The Radical Center
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The Radical Center

Values Matter: Liberty and Culture

Markets don’t solve problems. Markets can’t solve problems because they are not sentient beings. They don’t understand problems; they can’t consider solutions. They have no brain. In one sense they do not even exist.

Some libertarians are fond of saying “society” doesn’t exist. It doesn’t. In the same sense “markets” don’t exist. Both markets and societies are institutional arrangements which help the true problem solvers do their job. Those problem solvers are people. Some of the problems they solve are small ones, while others are astoundingly complex and massive.

As an institutional arrangement, markets provide some very important components for problem solving. First, they offer incentives to problem solvers. Second, depoliticized markets offer problem solvers freedom to pursue solutions. Third, the market conveys knowledge to problem solvers. It tells them where problems — profit opportunities — exist. It tells them what resources are available, it tells them what problems people want solved most urgently, it tells them whether they are succeeding or failing. It gives them information as to whether or not the cost of the solution is greater than the cost of the problem. A solution that imposes more costs than the problem it solves makes life worse, not better. Markets encourage cooperation in ways not otherwise possible. Markets limit the harm of failed solutions while maximizing the benefits of successful ones. And, they reward problem solvers when they get it right.

Prices and profits convey knowledge by taking variables and turning them in equations that producers, workers and consumers can understand.

None of this implies markets are perfect. They are not. There is no such thing as perfect competition, there never has been, and never will be. Markets don’t reach equilibrium either. Production doesn’t exactly match demand — ever. What happens in the institutional system we call markets is a process, not an end state. It is a means of shifting resources, always responding to the constant changing state of affairs. Resource availability is constantly shifting. New problems arise and need solutions. Old solutions are no longer worth more than they cost. New solutions make tried and true ancient solutions completely unnecessary.

What we call the market is constantly in flux and constantly evolving.

It has a tendency toward equilibrium but it never reaches it. It merely points us in the directions that make the most sense at any one point in time. It can’t reach a static point because humans are never themselves static creatures, but in constant flux.

What makes markets a better method for problem solving is that it has an institutional arrangement that encourages solutions. It can’t promise us solutions. Those are up to our fellow human beings to create. It just gives everyone the incentives to seek solutions, rewards if they find them, the knowledge they require to pursue solutions, and the freedom to seek them.

Once we understand that what we call the market is a complex social order of human action then we have to look at the role culture plays, not just in the market as a producer, but also in the pursuit of a free society. The libertarian ought to have as a goal the pursuit of not only economic prosperity, but also human flourishing where the rights of each individual are respected.

Not all human values are conducive to these goals. Just because libertarians believe in freedom of belief does NOT mean we are cultural relativists. Not all cultural values are equal. Some undermine both markets and freedom, some undermine one but not the other. Some values encourage both economic and social freedom.

Importantly values are not immutable. They can change. The reality is the society a lot of libertarians imagine is one that cannot exist without a cultural revolution. I do think there are social structures consistent with classical liberalism, which do NOT require seismic changes in cultural values. However, I do think the vision of the most radical libertarians does require that sort of shift and it is one reason I am skeptical of that program.

Harvard sociologist Edward Banfield, in his celebrated book The Unheavenly City, noted that within any culture there are subcultures with differing values. Those values may lead to specific characteristics for that group. These, “secondary characteristics are probably caused, directly or indirectly, by the primary one… In any case, each subculture displays distinctive attitudes toward — for example — authority, self-improvement, risk and violence, anddistinctive forms of social organizations, most notably of family organization.” (p. 47).

Banfield refers to these groups as classes. But, he makes it clear this category is nothing like what is meant when Marxists use the term. “As the term is used here a person who is poor, unschooled, and of low status may be upper class; indeed he is upper class if he is psychologically capable of providing for a distant future. By the same token, one who is rich and a member of ʻthe 400ʼ may be lower class: he is lower class if he is incapable of conceptualizing the future or of controlling his impulses and is therefore obliged to live from moment to moment.”

As might be expected, those on the lower end of the class scale are the primary individuals who seem most affected by social problems. Banfield describes their worldview and value system:

At the present-oriented end of the scale, the lower-class individual lives from moment to moment. If he has any awareness of a future it is of something fixed, fated, beyond his control: things happen to him, he does not make them happen. Impulse governs his behavior, either because he cannot discipline himself to sacrifice a present for a future satisfaction or because he has no sense of the future. He is therefore radically improvident: whatever he cannot consume immediately he considers valueless. His bodily needs (especially for sex) and his taste for “action” take precedence over everything else — and certainly over any work outline. He works only as he must to stay alive, and drifts from one unskilled job to another, taking no interest in the work.

Banfield says such individuals are “unable to maintain a stable relationship,” they are often “suspicious and hostile”. They have no attachment to the community or neighbors and resent all forms of authority.

