Why Bother Considering Whether Government is Necessary?

 

Before my most recent trip to India I had to choose which of two recently purchased books I should take with me: Aeon Skoble’s Deleting the State, or Salvatore Babones’ Dharma Democracy. I chose Dharma Democracy (which I have since written about here) because I didn’t like the idea of trying to explain to an airport official that Deleting the State is a philosophical treatise rather than a manual for the violent overthrow of governments.

At that time, I would not have been able to point to pages 107-8 where Skoble argues explicitly against violent action to remove a government in any “nominally liberal democracy”. In the Afterword of the recently published second edition of his book, the author takes the opportunity to emphasize his opposition to violence by giving reasons for eschewing it and reiterating that deleting the state means “deleting the idea of the necessity of the state”.

The subtitle of the book is Requiem for an Illusion. The illusion Skoble refers to is the Hobbesian Fear that in the absence of a government “to keep them all in awe” people would find themselves at each others’ throats - in a war “of every man against every other man”.  I will discuss later the author’s reasons for considering the Hobbesian Fear an illusion.

Skoble regards the neo-Aristotelian conception of human flourishing provided by Douglas Rasmussen and Douglas Den Uyl as providing the best defense of a theory of individual liberty. He notes, however, that in Norms of Liberty the Dougs leave open the question of whether a political/legal order defending individual rights necessitates the existence of a state. Skoble points out that the difference between a state and a political/legal order is not trivial.

What is the point of philosophical anarchism? 

In the Afterword Skoble writes:

“If deleting the state means deleting the generally held notion that we need to have a state, and the only way to do it is to make philosophical arguments, we’re in a lot of trouble. Philosophers have a poor track record of being persuasive to large majorities. So what, one might ask, is the point of philosophical anarchism?”

The author goes on to answer that question cogently. However, before considering his response, I want to present a contrary argument.

Is the existence of government an issue that should occupy the minds of those who believe that liberty supports human flourishing? As far as I know, there is no country in the world in which citizens are currently faced with a choice between having a minimal state or no state at all. In liberal democracies – the countries that currently enjoy the greatest personal and economic freedom – liberty is being threatened by political movements with authoritarian tendencies. Authoritarianism is presented in the wrapping of different varieties of collectivist idealism which offer citizens the opportunity to attribute personal and social problems to immigration, foreign competition, the greed of the wealthy, systemic discrimination, environmental degradation or anything else that appears to justify a larger role for government. Shouldn’t libertarians be focusing their attention on supporting the political/legal order – democracy, or representative government - that has been most successful in promoting personal and economic freedom?

Readers who doubt that the countries with greatest economic and personal freedom are liberal democracies should take a look at the graphs shown in an essay I wrote last year. There may be serious errors in common measures of personal freedom for some countries - as noted in my recent essay on Indian politics – but the weight of evidence suggests that representative government has hitherto been more successful in defending individual rights than any other contemporary form of politico/legal order that currently exists in the real world.

So, how do I justify spending time thinking about utopian concepts such as philosophical anarchism instead of spending all my efforts opposing the advances of authoritarianism?

The first defence that comes to mind is that I find it interesting to think about the question of whether government is necessary. I think that is sufficient justification for a human to spend some time thinking about any topic.

However, I have reasons to be particularly interested in the potential for utopian thinking to play a useful role in considering public policy issues. I have claimed in the past:

“We are more likely to improve opportunities for human flourishing if we approach public policy issues with a view to both (a) upholding ideals that ought to apply and (b) the real-world constraints that should not be overlooked.”

I made that comment in a short essay considering Chris Sciabarra’s discussion of the anti-utopianism in the methodology of Marx and Hayek in Marx, Hayek and Utopia.

Skoble argues that anarchist arguments can help people to think about the limits of state power. He suggests that they can be used to clarify that getting a different group of office-holders into power will not resolve problems that are attributable to institutional structures. He cites mass incarceration and business regulation that stifles innovation as examples. He sums up:

“To make the case against the state is to undermine the idea that coercion is necessary for social order or that it is beneficial to human society. It is to point the way toward the continual need to scale back the scope of state power. It is to affirm the priorities of liberty and its necessary connection to human flourishing, and to keep us mindful of the ways in which the state, and our often-unthinking obedience to it, hinders that flourishing.”

Allaying the Hobbesian Fear

Those who argue that a government is necessary to maintain social cooperation often refer to the prisoner’s dilemma in game theory. Players can obtain a greater payoff if they both cooperate than if they both defect. However, each player has an incentive to defect in the hope of obtaining a greater payoff at the expense of the other player. On that basis, it is claimed that in the absence of a coercive intervention to enforce cooperation both players will end up defecting.

However, Skoble observes that defection is only the winning strategy in a one-shot game - social cooperation emerges spontaneously when the prisoner’s dilemma game is repeated over long periods. In support of this argument he refers to Robert Axelrod’s book The Evolution of Cooperation, which found that a tit-for-tat (reciprocation) strategy gave players higher payoffs than constant defection. The author notes that strategies that allow for the possibility that a defecting player may have made a mistake offer higher payoffs than tit-for-tat.

It may be worth adding that the utility maximizing assumptions of game theory tend to be less conducive to social cooperation than are real people engaged in trust games in a laboratory setting. As Vernon Smith and Bart Wilson noted in Humanomics, anonymously paired people are “predominantly caring other-regarding, independent actors in the personal social exchange context of trust games in the laboratory”.

Skoble makes the point that law ought to be construed as a natural consequence of attempts of people to live and work together rather than as something requiring a coercive monopoly power. Among other things, he notes that enforcement of property rights requires “a society that in fact recognizes the practicality of recognizing property rights” rather than a “monopolistic coercive authority”. In that context he discusses the history of spontaneous evolution of civil law conflict resolution drawing upon works by David Friedman and Murray Rothbard.

The author devotes a chapter to providing an extended example of the potential for disaster relief to be provided via voluntary cooperation rather than a centralized political authority.

