economic freedom
Spring 2011

Society and Culture

A Question of Liberty

Steven D. Andrews

“We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”

Preamble to the US Constitution (1787)

The ratification of the U.S. Constitution in 1788 created “a new nation, conceived in liberty,” said Abraham Lincoln in his iconic Gettysburg Address. Lincoln’s focus was not on the Constitution, however, but on the revolution that had spawned it.

To Americans that event may be simply a proud chapter from history; others may think of it as just another war. But the American Revolution continues to transform human self-rule in ways most people have probably never considered. At stake both then and now is what the Constitution’s preamble refers to as “the Blessings of Liberty.”

The British colonials, whose vision created the United States of America, had embarked on their liberty quest in response to what Thomas Jefferson referred to as “a long train of abuses and usurpations,” political and economic, designed to place the American colonies “under absolute despotism.” In the celebrated Declaration of Independence, Jefferson went on to rehearse the history of those “repeated injuries and usurpations” by the government of King George III of England—all, he declared, “having in direct object the establishment of an absolute Tyranny.”

James Madison encapsulated the challenge that lay before the colonists as they sought to devise an alternative: “In framing a government which is to be administered by men over men, the great difficulty” is to “first enable the government to control the governed; and in the next place oblige it to control itself.” Their solution was to divide sovereignty between the federal government and the various state governments, and to further limit their power by separating government functions into executive, legislative and judicial roles, with checks and balances imposed on each.

Power to the People 

Since the birth of the United States, other nations have undergone revolutions of their own to form governments that would ensure liberty. The principle on which such governments are founded is embedded in an underappreciated phrase of the U.S. Constitution: “We the People.” Those three words set up a distinction between people and their government, establishing the idea that governments derive their power by consent from the governed and that they exist to secure fundamental human “rights.” As Jefferson eloquently stated it, “whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.” The preamble of the Charter of the United Nations similarly establishes its powers from a “We the peoples of the United Nations” statement.

It was this form of government that compelled Abraham Lincoln to vow at Gettysburg “that government of the people, by the people, for the people shall not perish from the earth.” Today that statement seems like a pronouncement from a prophet. For more than two centuries now, people throughout the world have engaged in their own pursuit of liberty and its blessings. In the last decade of the 20th century it was the nations of Eastern Europe. In 2011, governments in Northern Africa and the Middle East are being abolished and new ones instituted.

Without question, liberation from tyranny is essential to securing what Jefferson described as the “unalienable rights” of “Life, Liberty and the pursuit of Happiness.” The question is whether free individual political choice and the form of government by which people rule one another are sufficient to achieve those ends. Can such a simple formula transform tyranny into liberty and thereby secure for us and our children its blessings? Stripped of such blessings, among them sufficient material prosperity to eliminate the oppression created when we are deprived of life’s necessities, political liberty means little. Economic freedom is therefore both a result of and a reason for political liberation.

Enter the Economists 

The revolution in human government that began in 1776 is best understood if we appreciate another revolution that had been advancing for some time: the Industrial Revolution. While some historians describe it primarily as a process of socio-economic change that spanned more than two centuries, all agree that beginning in the mid- to late 18th century, there was a shift from manual and animal labor to machine-based manufacturing that revolutionized virtually every aspect of daily life in some way.

In his Lectures on Economic Growth, economist and 1995 Nobel laureate Robert E. Lucas Jr. wrote concerning the past 200-plus years, “For the first time in history, the living standards of masses of ordinary people have begun to undergo sustained growth.” He added that “nothing remotely like this economic behavior” has happened before. Commerce existed in the 18th century and had for some time, but it was insignificant compared to the amount of production slated for immediate consumption by the producers themselves. Industrialization changed all of that. The new technology meant that for the first time in history, an overwhelming majority of commodities and services were destined to be sold, bartered or exchanged in the market.

What breathed real life into the industrial revolution was Adam Smith’s The Wealth of Nations, an account of economics at the dawn of the period. Published in 1776, the same year the British colonies in America issued their Declaration of Independence, Smith’s work provided the science needed to exploit industrialization and mass manufacturing. The Wealth of Nations became, and remains, the foundation of economic thought and the single most significant work on the rise and applied principles of free-market capitalism. In conjunction with the implementation of Smith’s other principles, free-market capitalism meant that industrial technology could be exploited to liberate people from a subsistence-based life and to liberate the earth to produce to its full potential.

Smith’s thesis is that we all act on the basis of self-interest, and that when we are free to do so, whether we intend it or not, we promote what is best for society as a whole. He explains: “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. We address ourselves, not to their humanity but to their self-love. . . . Nobody but a beggar chooses to depend chiefly upon the benevolence of his fellow-citizens.” On that basis there is no need for the intervention of government or for orders from the top down. Smith, in fact, called such intervention “dangerous.”

