autonomy, and the extent of interpersonal trust in different countries.

Indexes

I am not aware of any other index of values facilitating economic freedom similar to the one I constructed in preparing the graph, even though there has been a substantial amount of previous research undertaken on cultural values supporting economic growth and institutional change. (Nicholas Moellman and Danko Tarabar have referred to some relevant literature in their article, ‘Economic Freedom Reform: does culture matter?’, Journal of Institutional Economics (2022), 18, 139-157.)

The priority people place on autonomy seems likely to be important in facilitating economic freedom because respect for individual autonomy implies respect for individuals engaged in commerce, particularly innovators. Trust of strangers seems likely to be important in facilitating economic freedom because it reduces the tribal instinct to seek to use the powers of the state to advance the interests of group members at the expense of other groups.

I have used Christian Welzel’s autonomy index to measure autonomy. This index uses three items in the World Values Survey (WVS) which ask respondents their views about desirable child qualities. Autonomy is considered to be valued more highly by those who independence and imagination as desirable child qualities but do not consider obedience as such a quality. (See: Christian Welzel, Freedom Rising, 2013). I used an updated version of the index based on the latest round of the WVS (2017-2022).

Welzel’s generalized trust index was used to measure interpersonal trust. This index gives higher weight to trust of strangers than to trust of family. I reconstructed the index for the latest round of the WVS by combining items covering close trust (trust of family, neighbours, and people you know personally), unspecified trust (whether most people can be trusted) and remote trust (trust of people you meet for the first time, people of another religion and people of another nationality). Unspecified trust was given double the weight of close trust, and remote trust was given three times the weight of close trust.

In constructing the facilitating values index, autonomy was allocated 75% of the weight and generalized trust was allocated 25%. Those weights were chosen on the basis of regression analysis using the autonomy and generalized trust indexes as explanatory variables to explain economic freedom. (Researchers seeking further information about the methodology used in constructing this index are welcome to contact me.)

 The Fraser Institute’s economic freedom index incorporates a large number of indicators relating to size of government, legal systems and property rights, sound money, freedom of international trade and regulation.

Discussion

My focus is on the outlier data points in the accompanying graph, and particularly on those countries which have substantially lower or higher economic freedom than might be predicted on the basis of values facilitating economic freedom.

One of the first things readers may notice in the graph is that values facilitating economic freedom are shown to be higher in China than in the U.S. and Australia. That may seem surprising if Geert Hofstede’s analysis, or your knowledge of cultural heritage, has led you to expect Chinese people to be much less individualistic than Westerners. If you need to be persuaded that many Chinese people have an individualistic perception of human flourishing, you might like to read an article I wrote on that topic in 2021.

While you are thinking about China, you might like to compare economic freedom in that country with that in Singapore, Hong Kong, and Taiwan. The most obvious reason why the latter jurisdictions have greater economic freedom is because they have adopted market-friendly ideologies.

Similarly, adoption of market-friendly ideologies explains why Albania has substantially greater economic freedom than Iran and Libya, and why Chile has greater economic freedom than Argentina and Venezuela.

Conclusion

The existence of values facilitating economic freedom helps to explain why some countries have higher economic freedom than others. However, it seems that a substantial part of international differences in economic freedom can be explained more directly in terms of prevailing government ideologies which either support or oppose free markets.

To what extent do international differences in personal freedom reflect people's values?

 

The accompanying graph shows that personal freedom tends to be greatest in countries where people hold the most emancipative values (on average). However, it also suggests that in some countries personal freedom is much less, or much more, than might be expected on the basis of the values commonly held by the people. For example, there is less personal freedom in Belarus than might be expected, whereas there is more personal freedom in Armenia and Georgia than might be expected.

Before going further, I need to explain what emancipative values and personal freedom actually measure.

The concept of emancipate values was developed by Christian Welzel to measure the beliefs that people hold about such matters as the importance of personal autonomy, respect for the choices people make in their personal lives, having a say in community decisions, and equality of opportunity. Welzel’s research, using data from the World Values Survey, suggests that larger numbers of people have tended to adopt emancipative values in an increasing number of societies as economic development has proceeded. The strengthening of emancipative values is explained by growth of action resources (wealth, intellectual skills, and opportunities to connect with others) rather than civic entitlements such as voting rights. As emancipative values have strengthened, more people have come to recognize the value of civic entitlements and have used their growing material resources, intellectual skills, and opportunities to connect with others, to take collective action to achieve such entitlements. The process has been ongoing, with people showing greater concern for promoting more widespread opportunities—including greater opportunities for women, ethnic minorities and the disabled—as material living standards have risen and emancipative values have strengthened. (There is more information about Welzel’s research on emancipative values here.)