In his final chapter, Skoble discusses the question of whether disagreements between libertarian anarchists and minimal-state libertarians are radically incommensurable, or capable of being resolved by dialogue. He argues that there are “no fundamental premises or values that separate anarchists from libertarian minimum-statists” that would prevent the differences between them being resolved by dialogue. There is even potential for dialogue between libertarians and welfarist liberals. Political philosophy can explore relevant questions such as the circumstances, if any, under which the will of the majority should override individual liberty.

Additional considerations

One argument that is sometimes advanced in opposition to philosophical anarchism is that a written constitution helps to protect liberty. Perhaps that is true of the United States, but it is not difficult to find examples of countries where constitutional provisions have failed to protect liberty. The former Soviet Union comes to mind. There are also notable examples of countries which have maintained a relatively high degree of liberty without written constitutional protections. Britain comes to mind.  

Roderick Long has suggested that those who believe government is necessary are being misled by a metaphysically illusive picture of what constitutional restraints are and how they work:

“The metaphysical illusion I referred to is the habit of thinking of constitutional restraints (checks and balances, separation of powers, etc.) as though these structures existed in their own right, as external limitations on society as a whole. But in fact those structures exist only insofar as they are continually maintained in existence by human agents acting in certain systematic ways. A constitution is not some impersonal, miraculously self-enforcing robot. It’s an ongoing pattern of behavior, and it persists only so long as human agents continue to conform to that pattern in their actions.” (Long, 2008)

I have previously discussed similar views of the nature of constitutions by Sheldon Richman (here) and Douglass North (here).

A more difficult argument to contend with is that the free rider problem would prevent adequate provision of national defense. I think John Hasnas has advanced an appropriate response to that argument. He suggests that an inability to raise sufficient capital to engage in foreign military adventures or pre-emptive warfare without resort to coercion proves nothing about the potential for defense against outside aggression to be funded voluntarily.

Hasnas acknowledges that he doesn’t know whether sufficient funds could be raised by voluntary means to fund protection against outside aggression. He suggests:

“No one believes that we can transition from a world of states to anarchy instantaneously. No reasonable anarchist advocates the total dissolution of government tomorrow. Once we turn our attention to the question of how to move incrementally from government to anarchy, it becomes apparent that national defense would be one of the last governmental functions to be de-politicized.”

That seems to me to be a sensible position to adopt. It does not preclude the possibility that a society that moves incrementally to reduce coercion of some by others will one day end up not requiring coercion to ensure appropriate provision of any goods currently provided by governments.

Conclusion

This essay has been prompted by my reading of the Second edition of Aeon Skoble’s book, Deleting the State.

Early in the essay, I posed the question of whether the existence of government is an issue that should currently occupy the minds of libertarians in the light of current threats to liberty by political movements with authoritarian tendencies. Skoble provides an appropriate response in his defense of philosophical consideration of the possibility of anarchy. In particular, he suggests that such philosophical endeavours help libertarians to make the point that getting a different group of office holders into power will not resolve problems that are attributable to the existence and scope of state power.

A central concern of the book is to allay the Hobbesian Fear that people will be unable to obtain the benefits of social cooperation in the absence of a government to maintain order. In my view, Skoble provides strong arguments to allay that fear.

I endorse Skoble’s view that law ought to be construed as a natural consequence of attempts of people to live and work together, rather than as something requiring a coercive monopoly power. Constitutional restraints are not self-enforcing. It cannot be assumed that they would continue to offer protection of the rights of citizens if enforcement of them did not have broad community support.

The question of how national defense could be provided without coercive taxation is probably the most challenging obstacle to attempts by philosophical anarchists to persuade minarchists that anarchy is a viable option. In my view, it makes sense to acknowledge the difficulties that would be encountered at present in ensuring adequate voluntary provision of defense resources. That doesn’t mean, however, that it makes sense to assume that coercive taxation will always be required to fund defense. Libertarians who have the objective of reducing coercion “as much as possible in society”, should leave open the possibility that at some stage elimination of the state could become a viable option.  

References

Axelrod, Robert, The Evolution of Cooperation (Basic Books, 1984).

Babones, Salvatore, Dharma Democracy: How India Built the Third World’s First Democracy (Connor Court Publishing, 2025).

Hasnas, John, Common Law Liberalism: A New Theory of the Libertarian Society (Oxford University Press, 2024).

Hayek, F. A. The Constitution of Liberty (University of Chicago Press, 1960).

Rasmussen, Douglas B. and Douglas J. Den Uyl Norms of Liberty: A Perfectionist Basis for Non-Perfectionist Politics (Pennsylvania State University Press, 2005). 

Long, R. T. “Market anarchism as constitutionalism”, in R. T. Long & T. R. Machan (Eds.), Anarchism/Minarchism: Is a government part of a free country? (Ashgate Publishing, 2008). pp. 133–154.

Sciabarra, Chris Matthew, Marx, Hayek and Utopia (State University of New York Press, 1995).

Skoble, Aeon J. Deleting the State: Requiem for an Illusion, Second edition (Independent Institute, 2026).

Smith, Vernon L., and Bart J. Wilson, Humanomics: Moral Sentiments and the Wealth of Nations for the Twenty-First Century (Cambridge University Press, 2019).

What was wrong with the Washington Consensus?

 

Just as I was reading the final chapters of William Easterly’s book, Violent Saviours: The West, the Rest, and Capitalism Without Consent, the United States government abducted the president of Venezuela to stand trial on drug charges in New York. I was pleased to see Nicolás Maduro facing justice, even if for the wrong reasons, but at the time of writing it remains to be seen whether the U.S. actions will advance the economic and personal freedom of Venezuelans.

 In the light of recent developments, Easterly’s conclusion seem to me to be excessively optimistic. He states:

“Adam Smith’s prophesied movement of “nations into some sort of respect for the rights of one another” had been partially fulfilled. The relation of the West to the Rest, previously based on coercion, was now based mainly on consent.”