Publication of The Wealth of Nations could not have been more perfectly timed. In the late 18th century the sentiment was (with some good reason) that economic oppression by the privileged ruling class was a source, perhaps the source, of virtually all social injustice. The masses reasoned that the excesses of monarchs and the wealthy aristocracy resulted in the waste of national resources, necessitating colonization and conquest and thus perpetuating war. Perhaps, it was reasoned, if need were rarer, life would be fairer and war a thing of the past. So The Wealth of Nations, with its thesis rooted in individual action apart from government intervention, meshed nicely with the new political sentiment for “government of the people, by the people, for the people”—a new liberal economic model to create a new economic reality within a new liberal political structure, and all of it centered on individual choice.

A Perfect World? 

The developed world now has more than two hundred years of this kind of political and economic liberation behind it. In that time we have seen people with free economic choice also demand free political choice. Likewise, the emancipation of peoples from political tyranny has led to the pursuit of economic liberation. These newfound liberties gave us hope—hope that we could, through a government of our own making, create a world capable of articulating a real law for all men.

U.S. president Franklin Delano Roosevelt spoke about that world in his address to Congress on January 6, 1941, as America prepared to join the Allies in liberating Europe from Hitler’s tyranny. Roosevelt saw a world of man’s making founded on four essential freedoms: freedom of speech and expression, freedom for every person to worship God in his or her own way, freedom to live a healthy, peaceful life free of want, and freedom from fear provoked by war and the mere threat of war. “That,” he declared, “is no vision of a distant millennium. It is a definite basis for a kind of world attainable in our own time and generation.” The vision he articulated in that speech was not for America alone but for people anywhere and everywhere. His “distant millennium” was an allusion to the biblical promise of the peaceful, prosperous, 1,000-year-long future world-ruling government of Jesus Christ on this earth. In Roosevelt’s view, men were competent, without a Messiah, to create a world order based on “the cooperation of free countries, working together in a friendly, civilized society.”

The revolution that Roosevelt described as producing that idyllic world order was to be perpetual, peaceful and steadily adjusting itself to changing conditions “without the concentration camp or the quicklime in the ditch.” But that is not the nature of the current revolutions in Northern Africa and the Middle East. It was not the nature of revolution in Eastern Europe and Russia in the last century. Nor, for that matter, was it the nature of the American revolution against the British crown in 1776.

We like to think of nations as cohesive groups of people who are linked by ancestry, language and culture. As it happens, mostly they are not. That fact has become ever more apparent since the Cold War thawed and the Berlin Wall came down in 1989. As an empire succumbed to the tide of political change, new systems of power and social organization emerged. And with them, a less coherent and less manageable world has materialized.

Government predicated on individual choice has only exacerbated the problem. With such a form of government came a rising tide of ethnic self-determination that spawned intra-national conflict all over the globe. The reason is simple: democracies reward the majorities who hold power. That is the tyranny of democracy. When those in the minority feel they are not represented by their government, they exercise their sovereign right to change their form of government. So nations unravel strand by strand. And as they do, international conflict ensues to prevent, if possible, what U.S. statesman and former professor of government Daniel Patrick Moynihan labeled Pandaemonium, the capital of hell in John Milton’s Paradise Lost. There is, it seems, no vision or belief, no theory or structural scheme, whether economic or political, acting in tandem or alone, capable of suppressing this disintegration (Proverbs 29:18). So governments today, representative or not, are in crisis.

Tyranny by Our Own Hand 

Roosevelt’s generation has passed. What remains is our struggle with Madison’s “great difficulty”: how to frame and enable a government administered by men over men to control both the governed and itself. The truth is that no form of human government can alter the nature of man. And unless our nature changes, our individual choices will only ensure our ultimate destruction (Proverbs 14:12). When the choices are ours, the tyranny is self-inflicted. How are we to be liberated from oppression that comes on us by individual choice?

Here Adam Smith’s market economy based on self-interest offers no help. Today, after three decades of market triumphalism, we are living with the fallout from an economic crisis created by market mania and deregulation. First there was the free-market fundamentalism of the Reagan-Thatcher years, the decade of the 1980s. Then we witnessed the market-friendly neo-liberalism of the Clinton-Blair years (most of the 1990s). While that era moderated free markets, it also consolidated the faith that markets are the primary mechanism for achieving public good.