The personal freedom component of the Fraser Institute’s Human Freedom Index incorporates indicators of rule of law, security and safety, freedom of movement, freedom of religion, freedom of association and civil society, freedom of expression and information, and relationship freedom.

As already noted, international differences in personal freedom don’t always reflect people’s values. The reason why that is so is fairly obvious when one looks at the country labels I have shown on the outliers in the graph. What is it that Armenia, Cyprus, and Taiwan have that Egypt, Iran, China, Belarus and Vietnam do not have?   Representative government. 

Two cheers for democracy!

Do people now have greater economic freedom in Sweden than in the U.S. and Australia?

 

When I think of Sweden, what comes to mind is a big government welfare state, with higher priority being given to economic security than to economic freedom. I was therefore surprised when I saw the Heritage Foundation data reproduced in the accompanying graph, which shows that economic freedom in Sweden is now higher in the United States and Australia. I expect that many readers would be similarly surprised.

The substantial decline which the graph shows for economic freedom in the U.S. and Australia since 2020 is presumably associated with government policies restricting freedom during the Covid19 pandemic. However, economic freedom in Sweden has apparently maintained an upward trend during that period.

In order to come to grips with this new information I thought it might be helpful to consider alternative economic freedom estimates and to take a look at the components of the Heritage Foundation’s economic freedom estimates.  

Comparison of Heritage and Fraser estimates   

 Some of those who feel uncomfortable with the idea that people may now have more economic freedom in Sweden than in the U. S. and Australia might obtain some solace from the fact that the latest economic freedom estimates of the Fraser Institute has Sweden (in 33^rd place) ranked far behind both Australia (6^th) and the U.S.  (7^th).  Some of the differences between the Heritage and Fraser estimates may be attributable to timing. The Heritage estimates for 2023 are based as far as possible on data for June 30, 2022, whereas the latest available Fraser estimates are for 2020. However, there are also differences in the aspects of economic freedom covered by the indexes. For example, the Heritage estimates incorporate Fiscal Health (deficits and debt) which is an aspect of economic management not incorporated in the Fraser estimates.

I was not surprised to see Sweden ranked first in the Fraser Institute’s index of personal freedom, well ahead of Australia (17^th) and the U.S. (33^rd). The Human Freedom index (which combines economic freedom and personal freedom) has Sweden ranked 6^th, ahead of Australia (11^th) and the U.S. (23^rd).

Comparison of scores on various aspects of economic freedom

The comparison of scores on the accompanying graph indicate that aspects in which Sweden performs relatively well, by comparison with Australia and the U.S. are fiscal health and government integrity. As might be expected from Sweden’s welfare state reputation, the aspects on which Sweden performs relatively poorly include tax burden and government spending.

Conclusion

The answer to the question I posed at the outset depends on which economic freedom index one looks at. The Heritage Foundation’s index clearly has people enjoying greater economic freedom in Sweden than in the U.S. and Australia, but that finding is not confirmed by the Fraser Institute’s index. Whatever Sweden’s current ranking relative to the U.S. and Australia, it is worth pondering how Sweden has managed to maintain relatively high levels of economic and personal freedom, despite having a large welfare state. At this stage, there is not much evidence that Sweden is in grave danger of sliding down the slippery slope to serfdom. 

What is holding back the growth of economic opportunities in PNG?

 

Why should you care about the economic opportunities available to the people of Papua New Guinea?  Perhaps some readers didn’t even know the location of Papua New Guinea (PNG) before looking at the accompanying map.

There is a lot to be said for the view that the people of PNG should be left to solve their own problems for themselves. However, one of the problems the people of PNG need to solve is how to reduce their dependence on foreign aid. Another problem they need to solve is how to cope with living in a part of the world in which China and the United States are increasingly competing for influence.

Joe Biden, the president of the United States is to visit Port Moresby, the capital of PNG, on May 22 for discussions with Pacific Island Forum members, while on his way to Sydney for a Quad meeting.