Under the presidency of Donald Trump, the U.S. seems to me to be behaving like a colonial power. President Trump makes no secret of the fact that he is more interested in control of additional territory, oil, and other resources than in promoting respect for human rights, free trade, and the liberal international order.

Apologists for President Trump can claim, with some justification, that big powers have always swung their weight around in their own interests despite their rhetoric supporting the liberal international order. Nevertheless, public support for international norms of behaviour has hitherto signaled a willingness to be held to account publicly for breach of those norms.

 Easterly qualifies his statement that the relation of the West and the Rest is now based mainly on consent:

“The trend toward freedom is neither inexorable nor irreversible. As of this writing, new threats to freedom have emerged with proposed increases in US tariffs and possible restrictions on foreign students. It’s a little premature to declare the attainment of a liberal paradise.”

With the benefit of observation of recent events, however, it is difficult to escape the conclusion that the world is currently moving rapidly away from the ideal of relations between nations being based on consent rather than coercion. It is possible, nevertheless, that oppressed people in some countries will manage to achieve more economic and personal freedom over the next few years. The best we can hope for is that before too long Washington will once again embrace the ideal that relations between nations should be based on consent rather than coercion.

Before I discuss Easterly’s view of the Washington Consensus, I will briefly outline what Violent Saviours is about.

The West’s conflicted view of the Rest

Violent Saviours offers a historical account of the conflict between the duelling visions that have influenced the conduct of Western nations toward the rest of the world since the 17^th and 18^th centuries. On the one hand, there are the liberal ideas of consent, self-determination, and equality that make possible positive-sum gains from commerce between groups and individuals. On the other hand, there are the opposing illiberal ideas of coercion, paternalism and racism that yielded a negative sum world of conquest.

Adam Smith was a leading advocate of liberal ideas and a critic of many aspects of colonialism. However, some well-intentioned Enlightenment philosophers (e.g. Condorcet) offered support for the “Development Right of Conquest”. Condorcet sought to justify conquest as offering the hope of eventually “civilizing” the locals.

Over the period from 1776 to 1865, the liberals were mainly on the losing side. They were unable to prevent the West’s adoption of illiberal policies such as colonial conquest and population removal (in countries such as the U.S, and Australia). However, liberals had some victories during that period; most notably, they were able to bring about abolition of the slave trade and of slavery in the United States.

Easterly suggests that over the period from 1865 to 1945 most economists abandoned liberal morality: “Commerce expands but without moral constraints on plunder”. The regression of freedom culminated in World War II, during which liberalism had to fight for its survival.

The period since 1945 has seen the partial victory of liberal ideas with the end of colonialism and a surge in commerce which has partially restored agency to people in the former colonies. Easterly notes that some economists – notably Milton Friedman, P. T. Bauer, and Amartya Sen – revived the idea of individual freedom as “an end in itself”.

It is possible to quibble with some aspects of that account, but I think the important point to focus on is the current state of the conflict between the duelling visions. Easterly writes:

“Yet the legacy of the past is still here. While obviously not equating modern development efforts with slavery, genocide, and colonialism, the question remains of what violations of consent today in the name of progress should be out of bounds.”

That provides the context in which I would like to consider the Washington Consensus.

 The Washington Consensus

The Washington Consensus was the term John Williamson, an economist, invented in 1989 to describe the set of policy reforms that the US Treasury, the World Bank and the IMF believed would be good for Latin American countries. The ten propositions of the Washington Consensus combined fiscal discipline with selective deregulation. They were broadly pro-market but did not entail a vastly diminished role for government. As an advocate of a greater measure of economic freedom than required by the ten points in the Washington Consensus, I recall being bemused to see opponents equate it with “neoliberalism” and “market fundamentalism”. John Williamson had a different reaction. As he discussed in the paper from which I obtained the epigraph, he was concerned that the term was often being used to refer to a more radical pro-market view than he had intended.

The policy ideas in the Washington Consensus were certainly applicable beyond Latin American countries and were not confined to economists in Washington DC. Those ideas were widely accepted by economists with expertise in economic policy in many different countries. I think they are still widely accepted by economists today.

As I was reading Easterly’s discussion of the Washington Consensus, the thought crossed my mind that the era in which it held sway was actually the high point in economic development policy as advocated by the World Bank. The Washington consensus seemed to show more recognition of the importance of economic freedom than subsequent policy approaches emerging from Washington.

One of the problems that Easterly mentions is that many observers thought that pro-market reforms were only desirable if they produced immediate economic gains. The reforms led to anti-globalization protests because they didn’t have an immediate positive impact on economic growth and were often associated with worsening of poverty. As time went on, however, “there was more evidence of growth turnarounds and poverty reduction correlated with movements away from extreme state control”.

As I was reading this, I tried to recollect what I had written in the 1990s about the adjustment process following an expansion of economic freedom. I wrote about some aspects of that question in an article entitled “The New Zealand Model of Economic Reform: A Review” (published in: Agenda: A Journal of Policy Analysis and Reform, Vol. 4, No. 3 (1997), ANU Press). My work suggested that the lack of clear evidence of economic benefits in some countries that had undertaken economic reforms in the 1980s could be attributed partly to the time required for new policy directions to become embedded and for adjustment to occur: 

“Profound changes in behaviour, including changes in the willingness of individuals to learn new skills and business practices, are required as people respond to the incentives that policy reforms provide.  It takes time even for the most innovative firms and individuals to accept that new market incentives are likely to be sustained and to develop and implement new strategies.  Widespread adoption requires sufficient time for these new strategies to become demonstrably successful.”

I am pleased that I wrote that even though I missed an important point that Easterly makes. He suggests that the emphasis “on material results alone – on both sides of the debate – neglected Sen’s and others’ arguments for freedom as an end in itself”.

