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Greg Lindsay, “In defence of traditional liberalism,”
Independent Business Weekly, November 14, 2001.

Recently in The Australian Financial Review a left-wing economist — for reasons difficult to fathom a regular columnist on that paper — accused the Centre for Independent Studies of opposing democracy and freedom of speech.

This, after 25 years of the CIS arguing the case not just for liberal democracy in general, but also publishing articles opposing restrictions on free speech through internet regulation and vilification laws, and the leading book on citizens’ initiated referendums.

It just shows what a tough job it is explaining liberalism in a way that leaves no room for misunderstanding.

The CIS and, I believe, ACT have a broad church view of the philosophy of liberalism.

All true liberals place individual freedom high, if not at the highest point, on their list of political priorities.

W.E. Gladstone, the great Liberal Prime Minister of Britain, said: “In the sphere of the State, the business of the last half century has been, in the main, a process of setting free the individual.”

Sir Erskine May, author of the most authoritative treatise on parliamentary practice now in about its 25th edition, said: “The nations which have enjoyed the highest freedom, have bequeathed to us the rarest treasures of intellectual wealth, and, to them we owe a large measure of our own civilization. The history of their liberties will be found concurrent with the history of their greatest achievements in oratory, literature and the arts. In short, the history of civilization is the history of freedom.”

Finally, we have all heard of Adam Smith, but I bet Bruce Smith hasn’t registered on your radar.

An Australian, of course, he was a lawyer and member of the Victorian and NSW colonial parliaments. In an important book Liberty and Liberalism of 1878 which we will be republishing next year, he states as his fundamental principle of liberalism “that each individual should have secured to him the most absolute liberty, subject to such restrictions only as are necessary to secure equal liberty to all.”

Liberals of this thinking support so-called “negative liberties” — freedom of speech, freedom of association, freedom of religion, freedom of movement, freedom of contract, and so on.

These are freedoms from state action, and from physical force by others. The main role of the state is to prevent others using force, through the police, the courts, and from external threats, the military.

Some liberals also support so-called “positive liberty” — the right of individuals to be free of various wants, to have access to food, clothing and shelter, and these days an ever-increasing list of other benefits — health, education, and so on.

Obviously it is good for people to have all those things, but liberals worry that the kind of state needed to provide all these things can all too easily start impinging on the “negative” freedoms.

Many supporters of this “positive liberty” view of liberalism, against what I would argue is liberalism properly understood, are too often willing to use the power of the state to achieve those ends. This has manifest itself in legislative inflation and much of what we see in the modern welfare state as it attempts to free people from so many of the “wants” that others perceive people need.

Some schools of thought see individual freedom as a great value, all in itself. It’s a position I share. John Stuart Mill, the famous 19th century British liberal, thought development of one’s own individuality was important. He favoured what he called “experiments in living.” Only by trying out different ways of life could we determine which was best. Some twentieth century liberal thinkers argued that autonomy was important, and that neither the state nor the society should interfere with the autonomous actions of others.

Even those not necessarily wanting to stand out from the crowd can see intrinsic value in freedom. My friend Charles Murray, an American classical liberal, in his 1988 book In Pursuit of Happiness and Good Government, summarises psychological studies showing how humans like to take control of situations and respond to challenges. On this view, there can be some loss in being forced to do something, even if it is otherwise in our best interests. This is why liberals favour persuasion and incentives to change behaviour, rather than coercion.

The language of rights has become more common in the past 20 or 30 years but it is not the only language used to defend liberal ideas.

We often hear arguments that the market economy is good because it leads to more wealth, which helps people lead comfortable lives; or that property rights give us security, and help us plan for the long-term; or that regulation is counter-productive because its costs exceed its benefits.

All these arguments lead to liberal conclusions, but they don’t necessarily assume that freedom is good in itself. Rather, the argument is that freedom is good because it leads to these various other good consequences.

These kinds of arguments are known as utilitarian or consequentialist.

I am wary of using utilitarianism as the basis of liberalism. It doesn’t take much ingenuity to use this kind of argument to justify restricting freedom as well as allowing it.

Indeed, the standard argument against utilitarianism is to say it means that the interests of some individuals can be sacrificed for the good of the many.

Despite the different views about the ultimate justification for liberal ideas, there are institutional arrangements that nearly all liberals favour in some way.

These institutions — private property, the market, civil society, and limited government — are the basis for a common political agenda.

Private property is vital to individual freedom because it gives people control over resources, which is in turn essential to them pursuing other goals.

Private property acts as part of the incentive system encouraging people to produce goods and services in exchange for a reward. In Adam Smith’s famous words: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”

While reasonably good laws on property are a feature of all Western societies, it should not be assumed that this is a complete part of the liberal agenda. Regulatory change can leave property in private hands, but greatly reduce its value or usability. These regulations may well be justified, but compensation should possibly be paid. This would protect property and probably improve regulation as lawmakers would have to consider the full costs and benefits of what they are doing.

Many liberals would also suggest taxation consumes too high a proportion of the income and wealth of citizens in virtually all Western countries.

Despite efforts to contain government spending, taxation levels are considerably higher now than a few decades ago. It becomes difficult for governments to protect property rights when they confiscate so much of it through taxation. Moreover, as the tax take rises and the welfare state grows, there are negative social effects. Welfare dependency grows and people lose their zest for freedom. I can think of few other developments so degrading for a human being.