My personal interest in the economic opportunities available to people in PNG stems from having worked there as a consultant on economic policy, having visited as a tourist on several occasions, and not least, from having relatives who live there. I maintain an interest in economic and social development in PNG and have written about it on this blog in the past (here, here, here, and here).

In this article I suggest that opportunities for human flourishing in PNG are less promising than recent macroeconomic indicators might suggest. After considering some macro-economic indicators, I briefly discuss population statistics, corruption and profligacy, the law and order problem, poor opportunities for young people, and lack of economic freedom.

Macro-economic indicators

The World Bank’s latest Economic Update paints a fairly rosy picture, with economic growth of 4.5 percent for 2022. Government revenue from mining and petroleum taxes surged (reflecting the impact of Russia’s invasion of Ukraine on natural gas prices). The increased revenue led to a reduction in the fiscal deficit. The magnitude of public debt remains a problem, with interest payments exceeding public spending on both health and education.

Inflation at around 6 percent per annum is not unduly high by comparison with other countries, but rising food prices have made life increasingly difficult for many people in urban areas. Foreign exchange rationing, associated with pegging of the Kina against the USD, has been a hindrance to business.

Population statistics

I mention population statistics mainly because questions that have recently been raised about the reliability of official estimates of the population illustrate the existence of deep-seated problems in public administration. The official estimate of population for 2022 is between 9 and 11 million. However, a leaked UN report has suggested that the population could be as high as 17 million. In this instance, the official estimate seems more likely to be correct. However, the last credible census took place 20 years ago, so no-one really knows the size of the PNG population.

It is widely accepted that the population of PNG has been growing rapidly and that the majority of people are relatively young, probably under 25 years old.

Corruption and profligacy

Corruption is still a major problem in PNG, although there seems to have been some reduction over the last decade. Of the 180 countries included in the Corruption Perceptions Index, only 50 were rated as more corrupt than PNG in 2022.

Profligacy in spending of public money by some government ministers is legendary. For example, in 2018, when PNG hosted the APEC summit, Justin Tkatchenko attracted controversy by purchasing 40 custom-made Maserati luxury cars. He claimed that they would sell like hot cakes after the event. Unfortunately, that didn’t happen. More recently, the same minister again attracted criticism for taking an overly large contingent of people with him, at public expense, to the coronation of King Charles III. It was his intemperate response, labelling critics as “primitive animals”, which eventually led to his resignation from the position of Foreign Minister.

The law-and-order problem

There has been a law-and-order problem is PNG for many years. In 2015 I wrote:

“It is unsafe for tourists to walk around most parts of Port Moresby alone except within the boundaries of major hotels, modern shopping malls and other locations where security is provided. The same applies to local residents. Tourists are more fortunate than most of the locals because they can afford to be transported safely from one secure area to another.”

It is particularly unsafe for women and girls to be in public places. A recent article on DEVPOLICYBLOG by Sharon Banuk, a university student, describes the nature of the problem that she has faced in staying safe.

PNG is ranked second, behind Venezuela, as the country with the highest number of reported crimes per 100,000 people. The ranking of PNG seems to have remained the same since 2017, having risen from 16^th place in 2015.

Poor economic opportunities for young people

The law-and-order problem has been linked to the increasing problem of youth unemployment in an article by Ms. Julian Melpa for the National Research Institute. A recent study found 68 per cent of people aged between 14 to 35 in Port Moresby were unemployed. Even people with tertiary qualifications often find it difficult to obtain employment.

The difficulty of finding employment is illustrated the accompanying photo of job seekers, published with a report in The National newspaper on Feb 6, 2023. The crowd were competing for a few advertised vacancies at a hotel in Port Moresby.

Lack of economic freedom

International agencies tend to label the main deficiencies in economic freedom in countries like PNG as governance problems. That labelling may make their advice more palatable to politicians who have ideological hangups about free markets but it obscures the adverse impact of lack of economic freedom on incentives to invest, innovate and create greater opportunities for human flourishing.

Only 36 of the 176 countries included in the Heritage Foundation’s index of economic freedom have a lower ranking than PNG. A similar picture emerges from the Fraser Institute’s economic freedom ratings. Only 43 of the 165 countries included in the Fraser index have a lower economic freedom rating than PNG.

PNG has particularly low ratings for rule of law (covering property rights, judicial effectiveness, and government integrity) business freedom, and investment freedom.

