Looking at the world through neo-liberal eyes

Adam Smith Institute President, Dr. Madsen Pirie, explains why he is willing to own the usually-derogatory term neo-liberal, and explains why the world actually shows us the success of the much-maligned perspective.

I spoke at Brighton University as part of their seminar series on neo-liberalism.  The term ‘neo-liberal’ is usually used in a derogatory sense, though I chose not to use it that way.  I was the only speaker in the series to speak in favour of neo-liberal ideas, and my title was “Looking At the World Through Neo-Liberal Eyes.”  I began by quoting an old Chinese proverb: “Never criticize a man until you have walked a mile in his shoes.  That way you are a mile away when you voice your criticism; and you have his shoes.”  I invited the audience to see the world briefly as it looks through neo-liberal eyes.  These were the points I made.

1.  Value is in the mind, not within objects.

Value is not a property of objects or a quality they possess.  Although we talk of objects “having value,” we mean that we value them.  Value is in the mind of the person contemplating the object, not in the object itself.  If value resided in things, it could theoretically be measured objectively and we would all agree on what it was.  There would then be no trade, for exchange takes place when each person values what the other person has more than they value what they are offering in exchange.  A trade gives each of them something they value more, and thus wealth is created by the exchange.  When people make the mistake of supposing that value resides in objects, they ask how it arrived there, and come up with fallacious ideas such as Marx’s labour theory of value.  An object can take masses of labour to produce, but if no-one values it, it will be worthless.

Read the whole thing.

Roger and I live in parallel universes

The friend Roger I wrote about, who opposes every single policy that might achieve his declared objectives, lives on the same planet as I do. We share physical space, but we live in very different parallel mental universes.

His world is dominated by sinister dark conspiratorial forces which leave ordinary humans as helpless victims of their oppression. Big Pharma, as he calls the pharmaceutical companies, is in cahoots with Big Tobacco, and they have allied themselves with Big Bankers to create cartels that acts against the interests of the public by overcharging for goods, by denying the public access to life-saving treatments, and by forcing them into buying harmful products and detrimental services. Big business, which includes fast food providers and major brand retailers, have bought legislators, think tanks and the media, and contrive to ensure that their misdeeds are never adequately uncovered and exposed by a servile media and legislature. We are all their helpless victims, and Roger campaigns against them by eagerly buying each new book that highlights their nefarious influence.

In my parallel universe people buy stuff they like, and their choices influence businesses into tailoring their output so that they can sell more. Individuals exercise the power of their feet; they walk away from stuff they don’t value, and every year big household names go under as they fail to match up with changing tastes. People make choices, and they allocate their resources to where they think they’ll bring most satisfaction. Sometimes they buy things whose value others might question, things such as carbonated beverages, salty crisps, tobacco, alcohol and fatty foods. But others who dispute the value of these things are free not to buy them.

In Roger’s universe the dark forces control our lives, and in the parallel universe we mostly control our own through our decisions. Roger’s world is full of pessimists who see individuals as helpless pawns, constantly manipulated; the other world is inhabited by many cheerful optimists, confident that human resources can be applied to achieve worthwhile objectives. In the cheerful world people watch out for rent-seeking, for the desire to use government restrictions to limit choices and secure greater returns than people’s free choices would have bought them. The optimists campaign constantly against this crony capitalism and in favour of free choices, open entry to markets, and against using legislation to thwart competitors. They often win, and they know that eternal vigilance is needed if individuals are to keep a world they can control, rather than succumb to one in which they are controlled.

It has to be said that the cheerful world is a lot more fun to live in than the one controlled by shadowy, sinister forces.

Lost and loster

“So you’re telling me there’s a chance!” That is Jim Carrey’s reaction, in Dumb and Dumber, when the lady he fancies tells him his chances are like one out of a million. (The 33-second clip is here.)

You’ve got to admire such optimism. May we classical liberals find it when we ponder the chances of seeing a turn toward classical liberalism.

The prospects are enhanced by understanding the situation. But currently we are still stuck in the ruts that were worn into our culture from 1880. A hard look at the period 1880-1940 might inspire, not a comedy, but a tragedy: Sad and Sadder.

But there’s still a chance, so chin up. At the end of Dumb and Dumber, Carrey does not get the girl, but he and his friend carry on in good cheer.

