The Rise Of Illiberalism & The Freerider Problem
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I have been asked:
Francis, why do you write, why do you speak up, when you know that you will be judged by a majority who not only politically disagrees with you, but is increasingly vehement in its social and economic sanctions? Don’t you realize that in so doing, you are putting your social standing, career and company at risk?
Is it ever in an individual’s calculated best interests to speak up when he or she disagrees with what seems to be a large and angry majority? There may be miracles of good fortune, striking moments in history, in which, upon making such an ill-advised stand, the individual prevails and the majority suddenly changes its mind… or when a silent minority suddenly emerges to defend the speaker…
In the ancient world, Tiresias, Socrates, Diogenes, and the Jewish prophets spring to mind. The modern era begins with Martin Luther nailing his theses to the church door. Closer to our time, Martin Luther King Jr., acting in the spirit of his namesake, speaking truth to power, not just with his later speeches, but with his earlier ones, before he had a national following, before he had become a name.
We attribute these anomalies to the contrarian being “on the right side of history,” or to rhetorical skill, or to the leader’s uncanny “knack” or “prudence,” for “judging well, the people, the words and the moment...” If enough time has gone by and legend has accrued, then we switch the narrative, and praise their lack of prudence, which we call courage, not foolishness. Or worse, we forget the darkness they knew and assume the inevitability of the light they brought…
Such outcomes can never be predicted, and thus, such a course of action should never be advised on an economic basis.
This reveals a paradox: that there is no economic basis for the basis for our economy. That is, the basis for our economy is strategic arbitrage: in which individuals invest time and money on unpopular ideas, which are either proven right or wrong by market forces over time. How come when the unpopular ideas are an overlooked opportunity or an undervalued asset or an unheard-of technology or a misunderstood need, supporting them is in our calculated best interests, but when the contrarian insights, ideas and arguments are political in nature, it is not, and no economic rational actor would dare speak up?
How come? Because…
The problem with Free Speech, from the point of view of the Individual, is that when it matters, it never makes sense.
Indeed, the cost-benefit analyses that characterize economic and strategic decision-making would never have created the free speech regime that our markets operate within, in the first place.
The principles and passions that led to our liberal democratic order are romantic, and rational in a romantic sense, but indefensible to the individual economic rational actor.
The Founding Fathers were certainly prudent and reasonable people, who pleaded, prodded, provoked and petitioned both their fellow citizens and the British Crown & Parliament in the years preceding the Declaration of Independence. But ultimately events came to a head, and in that final debate, any cost-benefit analysis which would have justified the American Revolution would have been very weak, at best, if not outright insane; and it certainly would not have motivated the colonists to do what was necessary to defy the most powerful military in the world at that time.
The Declaration itself makes this clear: “Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes… Let facts be submitted to a candid world… Appealing to the Supreme Judge of the world for the rectitude of our intentions…” No doubt some would deny the integrity of the Declaration, and claim that the Founders merely cloaked their partisan self-interest in moral language, as a political weapon. But such cynicism knows no bounds: if the Founders did not act on principle instead of self-interest, if these motives were not romantic, but economic, then are all historical motives economic, and all romantic claims not only suspect, not only foolish, but invalid? Alarmingly, the Marxist school of history does precisely that, taking this for their premise… But insodoing they rob themselves of their own progressive moral claims: the “oppression” of one group over another ceases to have any normative suasion as an “injustice” when the only acknowledged natural law is that Might Makes Right. No, the Declaration begins with a natural law and human rights argument, the principle of Liberty is romantic, and the fight for Liberty was driven by passion, not by prudence.
Having won their independence, paid for with their ‘lives, fortunes and sacred honor,’ the Founding Fathers sought to establish a romantic regime in which an economic calculus applies as little as possible to speech.
In other words, free speech is free not just because “Congress shall pass no law” but also because society is receptive. The Constitutional protection is merely a mechanical safeguard for what should be a social phenomenon. There can be no social protection other than the receptiveness — one might say, the fertility — of society itself.
If society is not receptive to disagreement, to unpopular truth, to the madness of the crowd being challenged by the genius of the individual, then speech may be legally free, but practically punished, so most people won’t dare. But if society believes in freedom, believes in debate, believes that the benefits of tolerating speech, especially speech we disagree with, outweigh the costs… then most people will relax, and be candid, and speak their minds freely.
Parrhesia is never prudent, never wise, always foolish; never economic, always romantic. Because speech is never at risk of censure when it is spoken in agreement with the majority, and it is always at risk of censure when it disagrees. And yet it is through disagreement that all thinking progresses. Innovation, political and economic, depends on contrarian insight.