I don’t see freedom as an “end in itself” – freedom is necessary because human flourishing is an individualized and self-directed process. What I think Easterly means is that institutional freedom would be no less desirable if individuals chose to use it ways that made no contribution to economic growth e.g. by increasing the amount of time they spent on leisure activities.

Easterly also suggests that the manner in which foreign governments were encouraged to adopt Washington Consensus polices was problematic:

“Low and middle-income countries could get badly needed loans from the World Bank and IMF only if they agreed to reforms decreed by Bank and Fund staff. The fatal combination of foreign advisors with some coercion would keep discrediting promarket recommendations made by the World Bank and International Monetary Fund in the 1990s, especially for Africa, Latin America, and Russia.”

A few pages on, however, the author notes that “the association of liberal reforms with a Washington-imposed Consensus did not turn out to be fatal”. He follows that observation with a long list of “homegrown reformers” who have pursued pro-market reforms. (I have reproduced the list here.)

Unfortunately, Easterly’s list of reformers does not include Javier Milei, president of Argentina. It was probably compiled too soon for that to be possible.

Now that I have mentioned Javier Milei it is worth noting that the U.S. government offered a $20 billion bailout for Argentina prior to the country’s recent legislative elections. The offer was apparently made with strings attached — namely, that the funds would be available only if Milei’s party won the election.

It seems to me that if the U.S. president were to promote a general policy of assisting those low-income countries whose political leaders enthusiastically expand economic and personal freedom, he might be worthy of the Nobel Peace Prize.   

Conclusion

William Easterly’s book, Violent Saviours, offers an insightful account of the conflict between liberal and coercive views of economic development since the 17^th and 18^th centuries. He suggests that the legacy of the past is still with us because development economists and policy makers are still confronted by the question of what violations of consent should be out of bounds.

That provided the context in which I considered Easterly’s views of what was wrong with the Washinton Consensus – the moderately pro-market economic policies advocated by the U.S. Treasury, the World Bank, and the IMF during the 1990s. Easterly is clearly sympathetic to espousal of pro-market policies. However, he makes a strong case that such policies should be advocated to promote economic freedom rather than to promote “material results alone”.

The view that Easterly presents is consistent with the idea that liberty is desirable because it provides opportunities for individuals to flourish in the manner they choose.

Part V: What information constraints confront political entrepreneurs?

 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.

---------

This essay considers the information constraints confronting central planners and those political entrepreneurs who have less ambitious aims to promote widely accepted economic and social objectives. It is appropriate to begin by considering the motives of political entrepreneurs.

Motives of political entrepreneurs

Many assumptions that economists make about motives of political entrepreneurs are clearly wrong. Political entrepreneurs cannot maximize social welfare functions, even when they seek to promote the well-being of citizens.  They rarely set out to maximize the number of votes they obtain, even though they seek to obtain sufficient votes to win elections. They don’t necessarily set out to maximize the perks of office, or to use their positions to maximize personal wealth, even though such behaviour is common when the institutional context is conducive to it. The claims that many politicians make to be motivated by concerns for the well-being of the population they represent are not always deceitful.

Bryan Caplan suggests that to get ahead in politics, “leaders need a blend of naïve populism and realistic cynicism.” One reason why many politicians have legal training is because “the electoral process selects people who are professionally trained to plead cases persuasively and sincerely regardless of their merits” (Caplan 2007, p.169).

The easiest way to give the appearance of sincerity is to believe in the merits of the case you are pleading. Leon Festinger’s cognitive dissonance theory predicts that when people publicly advocate a position - especially if doing so requires effort or commitment - they tend to adjust their private attitudes to align with their advocacy to reduce internal psychological tension (Festinger, 1957).

Institutional context has important implications for the character of people who are attracted to a career in politics. Unscrupulous opportunists are likely to be attracted to political and bureaucratic positions in which they can obtain personal benefit by using discretionary powers corruptly. F. A. Hayek observed that “the worst get on top” in totalitarian systems because “while there is little that is likely to induce men who are good by our standards to aspire to leading positions in the totalitarian machine, and much to deter them, there will be special opportunities for the ruthless and unscrupulous” (Hayek 1994, pp.166-67).

However, an institutional context that is attractive to unscrupulous opportunists may also attract potential political entrepreneurs who see opportunities for institutional reform. More generally, reform-minded individuals may be motivated to enter politics when they perceive that current practices are resulting in adverse economic and social consequences.

Unfortunately, reform-minded political entrepreneurs are not a panacea. As discussed below, those who advocate further restrictions on individual liberty in their efforts to promote economic and social objectives may make matters worse. And, as discussed in subsequent essays, even when reform-minded political entrepreneurs who advocate greater economic and personal freedom succeed in attaining high office, they face substantial obstacles to achieving their institutional change objectives.

The perils of central planning

In a famous article, F. A. Hayek explained that the data a national planning agency would require to engage in rational economic planning exists only in a dispersed form in the separate minds of millions of people. Hayek observed that individuals possess unique knowledge of “the particular circumstances of time and place”, which they can use for their own benefit, and that of others, only if the decisions depending on it are left to them or made with their active cooperation (Hayek 1945, pp.521-2). Hayek suggested that we should look at the price system as a “mechanism for communicating information” because prices act to coordinate the separate actions of different people (Hayek 1945, p.526).

In The Road to Serfdom, Hayek noted:

“The question raised by economic planning is … not merely whether we shall be able to satisfy what we regard as our more or less important needs in the way we prefer. It is whether we shall be able to decide what is more, and what is less, important for us, or whether this is to be decided by the planner” (Hayek 1944, p.100).