PNG governments have obviously been having major problems in performing the core functions of government in protecting natural rights of individuals to be safe and have opportunities to flourish. Governments face a formidable challenge in protecting economic freedom in PNG, with most of the population living in village communities and having little contact with the market economy.

However, similar challenges face governments in some other countries. Some African countries which face similar challenges now seem to be performing better than PNG in facilitating growth of economic opportunities.

Postscript

Readers who are interested in a more comprehensive picture of the well-being of people in PNG should visit the relevant country site of The Legatum Prosperity Index. For the purpose of the Legatum index, prosperity is defined broadly as occurring "when all people have the opportunity to thrive by fulfilling their unique potential and playing their part in strengthening their communities and nations".

My article mentions a visit to PNG by Joe Biden, which was scheduled for May 22. Unfortunately, this  visit will not occur as planned because he has given higher priority to political negotiations over the U.S. government debt ceiling.  

How authoritarian are American political leaders?

 

A few days ago, I took the Political Compass test for a second time. The test, devised by politicalcompass.org , requires individuals to respond to questions which indicate where their views place them on scales labelled Authoritarian - Libertarian and Left - Right. My position had not changed since I last took the test 7 years ago (see below) but as I looked around the site, I noticed the chart (reproduced above) which suggests that the main contenders in the U.S. 2020 election held relatively authoritarian and right wing views (with Biden somewhat less authoritarian than Trump).

Does the political compass make sense?  The horizonal axis measures economic freedom, with people at the right end favoring more economic freedom. That corresponds, more or less, to the conventional left-right spectrum. The vertical axis measures personal freedom, with people whose views place them at the top end favoring greater restriction of personal freedom. It seems to me that the positioning of a person on a political compass incorporating a personal freedom axis is much more informative than attempting to position them on only one axis.  However, the labelling adopted is not ideal. To be considered a libertarian, in my view it is necessary to advocate economic freedom as well as personal freedom.

I was somewhat surprised by the placement of both Biden and Trump as favoring a relatively high level of restrictions on personal freedom. I don’t follow American politics closely enough to dispute how accurate that placement might be within that context.

However, by international standards, it would make little sense to view Biden or Trump as advocates of authoritarian policies. The policies they have advocated in their efforts to win votes have not been greatly different from those currently prevailing in the United States. By international standards, people in the U.S. have relatively high levels of personal and economic freedom.

The results of the latest Human Freedom Index, published by Cato and the Fraser Institute, can be used to illustrate the point. The Human Freedom Index is the result of painstaking efforts to compile a vast amount of data relating to economic freedom and personal freedom in 165 countries.

It is interesting to see the relative position of various countries in a comparable scatter diagram showing economic freedom and the x axis and personal freedom on the y axis. In the diagram below, which I have labelled “Ideological Map of the World”, the values on the personal freedom axis are in reverse order to make it comparable to the political compass. The horizontal and vertical lines drawn on the diagram are positioned at median levels of economic and personal freedom.

The position of the U.S. is clear from the chart. The levels of both personal freedom and economic freedom in the U.S. are comparable to those of other liberal democracies, and far greater than in China or Russia.

My libertarian friends in the U.S. may have good reasons to view their national political leaders as excessively authoritarian, but they are competing for the votes of people who, by international standards, enjoy relatively high levels of personal and economic freedom.

Could polycentric defence protect us from monsters?

The accompanying photo depicts the views of a couple of protesters who were opposed to Australian involvement in the United States led invasion of Iraq in 2003. I still don’t support defacement of the Sydney Opera House but, in retrospect, the actions of the protesters seem more defensible than those of the Australian government at that time. The government attempted to justify the invasion on the flimsiest of evidence that Iraq still possessed weapons of mass destruction, and then sought to blame its decision on poor intelligence. The net impact of the invasion was to further destabilize the Middle East, including by generating a new terrorist organisation.

The Iraq invasion is part of a pattern of pathetically unsuccessful military operations in which Australia has participated, in partnership with the US, over the last 60 years. Few readers will need to be reminded of similarly unsuccessful military adventures that occurred in Vietnam and Afghanistan.

Nevertheless, a case can be made that involvement in those conflicts has served Australian interests by encouraging US governments to view this country as a staunch ally in pursuit of well-meaning global objectives. Australia is a sparsely populated country that is not easy to defend, so it is understandable that Australians should seek to have great and powerful friends who share similar values, who might come to their aid if they are bullied by a monster in their region. That strategy might come unstuck, however, if public reaction in the US to adverse outcomes of military interventionism results in adoption of an isolationist policy by the US government. Hopefully, the US will find a better approach to foreign relations, rather than resort to isolationism.