Of course, values are not the only factor. Certainly, as Hernando de Soto has pointed out so well the legal and property rights system can have massive impact on prosperity. But, within each system the various classes still exist and the lower classes, in the sense of their values, tend to have disproportionate problems with their lives. It seems very difficult to escape the conclusion that values individuals hold, and not the balance of their bank account, are a major cause for the problems they experience, though not the only such cause.

Within any community individuals need to co-operate and work together with one another to better themselves. This is one of the basic functions of the market. But, in a community consumed by the values described by Banfield it becomes very difficult to establish the relationships necessary to prosper. Francis Fukuyama points out:

“Social capital can be defined simply as an instantiated set of informal values or norms shared among members of a group that permits them to co-operate with one another. If members of the group come to expect that others will behave reliably and honestly, then they will come to trust one another. Trust acts like a lubricant that makes any group or organization run more efficiently.”

Markets allow people to act, how they act is determined by the values they hold. A free market will not produce wealth, it only allows for the production of wealth. People still have to do the producing. Some values impede wealth production and act to destroy individual freedom.

For instance, if we look at the attitudes toward issue of economic interest we see how religious values can impede one group over another. Christian dogma looked down on the loaning out of money at interest. Historically the Christian nations of Europe saw this as a distasteful, if not sinful necessity. Good Christians were discouraged from lending money at interest. But, as economics has taught us money lending is honorable and useful.

Christians thus left this practice to non-Christians, primarily Jews. The Jews prospered, and while Christians benefitted from loans the process encouraged anti-Semitism and wild conspiracy theories.

Similarly, the issue of economic arbitrage was considered by many as suspect. Buying low in one place and moving it somewhere where it was more precious was seen as taking advantage of people. Necessity required such middlemen but this position was looked down upon. The role was left to individuals considered as “outsiders” to fill. Again, this was Jews in Europe but in much of Asia the role was filled by ethnic Chinese living in non-Chinese areas. The values of the local community harmed them, and others had to fill the role, but that encouraged economic envy and racial antagonism.

We could make a long list of the values that encourage markets to work better. Frugality, punctuality, the importance of keeping ones word, trust for others are some.

Some cultures see competition as rude. It was unfair to compete with someone. Other cultures believe how you act doesn’t matter as you are subjected to supernatural forces of good and evil and a victim of circumstances. If you don’t believe your destiny is in your hands you have no reason to make an effort. The result will still be poverty, no matter how free your market.

If you distrust others and believe every transaction has to be contractually set out, and I mean in the form of legal documents, the result is a major increase in transaction costs. The market is less productive.

It is still absolutely true that governments can put impediments in the way of markets. But, even in a world without such regulations, there are values people hold that impede markets almost as efficiently — especially when they are held widely. A free market may allow freedom of beliefs, but not all beliefs encourage free markets and some are absolutely deadly to them.

Now, if I were a conservative I could stop there. I’ve discussed economic freedom and that is pretty much where the conservative wants freedom to end. I, however, oppose socialism of the soul as much as I oppose socialism of the wallet.

Ayn Rand argued there is no mind/body split; there is no dichotomy between the practical and the moral. Certainly studies done of various cultures show nations tend to have more social freedom if they are economically free. Now, I know some people use “freedom” is an absolutist sense, and nothing in the real world will ever satisfy their definition of freedom. But I am using it in a more relative sense. In spite of the atrocities of our government we are still relatively free. The world, for most people is freer today that it was at any time in history. If your only concern is white, middle-aged, straight men you might think otherwise. I tend to look at our species as a whole and not one group that was generally better treated in legal terms than everyone else.

Economically freer nations also tend to hold common social values.

Studies have found that cultures that are more rational versus religious tend to be more prosperous.

Religion impacts economic and social freedom in many ways. Religions that emphasized hierarchy, such as Catholicism tended to encourage political authoritarianism. Protestantism was more dispersed, with little emphasis on hierarchy and the political structures tended to be more diffused and competitive. There was greater emphasis on individual freedom even though both major strands of Protestantism — Calvinism and Lutheranism — were highly intolerant of “heresy.” The fractured nature of these areas, with multiple small city-states encouraged competition between governments and as there was free movement of labor this pushed these areas more toward economic and political freedom.

In his book Capitalism and the Permissive Society Samuel Brittan wrote, “Capitalist civilization is above all rationalist. It is anti-heroic and anti-mystical.” He points out that the capitalist, as a profit maximizer, is forced to ignore the “traditional, mystical or ceremonial justification of existing practices.” The capitalist who doesn’t do so will lose out to the capitalist who does. Thus he concludes, “The breakdown of theological authority, the rise of scientific spirit and the growth of capitalism were inter-related phenomena.”

Freedom, like science, requires questioning. Question authority doesn’t just mean question political authority. In a free society all authority is questioned. You question dogma and scientific theories. Faith, however, says you shouldn’t question. A faith-driven culture is one where questioning is more difficult. In place of questioning what is encouraged is obedience.