Our society has always been imperfect, but for all its imperfections, it has been, on the whole, remarkably liberal, open and tolerant of dissent. When that broke down, it resulted in our Civil War. And it is significant that it was the South that was intolerant of the North, and unwilling to accept the outcomes of a peaceful democratic process, not the other way around…
If our society becomes less liberal, our economic system will not work as well as it has, and if free speech and debate break down, our economy will eventually break down too. Peaceful revolutions occur in our markets every year, contrarian rebels organize movements, known as companies, to overthrow the establishment, and politicians, known as entrepreneurs, advance their ideas for a better future through new products and services. All of these subversive activities require collaboration, and collaboration requires speech. By increasing the cost of speech, we are increasing the transaction costs for the entire economy. In economics, every unpopular truths is an opportunity, but if smart people can’t explore their disagreements, they won’t be able to discover these opportunities.
Free speech creates public goods. As of the time of this writing, I have published over 2,000 Medium posts. Let us assume that 1,999 of them are complete and utter garbage. But if even 1 of them creates value and stands the test of time, it is a public good, benefiting everyone: not just the people who read it, but the people who benefit from the people who read it. In much the same way, Shakespeare is a public good: he is dead, his works are now in the public domain, and anyone can read them for free on the internet. Now I don’t claim to be Shakespeare, but did Shakespeare claim to be a Shakespeare? It may take a thousand, or a thousand thousand, Shakespeares to create a Shakespeare, but one atones for all.
Markets benefit from free speech. This argument has been made before, more exhaustively than I can make it here. But I will only give honor here to one of my favorite intellectual foils: the VC blog post. If VCs had not felt free to share their ideas, frameworks, best practices and so forth, and to debate each other, the global technology industry would not be what it is today. A startup in Romania, like UiPath, that is today a multi-billion dollar company, was able to benefit from the best minds in Silicon Valley long before actually visiting. Will that same magic happen in a world plastered in corporate virtue signalling and double-speak shibboleths, where readers cannot trust either the authenticity or originality of writers?
Our political system is romantic, so our economic system can be prudent. Over long timescales, this creates a freerider problem. The Founding Fathers did an incredibly foolish, unwise and imprudent thing, to set up this romantic system that we all benefit from, just by being born in this country, or by becoming a citizen or resident. Now that we all benefit from it, we are free to take advantage of all the wealth that it creates, all the public goods that it creates, and speak up only when we feel it is in our benefit. But when the romantic system itself is threatened, and romantically speaking up to defend it is not in our benefit, will we have the courage to be as foolish, unwise and imprudent as the Founding Fathers?
It’s a classic tragedy of the commons. The founders of the system are romantic, so they create a romantic system. The system is romantic so that the players can be pragmatic.
In the beginning of the romantic system, it is pragmatic to speak, even in disagreement, which benefits everyone. But as the number of romantic players declines, and the number of purely-pragmatic players increases, it eventually becomes pragmatic to be silent, except in agreement.
If all of the players romantically defended the romantic system, it would require very little effort to maintain and all of them would benefit. But by virtue of being romantic, the system cannot force the players to be romantic. And from the point of view of each of the players, the game theoretically optimal strategy is to be pragmatic.
From the point of view of the system, of course, this pragmatism is incredibly unpragmatic. Wouldn’t everyone be better off if…? Wouldn’t everyone be better off if everyone spoke up? Yes! Well, why don’t we force them to speak up, then? Certainly, that would be pragmatic!
If the system was pragmatic, the players would not be able to be either pragmatic or romantic: instead, they would be coerced. The system would have the power to make cost-benefit decisions with the available information on behalf of the participants, and although this coercion may arguably be in their best interests, it robs them of agency.
The very virtue of a liberal system is its fatal flaw: it depends on the wisdom of individuals overcoming the madness of crowds, and then trusts that that very crowd will jealously guard the freedom of that individual. This is what Tocqueville kept coming back to in Democracy in America: our system depends on the moral character of our society. If our society ceases to value Liberty as its ideal, our political and economic system will break down.
We take our system for granted, because we’ve never had to defend it. If we don’t defend it, it will not persist, forever, as part of the background. If we’re too busy making “progress,” and “progress” comes to mean “overthrowing historical injustice,” which comes to mean silencing all disagreement as evidence of “oppression…” If we undo the foundations of our political and economic freedom by characterizing them as “systemically unjust”… then we will, at tragic cost, re-live the horrors of the French Revolution, the Bolsheviks, the Chinese Cultural Revolution, and other misguided movements with seemingly good intentions. Progress is necessary and we should demand it, but we should demand it after disagreeing on and debating problems and solutions, without jeapordizing the foundations of Liberty upon which all progress heretofore has depended.
I know of no better argument than the 20th Century. This is why Hayek wrote The Road To Serfdom. Liberty overthrown, and over a hundred million people dead, because of regimes motivated by justice. This is what so many lived and died to warn us about. The road to hell is paved with good intentions and intolerance for dissent. Whereas the true road to progress is paved with endless debates which leave room for individuals to disagree with groups, especially when it is unpragmatic to do so.
Everyone has strategic and economic goals, interests, objectives. But to be a citizen in a free society is to refuse to be captured by telos, and to remember the ethos of the society. The way we progress is just as important as the progress. If we sacrifice the way to the progress, we end up with neither, but if we honor the way, no matter the short-term cost, the long-term progress is sure to come…
To the unpragmatic voice…
and endless debate.