The public choice economists such as James Buchanan argue that while the benefits of increased government spending are usually concentrated on a few, and they therefore have a strong incentive to lobby for it, the costs are diffuse and spread to consumers and taxpayers, who have only a weak incentive to campaign against it.

Parties like ACT and think tanks like the CIS try to cut through this logic. While it is true that the costs of any one new programme are often not high, cumulatively they are very expensive — which is why we have such large states today. There needs to be a public interest view working against, or at least being sceptical toward, each spending programme.

When interest groups and leftists point to the person or industry worthy of a privilege or subsidy, it is our job to point out someone has to pay for it.

That was the intent behind Margaret Thatcher’s famous — or infamous — statement that “there’s no such thing as society.” She wasn’t, of course, saying that we don’t have social relations with each other, as leftists try to maintain. Rather, her point was that in the end “society” paying for things means many individuals and families paying for things.

Another vital liberal institution is the market. As with property, with which it is inextricably linked, arguments for the market can be found in more than one tradition of liberal argument.

A key feature of markets is that they are voluntary. They are based not on governments allocating resources from above, but on individuals and organizations making agreements from below.

The most common argument in favour of markets is that they are efficient wealth producers. The evidence for this is historical experience, but the logic is that the price signal incorporates economic information that is impossible to gather any other way, and that financial reward provides the necessary incentive to produce in an efficient way.

Attempts by governments to intervene in markets nearly always produce consequences which were unforeseen and which seem to require further intervention down the track. Breaking this cycle is one of our biggest challenges.

While considerable policy progress has been made toward increasing the role of markets, this is not an argument we have comprehensively won in the public’s mind. The public’s basic intuitions on economic matters often do not match the professional opinion of economists and this explains the popularity of the free lunch that politicians love to exploit.

Perhaps the greatest difficulty we have, though, is that more economic education on its own will not satisfy those worried about markets.

Economic concerns are of course intertwined with all sorts of other concerns, and the economic logic often does not come out on top. On issues such as tariffs, economic ideas are confused by nationalist sentiment. In the Australian context, most surveys show majority support for protection from overseas imports, but there is no question about imports from interstate.

Markets are commonly criticised for producing inequality. This is true. Inequality is an inevitable part of a free society. People have different attributes, ability and luck, and these produce very different outcomes, not just in money income, but in status and other forms of rewards.

To the extent that it is possible to radically reduce these inequalities, it can be done only through massive intervention in society and the economy — though even the totalitarian communist societies failed to create equality, merely entrenching a politically inspired form of inequality.

In my view, the pursuit of equality is one of the major drags on our societies. It so often presents itself as envy and hatred of the success of others and is anti-social in its mean-spiritedness. Liberalism has no place for such sentiments.

As I suggested before with my reference to Margaret Thatcher, liberals are sometimes accused of not believing in society, of thinking we are all just atomized individuals.

Nothing could be further from the truth. Liberals are in fact strong advocates of civil society.

Liberals do, however, have a distinctive view of civil society. As against conservatives, we are sceptical of state plans to prop it up, which can too easily mean these institutions being co-opted into pursuing state purposes, rather than their own.

As against leftists, we are sceptical of state regulation of civil society. In Australia, for example, voluntary associations are increasingly regulated by anti-discrimination law, meaning they must take members they do not want. This can fundamentally change the character of the association and constitutes a breach of freedom of association.

Most liberals also favour various constitutional and legal devices to constrain the state.

One common device is periodic elections. The fear of electoral defeat is a restraint on government. Few liberals share the romantic idea of involvement in politics as being a high duty of the citizen and an intrinsic good. There are too many other good things one can do with life to privilege politics in this way.

Liberals, however, worry about the “tyranny of the majority.” This has led to various other constitutional devices to restrict the opportunities for undue infringement of freedom.

The most famous of these is the American Bill of Rights, guaranteeing a range of individual freedoms. There is some debate in Australia about the desirability of a Bill of Rights. Courts interpret laws in ways never envisaged by those who wrote them or voted for them. When the law is constitutionally entrenched it is — whatever is not expressly forbidden is allowed — and using the political process to keep parliaments quiet.

In my view, the last thing we want is a really efficient government. We should try to make it as difficult as possible for governments to pass legislation, even if it is legislation that we, as liberals, truly want.

A critical part of any constitutional strategy for limiting government is an independent judiciary, that can arbitrate claims the government is stepping beyond its legal power, and has the strength to issue an enforceable order against the government.

This is the critical element of what is often called the “separation of powers” and it is important in the enforcement of ordinary laws as well as constitutional laws. Separation of power controversies these days seem more about the courts trespassing on issues that are rightly the legislature’s, rather than the legislature threatening the judiciary.

The great liberal philosopher F.A. Hayek never gave up warning us to be vigilant in the defence of liberty. The role of the CIS is to inspire people with that vision — of free men and women in free societies, willingly assuming responsibility for themselves and watchful of the never-ending attempts of others to take their freedom away.

Greg Lindsay is the executive director of the Centre for Independent Studies. The above is an abridged version of a speech to ACT’s Auckland regional conference last weekend.