Christopher Coyne’s book

I was intensely interested in the consequences of military interventionism during the Vietnam war, but have not spent much time thinking about such  matters since then. The question I have ask above, of whether polycentric defence could protect us from monsters, was prompted by my reading of Christopher Coyne’s book, In Search of Monsters to Destroy.

Anyone seeking a better understanding of why so much US military intervention has been counterproductive should read Coyne’s book. From my perspective, one of the most illuminating contributions that Coyne makes is to draw attention to the relevance of Friedrich Hayek’s views about the hubris of economic planners to the “nation building” efforts that have followed military intervention.  Hayek pointed out that economic planning often has unintended consequences because economic planners can never have “the knowledge of particular circumstances of time and place” that is reflected in the decisions of individuals in a market system. Similarly, nation building efforts have unintended consequences because the architects of such efforts lack the knowledge of how to design and implement policies supporting rule of law, property rights, free speech etc. in settings with different belief systems, values, and ideals.

Rather than attempt a comprehensive review of the book, I want to focus here on polycentric defence, the approach Coyne suggests as a potential path forward. (Several podcasts are available for readers interested in hearing Christopher Coyne discuss his book. I recently listed to his discussion with Jeffrey Sachs and was pleasantly surprised by the extent to which Sachs agreed with Coyne.)

Polycentric defence

Christopher Coyne claims that his position is inherently non-isolationist:

“It is not a retreat from the world, but a call for global engagement by means other than militaristic imperialism and the associated hubris which assumes the world can be controlled by Western government elites”.

He advocates a culture of peace which requires “shedding the belief that the military operations of the nation-state are the central source of security in a free society”.

As an alternative to the current “monocentric order” where there is only one centralized decision-making unit with a monopoly on the use of violent force, he proposes a polycentric system “involving numerous decision-making units – each with autonomy in action – operating within a shared set of rules”.

I see this as a utopian ideal, but one that is worth moving toward. Coyne points out that polycentric defence already exists to some extent because ordinary citizens engage in a diverse range of security activities, individually and in collaboration with their neighbours, to protect themselves against violence and plunder. He reminds readers that non-violent action has sometimes been used successfully against foreign invaders as well as internal usurpers. He also notes that polycentric defence already exists at an international level because nation-states exercise autonomy in decision-making.

The main point that Coyne is making is that a culture of military interventionism has had perverse consequences, unintentionally eroding liberal values and creating enemies abroad. He suggests that we view the search for a stable peace as an ongoing project “entailing self-governing individuals engaged in an active process of discovery, experimentation, and practice to navigate conflicts without resort to violence”.

 What about Ukraine?

In the epilogue to his book, Christopher Coyne expresses disappointment that the Russian government’s invasion of Ukraine in February 2022 has “led to renewed calls for the reassertion of American empire”. He regards that response as “speculative, first best theorizing about international relations” which could potentially devolve into violent conflict between nuclear powers.

My view is that this time it is different. The West’s supply of arms to Ukraine to help it defend itself against Putin’s aggression is far removed from the examples of military interventionism that Coyne discusses in his book. It would obviously be crazy to attempt to destroy an invading monster with nuclear weapons at his disposal, but it would be equally crazy, it seems to me, to avoid giving the victims of his aggression the support they need to defend themselves.

Conclusions

Christopher Coyne makes a strong case that much of the military interventionism of the United States and its allies has had the unintended consequence of eroding liberal values and creating enemies. Attempts to impose the institutions of liberal democracy on people with different belief systems, values, and ideals were doomed from the outset.

Coyne suggests moving away from this interventionist culture, which assumes that the world can be controlled by Western government elites, to a system of polycentric defence. It seems to me that the appropriate answer to the question of whether a polycentric defence system can protect us from monsters depends on how we view polycentricity. It is difficult to see how the governments of the liberal democracies could abandon centralized decision-making on national defence without weakening the ability of their citizens to defend themselves against the autocratic monsters outside of their borders. However, a system in which nation-states exercise autonomy in decision-making on national defence is not far removed from what we have at present. Rules of just conduct that have evolved via diplomatic efforts within this system have done much to promote peaceful coexistence among nations. A system in which nation-states exercise autonomy can do much to protect us from monsters when nation-states are willing to act in concert to punish overt violations of international law.   