Another value found in the freer nations is tolerance. This is tolerance for people who aren’t like you. Everyone is tolerant of people who mirror themselves. It is much harder to be tolerant of those unlike yourself. Markets thrive on diversity, not on conformity. Market take individual differences and magnify the benefits of the diversity. In fact, one of the reasons free trade is so beneficial is precisely because of human differences.

Racial bigotry or anti-gay prejudices are examples of intolerance.

Now, can an individual bigot be a libertarian? Technically, of course. If they don’t infringe the rights of others they are still acting consistently with libertarian values.

But, I would argue while an individual can be bigoted and libertarian a culture cannot be bigoted and libertarian. That, I think, is impossible.

Individuals live in the cultural bubble that surrounds them. Like it or not, it inhibits how they behave. Remove the cultural inhibitions and people act on their prejudices. When certain levels of intolerance are achieved within a culture then the restraints disappear and people begin acting on their hatreds.

If we go to the Germany of 1900 it was unthinkable people would attack Jewish shops or put Jews in concentration camps. Yes, there were anti-Semites around, but the culture only tolerated certain levels of anti-Semitism. Thanks to the Marxist attack on “Jewish capitalism” and the National Socialists promoting this theory, along with other historical factors, anti-Semitism increased and soon thought turned to action.

Hatred is imperialistic. It will take more territory when it can. We sometimes forget that lynching was common in this country, particularly in the South. We forget the Puritans murdered people for being Quakers. The culture in which they lived allowed it. Our nation lived in a culture where slavery was tolerated.

When the cultural values are dominated by intolerance it becomes more than a belief, it becomes a practice. And it is a practice that means the violation of the rights of others.

Another value of the unsuccessful nations is a reliance on traditional values. Things are done the way they were always done. Change is considered bad.

Hayek contrasted this with the classical liberal view. He said liberals, or libertarians, are “not averse to evolution and change” and said when “spontaneous change has been smothered by government control, it [liberalism] wants a great deal of change.” This, he argued, was in conflict with the “conservative attitude” which was a “fear of change, a timid distrust of the new as such.” Hayek said his position “is based on courage and confidence, on a preparedness to let change run its course even if we cannot predict where it will lead.” He also warned that those who cling to traditional values “are inclined to use the powers of government to prevent change or to limit its rates to whatever appeals to the more timid mind.”

Another difference between Hayek and conservatives is he saw order emerging from voluntary interactions of people, while “Order appears to the conservative as the result of the continuous attention to authority.” The conservative, he said “feels safe and content only if he is assured that some higher wisdom watches and supervises change, only if he knows that some authority is charged with keeping the change ‘orderly.’”

Hayek believed in the rule of law, with government powers strictly limited to general rules of social order. Contrast this with a conservative who “does not object to coercion or arbitrary power so long as it is used for what he regards as the right purposes. He believes that if government is in the hands of decent men, it ought not be too much restricted by rigid rules.” Hayek warned that the conservative is “less concerned with the problem of how the powers of government should be limited than with that of who wields them” and said “he regards himself as entitled to force the value he holds on other people.”

Hayek saw conservatives as lacking principles but not “moral conviction.” He wrote, “The conservative is indeed usually a man of very strong moral convictions,” but “has no political principles which enable him to work with people whose moral values differ from his own for a political order in which both can obey their convictions.”

Hayek’s liberal social order allows people of differing convictions the freedom to pursue their own values. The joking response to conservatives, “If you don’t like gay marriage, don’t get gay married,” actually encapsulates Hayek’s view of a liberal society, which allows people of different views the freedom to pursue their own values.

Those who oppose erotica are free to NOT buy it, those who oppose abortion are free to shun abortions, and those who oppose gay marriage don’t have to get gay married! Classical liberalism says if you don’t like something do indulge in it. Conservatism and socialism tends to say, if you don’t like something make it illegal.

It is here that Hayek’s liberal are most clearly in opposition to both conservatism and socialism. “I sometimes feel that the most conspicuous attribute of liberalism that distinguishes it as much from conservatism as from socialism is the view that moral beliefs concerning matters of conduct which do not directly interfere with the protected sphere of other persons do not justify coercion.”

Conservatives invoke supernatural claims to justify intransigent opposition to change, not so with Hayekian liberals.

“The liberal differs from the conservative in his willingness to face [human] ignorance and to admit how little we know, without claiming the authority of supernatural forces of knowledge where his reason fails him. It has to be admitted that in some respects the liberal is fundamentally a skeptic — but it seems to require a certain degree of diffidence to let others seek their happiness in their own fashion and to adhere consistently to that tolerance which is an essential characteristic of liberalism.”

Hayek’s wrote, “What distinguishes the liberal from the conservative here is that, however profound his own spiritual beliefs, he will never regard himself as entitled to impose them on others and that for him the spiritual and the temporal are different spheres which ought not to be confused.”

A libertarian agenda is also, I argue, a cultural agenda. We need to encourage values consistent with economic and social freedom.

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James Peron

James Peron

James Peron is the president of the Moorfield Storey Institute, was the founding editor of Esteem a LGBT publication in South Africa under apartheid.