In later writings, Hayek noted that as the adverse consequences of central planning became apparent, it came to have fewer defenders in the liberal democracies. However, arguments were still being advanced in favor of the state’s taking sole charge of providing various services that can be provided privately. He suggested that this also entailed the risk that people would be prevented from using their unique knowledge for their own benefit and would be denied the benefits of competitive experimentation:

“If, instead of administering limited resources under its control for a specific service, government uses its coercive powers to insure that men are given what some expert thinks they need; if people thus can no longer exercise any choice in some of the most important matters of their lives, such as health, employment, housing, and provision for old age, but must accept the decisions made for them by appointed authority on the basis of its evaluation of their need; if certain services become the exclusive domain of the state, and whole professions – be it medicine, education, or insurance - come to exist only as unitary bureaucratic hierarchies, it will no longer be competitive experimentation but solely the decisions of authority that will determine what men get” (Hayek 1960, p.261).  

In a book first published in 1985 Don Lavoie further explained the fundamental knowledge problem that political entrepreneurs are confronted with when they seek to plan economic activities. The most obvious implication is that it is impossible for markets to be replaced by comprehensive economic planning. However, more modest attempts to steer the market towards outcomes which planners consider to be desirable also obstruct the source of knowledge which is essential to rational decision-making (Lavoie 2016, p.56-7).

Lavoie points out that the only way we can know whether we are squandering resources by over- or under-investing in microprocessors or steel, for example, is via “the messages contained in the relative profitability of rival firms in these industries”. He adds:

“But this is precisely the information we garble when we channel money toward one or another of the contenders. Deprived of its elimination process, the market would no longer be able to serve its function as a method for discovering better and eliminating worse production techniques. Without the necessity of responding to consumers’ wants or needs, businesses would never withdraw from unprofitable avenues of production” (p.181).

Lavoie notes that advocates of industry policy disagree on the directions in which the market should be steered. For example, Felix Rohatyn wanted to funnel aid to sunset industries while Robert Reich wanted to funnel it to sunrise industries. He sums up:

“It is the main conclusion of the argument that I have called the knowledge problem … that there are no rational grounds on which Reich could ever convince Rohatyn or vice versa on such matters as are involved in economic change. As a result, such battles are sure to be fought with weapons other than carefully reasoned argument” (p. 200-201).

Lavoie notes that Rohatyn and Reich both argued that it is the responsibility of a strong leader to coordinate the actions of the rest of us (p.190). The coordination they had in mind seems to be more akin to the coordination that military leaders impose by giving orders to subordinates than the coordination among individuals that occurs voluntarily and spontaneously in a free market.

Lavoie argues that economic planning is inherently militaristic: “The practice of planning is nothing but the militarization of the economy”. In making that point he notes that the theory of economic planning was from its inception modeled after feudalistic and militaristic organizations (p. 230).

Some would argue that a degree of militarization is a price worth paying, or even desirable, to achieve a range of national objectives. Indeed, the conventional theory of democracy seems to entail top-down direction. Prior to elections, political leaders tell voters about their plans for education, health, social security etc. and are expected to implement those plans after they are elected. That view seems to imply the existence of some kind of necessary tension between democracy and markets. I will discuss that view later in this essay.

Knowledge required for governance

Gerry Gaus’s final book discusses, among other things, the question of whether the Open Society has evolved beyond “our” governance. Gaus seems to adopt F. A. Hayek’s view of the Open Society (or Great Society) as a society in which coercion of some by others has been reduced as far as possible and individuals are free to use their own knowledge for their own purposes.

Gaus alludes to the knowledge problem when he observes that “we seek to devise policies to improve” the functioning of the Open Society. However, “we do not have the knowledge and competency to do so, hence we are constantly disappointed by the last round of interventions and we blame the last government for its failures and broken promises” (Gaus 2021, p.13).

Gaus points out that when people do not endorse a policy imposed by planners, some tend to evade it. In commenting on the “passive population model”, he writes:

“Unfortunately, this view has been resurrected by those elites who continue to believe that the public is too ignorant to make its own decisions, and so should submit to “epistocracy,” or rule by those who know (aka, them). Not only, however, is such expertise essentially nonexistent in complex systems, but most actual agents in the Open Society are anything but passive materials to be guided by the elite: they are active, reflexive agents who make their own choices. When citizens do not endorse a policy, many will employ their resources to evade it” (Gaus 2021, p.244).

Gaus considers three levels of governance – macro, meso, and micro- and three dimensions of governance – goal directed, strategic, and rules-focused. A goal-directed governor identifies preferred states and seeks to move society toward them. A strategic governor seeks to solve strategic dilemmas to assist citizens to secure outcomes they all want. A rules-focused governor seeks to structure some of the rules of self-organization.

Gaus’s analysis leads to the following conclusions:

• There is little prospect for a governor to successfully pursue macro-level goals in a complex society. For example, efforts to promote development in particular societies are often unsuccessful because institutions cannot readily be transferred from on society to another.
• Attempts to structure the “rules of the game” at a macro level are more promising. In cooperation with the self-organized normative framework of society a governor may effectively shape the rules of self-organization e.g. via civil rights legislation.
• Goal pursuit at the meso level is a dubious enterprise. Pursuit of environmental, economic and welfare-targeted variables is a hit-and-miss affair because our social world is a complex system. It is not linear and determinate, as is often assumed. Successful goal pursuit in a complex world is usually a matter of “muddling through” (sometimes described as learning-based governance).
• Polycentric governance studies show that a focus on problem-solving tends to facilitate effective governance when publics share pressing strategic dilemmas.
• There may be grounds for more optimism about the prospect for micro governance than governance at other levels.

In writing about micro governance, Gaus makes a favourable reference to the work of Abhijit Banerjee and Esther Duflo. Gaus justifies his optimism about micro governance as follows:

 “When changes come up from the more micro levels, not only are they apt to garner the moral endorsement of actual citizens, but the Open Society will possess a diversity of normative networks. Because what works today may be dysfunctional tomorrow, a diversity of approaches is always critical. This itself upsets the moralist, who believes she speaks for the truth about justice, and sees most deviations from her plan as shades of immorality. But many of the diverse publics will not take up her solutions—many citizens will see different problems and possibilities, and their normative beliefs will lead them to different solutions” (Gaus 2021, p.240).