Does the "Politics of Being" support progress?

 

“Politics of Being” is title of a recently published book by Thomas Legrand. The subtitle is “Wisdom and science for a new development paradigm”. The question I ask myself is whether Legrand’s views support progress as I defined the concept in Freedom, Progress, and Human Flourishing. Would widespread adoption of Legrand’s views enhance the growth of opportunities for individuals to obtain the basic goods of flourishing humans?

Before I purchased the book, I was aware that the author had shown wisdom by including this quote from Elinor Ostrom’s Nobel Lecture:

“A core goal of public policy should be to facilitate the development of institutions that bring out the best in humans.”

That passage is actually quoted several times in the book and is sometimes accompanied by the preceding sentence in which Ostrom distances her approach from that of policy analysts who design institutions “to force (or nudge) entirely self-interested individuals to achieve better outcomes”. The passage I have quoted at the top of this article illustrates Ostrom’s optimistic view of the capacity of individuals to work together to devise solutions to collective action problems without help from governments.

The essence of Legrand’s line of argument is that the world is stuck in an obsolete development path and is in need of a new “wisdom-based approach to politics”.  I will discuss briefly what he perceives to be wrong with the current development path, before discussing some elements of the alternative path he advocates.

Perception of the problem

Legrand believes that the current development path is causing many problems. The world is on track for a climate change catastrophe. Economic development and increased life expectancy are not making people much happier in high-income countries. Many countries seem to be facing mental health crises. There has been a decline in interpersonal trust in many countries. Our current model of development is rooted in a set of values that are causing a civilization crisis. He writes:

“Our economic system not only destroys social ties and the environment but feeds on these destructions that create new market opportunities. It seeks to adapt humans to its own requirements rather than adapting itself to human needs. Based on fundamental misconceptions, this system can only perpetuate itself through ever more propaganda that feeds our disconnection from ourselves, our true needs, and ultimately, our apathy.”

I agree that all is not well with the world and share some of Legrand’s concerns. However, I am more optimistic than he is about climate change, and strongly disagree with his views on economics. Readers who are interested in my views should read Freedom, Progress, and Human Flourishing.

Being and Interbeing

Legrand argues that the new development model required is essentially spiritual. He views spiritual development as:

“the process by which we come closer to our true nature. From that connection, we naturally tend to manifest the highest qualities: wisdom, love, joy, peace etc., or simply the best or most authentic version of ourselves currently available!”

Legrand’s discussion of spiritual values includes chapters on life, happiness, love, peace, mindfulness, and light.

According to Legrand the new paradigm involves a transition from “having to being, which many believe means interbeing”. So, what is interbeing?

 “Interbeing is a term coined by Zen Master Thich Nhat Hanh, which goes beyond interconnectedness to touch on the very nature of our being. It expresses the nature of reality based on the Buddhist teachings of interdependent co-arising (“that is because this is”), non-self, and impermanence”.

I see no problem accepting that everything is interdependent. Impermanence does seem pervasive (except in respect of fundamental values, virtues, and the highest qualities). But “non-self” poses problems. As I see it, self-awareness is a fundamental characteristic of the kind of thing (entity or system) that an individual human is.  Self-respect arises from self-awareness, and motivates respect for other people, and other living things. Respect is the foundation which makes love possible. By the way, do you know who it was who said “one should not hurt others if one loves oneself”? The answer is here.

At various points in the book Legrand recognizes that people have “higher selves” and “true selves”, so he seems to acknowledge that we should aim to purify our egos – to remove the biases, distortions, and attachments that tarnish our perceptions of our individual selves - rather than eliminate self-awareness. He provides a good summary of his view of “being” and of personal development in this passage:

“As a person, there is little chance that I get closer to my authentic being by defining a vision of who I am and trying to actualize it. On the contrary, I can discover who I am by freeing myself from predefined and limiting identities, purifying my intentions, character, and behaviors, and expressing the deepest yearning of my soul. This is a conscious, evolutionary process of emergence, informed but not bounded by the understanding I have of my essence, which is necessarily limited. The same is true for nations.”

The world would be a better place if more people adopted that as their personal development model. However, I was tempted to leave off the last sentence of the quoted passage. The idea that nations have “souls” seems to me to be collectivist nonsense.