Our movie would be called Lost and Loster. “Lost” not as in “lost cause,” but as in “lost children.” Our civilization has gone astray and is now bewildered as to place and direction. That is the theme of the new website, Lost Language, Lost Liberalism, nicknamed 4L.

With governmentalization on autopilot, with the center-left dominating much of the media, schooling, academia, and other cultural institutions, with the entrenchment of government as big, suffocating player, it is no surprise that many people who fancy themselves “liberal” are doing some soul searching. Edmund Fawcett’s 2014 book Liberalism: The Life of an Idea demonstrates such soul searching, if not soul finding.

What makes a liberal? To answer that question, it is good to learn about how the term “liberal” first arose as a political term. Here, think Adam Smith (as I explain here). Then, we also need to understand how from 1880 the meaning shifted—the theme of Lost Language, Lost Liberalism – 4L.

4L shows that English-language discourse underwent a watershed change during the period 1880-1940. 4L studies the changes in the meaning of words, and suggests that these changes played an important role in the decline of classical liberalism. Ten central words are treated: liberal(ism), liberty, freedom, justice, property, contract, equality, equity, law, and rights.

Compendia of quotations show the debate over the meaning of each word. The site also features other forms of evidence, including ngrams and copious testimony about generational shifts.

I am honored that the Adam Smith Institute has chosen to partner on the project; the Press Release from ASI can be found here.

The chances of recovering Adam Smith liberalism depend on understanding the course of the past 250 years. The 1880-1940 act is especially sad and casts a long shadow. But there is still hope that we’ll find our way to the true path of liberalism.

Liberalism Unrelinquished: An interview with Dan Klein

Liberalism Unrelinquished (LU), is a new project by Prof Daniel Klein and Kevin Frei which aims to reclaim the word ‘liberal’ from those people who want to ‘governmentalize’ social affairs. So far it has been signed by around 350 people, including Alan Macfarlane, Charles Murray, Deirdre McCloskey, Richard Epstein, and Alan Charles Kors — as well as several members of the ASI. Dan spoke at the ASI back in 2012 on“Mere Libertarianism”, his synthesis of Hayekian and Rothbardian strands of libertarianism. I reviewed his rather excellent book Knowledge and Coordination here. I spoke to Dan about his new project.

Bio: Daniel Klein is a professor of economics at George Mason University (where he leads a program in Adam Smith), the JIN Chair at the Mercatus Center at GMU, a fellow of the Ratio Institute in Stockholm, editor of Econ Journal Watch, and the author of Knowledge and Coordination: A Liberal Interpretation(Oxford University Press, 2012).

What is Liberalism Unrelinquished (LU)?

LU is a declaration of no surrender on the word liberal. The 250-word Statement is as follows:

In the 17th and 18th centuries there was an ascendant cultural outlook that may be termed the liberal outlook. It was best represented by the Scottish enlightenment, especially Adam Smith, and it flowed into a liberal era, which came to be represented politically by people like Richard Cobden, William Gladstone, and John Bright. The liberal outlook revolved around a number of central terms (in English-language discourse, the context of the semantic issue that concerns us).

Especially from 1880 there began an undoing of the meaning of the central terms, among them the word liberal. The tendency of the trends of the past 130 years has been toward the governmentalization of social affairs. The tendency exploded during the First World War, the Interwar Years, and the Second World War. After the Second World War the most extreme forms of governmentalization were pushed back and there have since been movements against the governmentalization trend. But by no means has the original liberal outlook been restored to its earlier cultural standing. The semantic catastrophes of the period 1880-1940 persist, and today, amidst the confusion of tongues, governmentalization continues to hold its ground and even creep forward. For the term liberal, in particular, it is especially in the United States and Canada that the term is used in ways to which we take exception.

We the undersigned affirm the original arc of liberalism, and the intention not to relinquish the term liberal to the trends, semantic and institutional, toward the governmentalization of social affairs.

Thus far, about 350 people have signed the statement.


Where next for capitalism?

Writing for the BBC today, Madsen outlines his ideas about what capitalism should do to renew itself:

What capitalism should now do is to free itself from these rent-seeking perversions and spread its benefits as widely as possible.

It should act against anti-competitive practices to give people instead the power of free choices between competing goods and services. It should spread ownership of capital and investment as widely as possible through such things as personal pensions and individual savings accounts.

Read the whole thing.