Can democracy be consistent with freedom?

Gaus and Lavoie offer similar views on the compatibility between democracy and freedom. Gaus suggests that “so far from being opposed or in tension, democracy and freedom need each other to thrive.” He suggests that a critical task of the democratic order is to ensure the equality and fairness on which large-scale human cooperation depends. However, unless it is “animated by a spirit of public justification, democracy itself becomes a mechanism by which some seek to impose their valued goals on others in the name of the people” (Gaus 2021, p. 245).

In his discussion of the view that there is some kind of necessary tension between democracy and free markets. Lavoie notes that we tend to think that “taking democracy too far undermines markets and that taking markets too far undermines democracy”. He attributes that view to “liberalism’s gradual drift into compromises with conservatism and socialism” (Lavoie 1993). He suggests that liberalism needs to reinterpret its notions of markets and democracy so that they are seen to be essentially complementary. Our economics needs to take account of the cultural underpinnings of markets and our politics “needs to move beyond the model of the exercise of some kind of unified, conscious democratic will and understand democratic processes as distributed throughout the political culture”. The force of public opinion is best perceived as the distributed influence of political discourses throughout society rather than as “a concentrated will”.

Lavoie argues that what we should mean by democracy is a distinctive kind of openness in society rather than a theory about how to elect the personnel of government:

“Democracy is not a quality of the conscious will of a representative organization that has been legitimated by the public, but a quality of the discursive process of the distributed wills of the public itself” (Lavoie 1993, p.111).

It seems to me that those who see merit in the view of democracy presented by Lavoie and Gaus have good reasons to be skeptical about the worth of top-down planning to achieve national objectives. Individuals have different priorities and objectives that deserve to be recognized. Top-down planning cannot give appropriate recognition to those individual differences. Moreover, given the peculiarities of the business of politics, as discussed in the preceding essay, well-meaning attempts to pursue economic and social objectives that are widely supported within communities are prone to diverted to serve narrow interest groups.

In the following essay I consider the consequences of institutional path dependence, first in slowing the emergence of interest group politics, and second in making it more difficult for reform-minded political entrepreneurs to restore freedom and enhance opportunities for human flourishing.

 

References

Caplan, Bryan., The Myth of the Rational Voter (Princeton University Press, 2007).

Festinger, Leon., A Theory of Cognitive Dissonance (Stanford University Press, 1957).

Gaus, Gerald., The Open Society and its Complexities (Oxford University Press, 2021).

Hayek, F. A., The Road to Serfdom (University of Chicago Press, 1994).

Hayek, F.A., “The Use of Knowledge in Society”, The American Economic Review, XXXV, 4 (1945).

Hayek, F.A., The Constitution of Liberty (The University of Chicago Press, 1960).

Lavoie, Don., National Economic Planning: What Is Left? (Mercatus Center, 2016).

Lavoie, Don., “Democracy, Markets, and the Legal Order: Notes on the Nature of Politics in a Radically Liberal Society” in Ellen Frankel Paul, Fred D. Miller, Jr., and Jeffrey Paul (Eds.) Liberalism and the Economic Order (Cambridge University Press, 1993).

What impact does political entrepreneurship have on freedom and flourishing?

 

Preface to a Series of Essays

“Entrepreneurship necessarily takes place within culture, it is utterly shaped by culture, and it fundamentally consists in interpreting and influencing culture.”

-        Don Lavoie (Lavoie 2015, p. 50)

A few months ago, a kind person told me that “Freedom and Flourishing” had become more than just a blog. With that thought in mind, I have decided to try something new. I am proposing to present here a series of linked essays that can be read in much the same way as a journal article. Readers who wish to do so will be able to start at this Preface and read all the way through to the end, or alternatively, just read the essays that are of most interest to them. There will be links at the end of each essay to help readers to find their way to the next one and links at the beginning of each essay to help readers to find their way back to this Preface.

Some readers may notice that some of the material presented here has been published previously on this blog. The views presented in this series of essays have been more carefully considered but are still subject to revision.

As always, I welcome comments from readers.

———

Some readers will come to this series with the prior belief that political entrepreneurship has a negative impact on freedom and flourishing. Those of us who believe that people tend to flourish most fully when governments refrain from interfering with their lives may hold that belief. We certainly have good reasons to be skeptical about the impact of political entrepreneurs on human flourishing.

Nevertheless, if we are serious about promoting libertarian ideals, we cannot avoid considering the possibility that political entrepreneurship might have a role to play in getting us from where we are now - or where we seem to be heading - to a political and legal order that is more conducive to human flourishing.

In my view, it is important to obtain a better understanding of political entrepreneurship at this time because many voters in liberal democracies seem to have become increasingly dissatisfied with conventional centre-left and centre-right political leaders. Unfortunately, there seems to be increasing support in liberal democracies for leaders who propose rule changes which are likely to have detrimental impacts on prospects for freedom and flourishing. That support seems evident on both the progressive and conservative sides of politics.

In that context, it is particularly important to understand the contribution that political entrepreneurship has made to the problems that voters perceive, and the likely consequences of the alternative approaches to political entrepreneurship that are currently on offer.

The analytical approach adopted here has been influenced by entangled political economy as explained by Richard E. Wagner. According to that approach, both “polity and economy are arenas of practical action that operate in similar but not identical fashion” (Wagner 2016, p. 64).

Wagner’s approach recognizes the importance of individual action:

“The framework of entangled political economy accommodates recognition that societies change only through individual action inside those societies, and with those actions spreading within the society according to the receptivity of other members of that society to those changes” (Wagner 2016, p. 138).

As Chris Matthew Sciabarra has suggested, to understand institutional change we need to recognize interactions between personal, cultural and structural (political-economic) considerations. Sciabarra has discussed the nature of those interactions using a Tri-Level Model which builds on Ayn Rand’s conceptual framework (Sciabarra 2000, pp. 379-83). He emphasizes that although the personal, the cultural, and the structural can be analyzed separately, they can never be “reified as wholes unto themselves” (Sciabarra 2000, pp. 379-80).