Governance

The part of the book providing an agenda for action envisages a larger role for government than I had anticipated. For example, Legrand suggests that government efforts to promote early childhood education should start during pregnancy. He also suggests that governments should actively promote a healthy diet. Even followers of Elinor Ostrom can sometimes find it difficult to remember to avoid adopting an overly pessimistic view of what people can achieve without government guidance.

I agree with Legrand that it is naïve for people to believe that “all it takes to improve our societies is to secure a majority of voters for their ideas, especially when they engender polarization”. Political leaders have no hope of implementing lasting reforms unless they can foster broad community support for them. That usually means avoiding politicization of the issues. (As an aside, one of the inconvenient truths about politics is that Al Gore’s involvement in support of U.S. action to mitigate climate change provided a focus for Republican opposition to such policies.)

The book contains interesting proposals to enact the “politics of being” in political institutions. Legrand suggests that each nation should establish a “wisdom council” to preside over discussions about the nation’s evolution with the government and parliament. The councils would consist of equal representations of four groups: randomly selected citizens, representatives of the “outer” economic, social, and environmental life of the nation, representatives of the “inner” spiritual, cultural, and psychological life of the nation, and “representatives of non-human members of the earth community”.

Legrand also suggests that the Baha’i model of governance should be adopted for lower houses of parliament. In brief, adult community members elect representatives at the local level and are urged not to discuss with others who to vote for. The local representative vote for regional representatives, who in turn vote for national representatives.

It is difficult to envisage circumstances in which politicians would enact such radical changes to existing systems of representative government. However, if the outcomes of the existing systems become increasingly unpalatable, radical alternatives will no doubt be contemplated by an increasing number of citizens. In that context, Legrand’s proposals will have stiff competition from other proposals, including the decentralist approach discussed previously on this blog.

The main problem I see with Legrand’s governance proposals is their potential to infringe individual liberty. Most of the members of the proposed governing council would be likely to advance the interests that they represent by advocating further restriction of individual liberty. The Baha’i model is presumably more responsive to community members than religious and political governance systems in which the hierarchy is self-perpetuating, but people who are indirectly elected to peak positions still have less incentive to have regard for the wishes of members at the grassroots level than if they were directly elected, or selected randomly.

Facilitating progress?

Legrand describes his book as “a drop in the ocean”. I think it may have potential to be more than that. The part of the book dealing with spiritual development has potential to be influential if it finds its way into the hands of sufficient numbers of people who are currently rudderless and yearning for inspiration.

I think contemplation of Legrand’s views on spiritual development has potential to enhance progress, viewed as the growth of opportunities for individuals to obtain the basic goods of flourishing humans. After reading the book, some people might be more inclined to wise and well-informed self-direction, healthy living, improved inter-personal relations, living in harmony with nature, and adoption of behaviors that enhance psychological well-being.

However, Legrand’s attack on “the current development path” invites further restrictions on economic freedom which would impact negatively on growth of productivity and hence on growth of opportunities for human flourishing. As outlined in the following paragraph in Freedom, Progress, and Human Flourishing, I see declining rates of productivity growth as a major threat to growth of opportunities for human flourishing:

“This chapter has focused on the threats posed by climate change, declining productivity growth, and problems with democracy. I do not dismiss the longer-term threat posed by climate change, but in my view, there are stronger reasons for concern about the more immediate threat posed by declining productivity growth. Individuals, firms, and governments are taking action to mitigate climate change, and their efforts seems likely to accelerate before adaptation becomes excessively costly. There are fewer grounds for optimism that governments will deal with emerging economic problems (of their own making) in time to avert the widespread misery that is likely to follow from looming economic crises.”

As explained in my book, my optimism about action to mitigate climate change rests on signs that the polycentric approach, proposed by Elinor Ostrom in 2009, is now being adopted successfully.

I am not greatly troubled by the thought that some readers of Thomas Legrand’s book may be persuaded to adopt economic and political views that are inimical to productivity growth. There is an ocean full of views on public policy that are similar to those which he advocates, so I don’t think his additional drop will have a significant direct impact on policies adopted. Hopefully, his book’s endorsement of Elinor Ostrom’s approach will encourage some readers to explore her views in greater detail.

My bottom line: The net impact of “The Politics of Being” will be to support the growth of opportunities for human flourishing.