Monthly articles (in French and English) on the theme "Querying economic orthodoxy"

No. 43 - July 2009

Democracy under threat


No doubt the humanist and republican promise was above all the idea that, at last, having left the Ancien Regime behind, we were going to make our own history together, to take part in its construction.
Luc Ferry, philosopher and former French minister of education, Réconcilier régulation, développement durable et globalisation, in Le Monde, 13 juin 2009

A just society must be the creation of politics.
Pope Benedict XVI, encyclical Deus Caritas est (2006), #28

The driving force of human history is not a power beyond our control, but our own responsible decisions.
Sir Jonathan Sacks, Chief Rabbi of the United Kingdom, The Politics of Hope (Vintage,
London, 2000), ch. 22

We have created a world dominated more than ever before by markets. And we ask ourselves why we suffer from so many unwanted consequences?

A state of drift

Today, far from making our own history together, we find that obscure, barely visible forces are writing our history for us, outwith our control and often contrary to our wishes. English eurosceptics, of course, will blame all this on Brussels; but they are merely lashing out at a convenient scapegoat. The debilitating sense of uncontrolled deterioration is a problem for Europe as a whole, and indeed for many other human societies. Europe as a whole cannot offload the blame on to Europe. As Luc Ferry observes in the article quoted above, history is now moving independently of human wishes.

Our climate and our environment are deteriorating, and though we ourselves are partly to blame, this is largely the consequence of other people's pollution. Our industries crumble, and we feel powerless to overcome or avoid global competition. Our families and our society are increasingly fragmented and disordered, and we feel unable to do much about it. We are adrift, neither knowing nor approving the destinations towards which we meander through foggy channels.

How can this be explained? In his last book, Friedrich von Hayek, that bigoted apostle of the free market, gave us an excellent clue. In the marketplace...unintended consequences are paramount: a distribution of resources is effected by an impersonal process in which individuals, acting for their own ends (themselves often rather vague), literally do not and cannot know what will be the net result of their interactions.1 

A self-inflicted malaise

Over recent decades, by following the rotten advice of Hayek and his kind, we have created a world dominated more than ever before by markets. And we ask ourselves why we suffer so many unwanted consequences? 

Hayek, unlike Ferry, did not assert that truth about markets in order to deplore it. On the contrary, he welcomed it wholeheartedly. His dream was a world where, as he wrote elsewhere, social states arise from people's actions, not from their intentions. He, like other libertarians, detested the very notion of any desire to make our own history together.

For that implies a common social project. We decide, one hopes democratically, that we want to have a community with certain characteristics. We want, for example, a city like Haussmann's2 Paris; what better? Avenues planted with planes or chestnuts; smooth-running, quiet, non-polluting trams without overhead wires3 (these were possible in the 19th century, and may be again in the 21st); elegant, harmonious streets; shops that close on Sunday so that your employees may rest, as you do, as the law of Moses, with good humane, practical sense, requires.4 

For libertarians, all that is totally unacceptable. Why so? Because for them, freedom means that nobody is obliged, at the wish of anyone else, to do, or not do, anything whatsoever. We remain free, though we are pushed around without consideration or respite, provided always that we are pushed around only by impersonal forces, like the markets. That is the pure and authentic libertarian doctrine. 

But as soon as we are obliged by anyone else to do something, we fall into slavery. You think I am exaggerating? Turn again to Hayek: enforced obedience to common concrete ends is tantamount to slavery,5 even if the ends have been determined by democratic political process.  

If 19th-century Parisians, rather than being Baron Haussmann's 'slaves', had been 'free' citizens under the minimal government of libertarians, then each landowner would have been able to build whatever he fancied without any obligation to respect the harmony of the city. We might have got urban dog's breakfasts like London's Oxford Street. 

The libertarian 'ideal'

What, then, do these libertarian free-marketeers really want? Their basic motivation is hatred of the state. True fundamentalist libertarians, such as Murray Rothbard, are outright anarchists. Rothbard wanted to privatize the armed forces and the courts of justice. Others, a little closer to reality, nevertheless want to replace the state, so far as possible, by the market. They call for the night-watchman state, denuded of almost all positive powers.

But it is through the state, not in the marketplace, that we exercise our democratic rights. If we disempower the state, we deprive ourselves of our powers at the ballot-box. Ludwig von Mises, Hayek's teacher, was well aware of this, and he did not care. He held that that 'market democracy' was far preferable to parliamentary democracy. The capitalist society is a democracy in which every penny represents a ballot paper,6 he wrote. But that is a plutocracy. Remember that, in the USA, much fewer than 10% of households hold the majority of total capital. Thus, in the marketplace, a small, rich minority have the majority of monetary 'ballot papers'.

America was built by people who left their native lands to escape from domination by privileged minorities. Yet, towards the end of the last century, Americans have pursued policies that have put themselves increasingly under the domination of a narrow wealthy minority. And they have done that on the advice of scions of the imperial Austrian aristocracy.

Time to rethink our mistaken choices 

Our loss of control over where our societies are going, eloquently deplored by Monsieur Ferry, is the result of our allowing ourselves to be seduced by the libertarians. We have liberated our markets; and now, like Baron Frankenstein with his monster, we find to our dismay that the markets are free to tyrannise over us. 

The libertarians do not deserve to be taken seriously. It is true that the fathers of the contemporary libertarian movement, von Mises and von Hayek, lived through an era when vicious fascist and communist states were dominant. But that grim experience inspired  them to an absurd solution. They decided that the best alternative to bad government is the absence of government, replaced by that sacrosanct market in which the greediest dominate.

That is a pathetic nonsense. The only worthy alternative to bad government is good government. It is not easy to achieve it. We have no alternative but to keep on trying.  

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1  Friedrich von Hayek, The Fatal Conceit  (Routledge, London, 1998), chap. 5, page 71

2  RATP, the Paris transport authority, and tram manufacturer Alstom are testing a system of electricity storage using not conventional batteries but supercondensers. These are capable of being recharged very rapidly at stations.

3  During the Second Empire (1852 - 1870), much of Paris was reconstructed under the supervision of Baron Haussmann, Préfet de la Seine, whose position was similar to that of the Mayor of Paris today. Under his very rigorous urban planning, Paris acquired essentially the layout and architectural style that we still know and admire.      
4  See Deuteronomy 5:14.  The Hebrew term 'ebed is generally translated as servant or slave; since we are applying the verse to a modern context, I have taken the liberty here of substituting employee. 

5  Hayek, loc. cit. supra, page 63

6  Ludwig von Mises, Die Gemeinwirtschaft [Socialism] (1922), part IV, chap. 5