I believe that the concept of political entrepreneurship is necessary to an understanding of institutional change for much the same reason that the concept of economic entrepreneurship is necessary to an understanding of technological change. The focus of the series is on how political entrepreneurship shapes the formal rules that govern economic and personal freedom across jurisdictions.

These essays draw heavily upon the insights of Don Lavoie in considering the nature of political entrepreneurship. In the passage quoted in the epigraph, Lavoie was writing about economic entrepreneurship. He argued that the “seeing of profit opportunities is a matter of cultural interpretation” (Lavoie 2015, p. 51). However, the idea that entrepreneurship consists in “interpreting and influencing culture” seems particularly relevant to political entrepreneurship.

What Lavoie means by culture is “the language in which past events are interpreted, future circumstances are anticipated, and plans of action are formulated.” (Lavoie 2015, p. 49).

He explains that he views culture as a discourse. In that context: “entrepreneurship is the achievement not so much of the isolated maverick who finds objective profits others overlooked as of the culturally embedded participant who picks up the gist of a conversation” (Lavoie 2015, p. 51).

Essays in this series will discuss the implications of significant differences that exist between political and economic entrepreneurship. In politics, voter choices are weakly linked to individual outcomes, decision-making often involves triadic relationships, and political marketing allows greater scope for deception. Moreover, political deal-making lacks a clear success metric comparable to profit in markets, and institutional incentives may attract opportunists rather than principled leaders.

I acknowledge, however, that many political entrepreneurs are motivated by a desire to achieve economic and social objectives that are widely supported in the communities they live in. They are confronted by information constraints. It is often impossible for a central authority to possess and process all the knowledge needed to achieve social and economic objectives without producing adverse, unintended consequences. As new policy initiatives are implemented to reduce those adverse consequences, economic freedom is often further reduced, and adverse economic and social impacts tend to multiply.

Political leaders seeking to restore economic freedom face challenges including entrenched interests and institutional path dependence. Changing formal rules is insufficient without corresponding changes in norms and incentives. I maintain that institutional reform is not solely about electing better leaders at a national level.

In advocating that the social sciences should pay more attention to the role of political entrepreneurship, I am certainly not attempting to promote a “great man theory” of institutional change. Political entrepreneurs rarely act alone, and their influence is constrained by a range of factors that are present to varying degrees in the societies in which they function.

Crucially, libertarian political entrepreneurs are unlikely to have a lasting impact on freedom and flourishing if their influence is confined to national politics. A national leader may play a pivotal role in sweeping away accumulated regulation but a culture supporting liberty and individual flourishing cannot be established and maintained unless many individuals undertake frequent acts of political entrepreneurship in their day-to-day interactions with others.

The structure of the series is as follows:

Part I provides a brief discussion of the links between freedom and flourishing to explain my reasons for focusing on institutions relating to economic and personal freedom. It also explains the meaning of institutions, institutional change, and political entrepreneurship.

Part II considers the extent to which differences in economic and personal freedom in different countries can be attributed to differences in underlying cultural values. It concludes that prevailing culture at a national level offers only a partial explanation of differences in economic and personal freedom levels. There is much left to be explained by other factors, particularly the influence of political entrepreneurship on the ideologies adopted by governments.

Part III discusses similarities between political and economic entrepreneurship.

Part IV discusses the incentives that political entrepreneurs are faced with in the context of the characteristics of politics that make it a peculiar business.  

Part V discusses the motives of political entrepreneurs and the impact of information constraints on pursuit of economic and social objectives.

Part VI considers the consequences of institutional path dependence, first in slowing the emergence of interest group politics and associated detrimental impacts on economic dynamism, and second in making it more difficult for reform-minded political entrepreneurs to restore economic freedom.

Part VII considers whether heroic political entrepreneurship has potential to promote freedom and flourishing. It urges that political entrepreneurship be perceived more broadly than in terms of government leadership.

Part VIII summarizes the series and concludes.

Acknowledgement

I would like to thank Chris Matthew Sciabarra for helpful comments on earlier drafts of some of the material presented in this series. The usual caveat applies. Please do not assume that Chris endorses the views presented here.

References

Lavoie, Don, “The discovery and interpretation of profit opportunities: culture and the Kirznerian entrepreneur”, in Culture and Economic Action, edited by Laura E Grube and Virgil Henry Storr (Edward Elgar, 2015).

Sciabarra, Chris Matthew, Total Freedom: Toward a Dialectical Libertarianism (Pennsylvania State University Press: 2000).

Wagner, Richard E., Politics as a Peculiar Business: Insights from a Theory of Entangled Political Economy (Edward Elgar, 2016).

Is it too soon to be asking in what part of the world will the next golden age be located?

 

The question posed above occurred to me as I was reading the final pages of Johan Norberg’s latest book, Peak Human: What We Can Learn from the Rise and Fall of Golden Ages.

Johan Norberg is a senior fellow at the Cato institute. He is a historian of ideas and a prolific author. If Norberg has a fan club, I might qualify for honorary membership. I have written about some of his previous books on this blog (here and here) and have read others.

Norberg explains what he means by a golden age in these terms:

“A golden age is associated with a culture of optimism, which encourages people to explore new knowledge, experiment with new methods and technologies, and exchange the results with others. Its characteristics are cultural creativity, scientific discoveries, technological achievements and economic growth that stand out compared with what came before and after it, and compared with other contemporary cultures. Its result is a high average standard of living, which is usually the envy of others, often also of their heirs.”

The author suggests that the most important precondition for a golden age is “an absence of orthodoxies imposed form the top about what to believe, think and say, how to live and what to do.” He doesn’t present the golden ages he has identified in utopian terms. He acknowledges that countries concerned all practiced slavery, denied women basic rights and “took great delight in exterminating neighbouring populations”.