True to Smith’s vision, markets today, by design, function primarily on the basis of human self-interest—in a word, greed. In any other context, greed is seen as an evil born of defective and undisciplined moral character. Not so in the context of the market, where the competing interests of buyer and seller in a shared transaction are capable (we are told) of performing the alchemy necessary for transforming an individual evil into something for the overall good of society.

The alchemist’s formula is flawed, however. Questions concerning what we ought to do in society and in politics are unarguably moral and ethical and not, per se, economical. Moral and ethical choices demand values-based education, and decisions that are values-based often require us to subordinate self-interest, to exercise patience and defer personal gratification. But the market does not teach us to behave on the basis of values, nor can it. Market-based solutions dictate that decisions are arrived at on the basis of balancing costs and benefits. Most of us will choose a path that appears to provide us with the greatest benefit in the shortest period of time. This rarely produces the best result for us or for society as a whole. And if market-based incentives are necessary to provide us with the motivation to do the right thing, then what choice will we make when those incentives are not present and the only thought pattern we know is to choose what appears to provide us soonest with the greatest benefit at the lowest personal cost?

The most significant flaw in the alchemist’s formula is its failure to recognize that markets change the way we think. In our market-based world we are constantly compelled to assign value to commodities that we need or want and then to act on the basis of whether they are worth their cost. If the market were restricted to “things,” perhaps Smith’s formula would have some value. But the market’s reach is much greater. Today the market ethos has been introduced into schools: students are paid if they improve their academic performance. Health-care institutions, prisons and charitable organizations have likewise adopted the market model for their operations. On a national level, war, once fought by patriots, is now outsourced to private military contractors. And one leading economist, Nobel Prize winner Gary Becker, has suggested that the United States solve its immigration problems by putting U.S. citizenship on sale.

The fact that market principles have been adopted to resolve problems in these areas of life is sufficient to demonstrate that the market affects the way we think and how we assign value to not just things but people and their lives. And that is the point: markets are supposed to affect what we value and how we determine the worth of what we value. That is the market’s primary function. Simply put, what we do affects how and what we think. Markets, because they are expansive and self-reinforcing, cannot liberate us. They can only enslave us to ourselves—a self-imposed tyranny.

And what of the earth that sustains our lives? Industrialization and a free-market economy were supposed to have liberated it as well. But the earth’s resources are pushed to produce so much, so fast, that even renewable resources often have no time to regenerate. Industrialization and its pollution are altering our environment in unpredictable ways, and not for the better. We are tyrannizing the only planet we have to live on. Our pursuit of the blessings of liberty has defiled the earth and violated a covenant about which we are mostly ignorant. As a result, the Bible says “the earth lies defiled under its inhabitants” (Isaiah 24:5, English Standard Version). And as our planet struggles to free itself from the bondage to which we have subjected it, we seem cursed by the “natural disasters” that plague us.

Needed: A New Model 

The liberty that people hoped a government and an economy based on individual choice could create has simply not materialized. No one can deny the need for people to participate in governing themselves, nor the need for markets. With respect to government and man’s tortured history with it, the fundamental question is whether we are actually capable of governing ourselves, others and the earth. With respect to markets, we need to realize that there are spheres of life in which they do not belong.

Now the democracy of self-determination is supplanting representative forms of government that have shaped the past two centuries while capitalism cuts across cultures and defines the values of every generation within its reach. Left in the wake of these two forces are generations of children brought up to believe that there is no social process beyond politics, that there are no spiritual values or truths beyond those they define for themselves or those imposed by the natural forces of the market.

The liberation movements that began in 1776 are not the last, best hope of man or the earth. There is one remaining alternative that humankind has not yet tried. The principles upon which that government and its economy are founded are outlined in a legislative scheme given to another nation “conceived in liberty,” the ancient nation of Israel. The structure of its government was values-based, provided for the exercise of individual choice, and accommodated markets. It also provided the means that, if followed, would balance power systems and social structures to protect the weak and support the poor and disenfranchised. Its most amazing feature was its legislative scheme to reset society and economy for each generation. Its purpose was to liberate the people from the tyranny of their own choices—the very tyranny to which our revolution of liberation has subjected us today. But because that legislation was, to our knowledge, never fully implemented, it never did have its intended effect on the conscience of individuals or the nation.

In our age, the search for peaceful cohabitation between the nations of the world is as urgent as it ever has been. What is needed is a model from which to fashion a global community that will, for generation after generation, live so that all may live. The tragic truth is that this world’s peacemakers are thwarted by governments and institutions that mock even the idea of peace.

Such a model does exist. And while its implementation will meet resistance, its eventual establishment is certain. That government will provide the liberty and the blessings that have eluded man’s efforts. In the next issue, we will explore that government.