As implied in the epigraph, Norberg argues that civilizations decline when they lose cultural self-confidence. He suggests that episodes of creativity and growth are often terminated because of the perceived self-interest of people who fear change and feel threatened by it. Free speech is replaced by orthodoxies and free markets are replaced by increased economic controls. The fears of those seeking stability and predictability often become self-fulfilling.

 In my view, Norberg has done an excellent job in explaining why golden ages have emerged and disappeared at different times in different parts of the world.

However, I think there may be an omission in the author’s identification of golden ages. I will briefly discuss that before focusing on the question of whether the Anglosphere is in decline.

Identifying golden ages

Norberg discusses seven golden ages in his book. Since he doesn’t provide a summary timeline showing their duration, I asked ChatGPT to construct the following:

• Athens: 480–404 BC
• Rome: 27 BC–AD 180
• Abbasids: 750–950
• Song dynasty: 960–1279
• Renaissance Italy: 1490–1527
• Dutch Republic: 1609–1672
• Anglosphere: c. 1688 onward.

If that timeline is broadly correct, it suggests that the largest gap between golden ages occurred between the end of the golden age of Rome and the beginning of the golden age of the Abbasids. What was happening at that time? Although the golden age of Rome may have ended around 180, following the death of Marcus Aurelius, the decline and fall of the Roman empire took a few more centuries. The last emperor of the Western Roman empire was deposed in 476. Plato’s Academy in Athens apparently continued to function until 532, when the seven last philosophers left to seek refuge with the Persian king. Interest in Greek philosophy grew in Persia during the 6^th and 7^th centuries, partly because of the presence of scholars associated with schismatic Christian sects.

As I was pondering what was happening between 180 and 750, I began to wonder whether India’s golden age might have been worth discussing in this book. While visiting India last year I read William Dalrymple’s book, TheGolden Road: How Ancient India Transformed the World. As well as discussing India’s impact on religion and culture throughout much of Asia, Dalrymple. points out that over the period from about 250BC to AD 1200, India was an important centre of commerce and trade, and an innovator in fields such as astronomy and mathematics.

India was the source of the numerical system with 10 digits including zero, that we use today. Norberg mentions that important contribution, but Dalrymple discusses it at greater length.

Another fascinating topic discussed by Dalrymple is the close relationship between the merchant classes of early India and the Buddhist monastic movement. Dalrymple emphasizes the importance of trade between India and the Roman empire. He notes that as the Roman empire crumbled, India’s trade with Europe was replaced by expansion of its trade with south-east Asia.

Is the Anglosphere in decline?

The Anglosphere refers to those nations where the English language and cultural values are dominant. Few would dispute that over the last couple of centuries the Anglosphere, first led by Britain and then the United States, played a leading role among nations in demonstrating the benefits of liberal democracy, free markets, technological innovation, and free international trade. Life in the Anglosphere has been far from ideal even in respect of those criteria, but there can be no doubt that we have been living in an age of widespread prosperity that is without historical precedent. As Norberg points out, the whole world has benefited from the spread of golden-age conditions fostered by the Anglosphere, with global extreme poverty declining from 38 to 9 percent in just the period since 1990.

However, Norberg notes that “many ominous signs of decline are clearly present in our time”. He mentions the “hubristic overreach” of U.S. attempts to reshape the Middle East through military interventions in Afghanistan and Iraq, the financial crash of 2008, and the growth of “crippling public debt”. He suggests that a series of crises, including the Covid pandemic, have fostered “a sense that the world is dangerous and that we need to protect ourselves from it”. He writes:

“Most worryingly, rich counties have experienced a major backlash against globalization and trade, and immigrants have become scapegoats, just as they were in so many other eras of decline, potentially shutting us out from our most potent source of constant revitalization.”

Norberg notes that both China and Russia “have recently taken a totalitarian turn and are working hard to devastate neighbours”. He suggests, nevertheless, that Russia and China will have a hard time trying to challenge the Anglosphere-led world order because it will be difficult for them to find reliable friends among advanced states. 

Unfortunately, in the short time since the book was written, the government of the United States has adopted an international stance that seems to be inconsistent with the continued existence of an Anglosphere-led world order. Countries that have long regarded themselves as allies of the U.S. are now forced to contemplate seriously how they can best protect their own interests if the U.S. pursues isolationist policies.

The book ends on a somewhat optimistic note. The author observes that there are roughly fifty prosperous, open societies around the world. If one of them fails, “that will not stop others from picking up the torch”. He adds:

“That prompts the question of where the next golden age will come from.”

After considering various possibilities, however, he suggests that “perhaps this is the wrong way to look at it because we now have a “truly global civilization” in which every literate person anywhere in the world can draw upon the accumulated knowledge of humanity and learn skills in any field. In that context, “no one country can hold a monopoly on the ideas that can make them prosper”.

I agree with the general thrust of that argument. The technology required for future golden ages is not deposited in a library that can be easily destroyed. However, the geographical location of societies that are open and prosperous is still an issue worth considering. It isn’t much consolation for citizens in the United States, Britain or Australia to know that their children and grandchildren may be able to draw upon the accumulated knowledge of humanity and learn skills in any field, if institutional change impinges adversely on their incentives to do such things. Opportunities for human flourishing depend on whether political entrepreneurs will restore and maintain sufficient economic freedom.

It is in that context that I ask: Is it too soon to be asking where the next golden age will be located?

I suggested an optimistic answer to that question in Chapter 6 of Freedom, Progress, and Human Flourishing. Looking beyond looming economic crises, I am still optimistic that the governments of most liberal democracies will eventually introduce institutional reforms to enable the drivers of progress to restore growth of opportunities.

Addendum

Readers may also be interested in a recent article by Johan Norberg, entitled “From Athens to Sparta: How Trumpism is Accelerating America’s Decline”, published in The Unpopulist:

https://www.theunpopulist.net/?utm_source=navbar&utm_medium=web .