The problem that I have been asked to discuss appears clear and simple. The problem of freedom consists in our ability to maintain the inheritance of freedom in a changing world. But say as much as “changing world,” and you are in for alarums and excursions from right and left – especially from the right and the left, the children of Light and the children of Darkness being equally unhelpful (and unclarifying, I am afraid); in effect, sometimes one would wish to be quite sure which was which.
I mean by freedom concrete institutions, civic liberties – freedoms (in the plural) – the capacity to follow one's personal conviction in the light of one's conscience: the freedom to differ, to hold views of one's own, to be in a minority of one, and yet to be an honored member of the community in which one plays the vital part of the deviant. It is freedom to follow what the Anabaptists – and the Quakers after them – called the “inner light” – or, in terms of political theory, to be in safe possession of the priceless achievement of John Stuart Mill's century.
I admit that there may arise a dilemma of national security versus civic liberties. To ignore it is to bury one's head in the sand. However, it need not prove fatal to liberty, if tackled in a spirit that is open both to the realities of the situation and to the transcendent principle of political freedom.
Also, I readily admit that I do not mean by freedom the right to sweat one's fellows, to make inordinate gains without commensurate service to the community, or to keep technological inventions from being used for the public benefit, or the liberty to profit from public calamities engineered from private advantage. If such freedoms disappear, it is all to the good. John Stuart Mill, though at that time a convinced upholder of laissez-faire economy, rejected the defense of private trading or private enterprise as a matter of individual freedom, as unrelated to the fundamental values of freedom of thought, mind, and conscience.
Let me repeat my first statement. The problem of freedom consists in our ability to maintain our inheritance of freedom in a changing world. For it is held that change must destroy free institutions. This is argued in two very different keys: in Milton's language, that of Satan and that of the angelic host.
Satan argues: “Don't worry, go ahead; free institutions are a bourgeois fraud, and change will inevitably do away with these ideologies of capitalism.”
The other side echoes the premise that change will do away with freedom, but draws the opposite conclusion: “Stop! Do not try to reform capitalism, for if you interfere with free enterprise you will inevitably lose your freedom.”
Between the Marxist determinism of the powers of darkness and the laissez-faire determinism of the seraphic host, we find ourselves the victims of two kinds of inevitabilities: Marxist inevitability, which sometimes almost exultantly proclaims the inevitability of the loss of our freedoms, unless we resign ourselves to the status quo, changelessness and certain destruction; and laissez-faire inevitability, which proclaims precisely that fatal changelessness in a changing world, compliance with laissez-faire preconceptions, under the threat of an (allegedly) otherwise inevitable serfdom. In my conviction, these are merely two different forms of the same creed of economic determinism – a materialistic legacy of the nineteenth century – which economic history does not bear out.
Marxist determinism is based on some kind of railway timetable of social development: Upon slave society follows feudalism, upon feudalism capitalism, upon capitalism socialism. Ideologies move in parallel – after a kind of Auguste Comte timetable of theology, metaphysics, positive science. Everything is ultimately predetermined – including ideologies, institutionalized or not. In the long run the economic basis of society, that is, technology, pulls into line the conditions of production, in other words the property system, and both together pull into line the superstructure of institutionalized ideas and valuations. Irrigational technique not only produces a slaveholders' society, but such a society must also ultimately produce fetish idolatry; the hand mill not only produces a feudal society, but such a society must also ultimately produce a church religion; the steam engine not only produces a bourgeois society, but such a society must also eventually produce the ideologies of liberty, equality, and fraternity; electricity, and a fortiori the atomic age, must produce socialism, under which liberty, equality, and fraternity disappear again as ruling ideologies and are replaced by dialectical materialism.
Now, there is an element of essential truth in all this. Technology and ecology decisively limit the basic structure of human society and may deeply influence its ideology. But only under market economy do economic factors not only limit, but determine culture. Only here does the economy determine the shape and form of society. Economic determinism is here a massive fact. But only here. As a description of earlier periods, it is a mere anachronism, while as a forecast of the future it is no more than a prejudice.
“Marxism,” as well as laissez-faire, mirror nineteenth-century conditions. A market economy is an economy organized through markets, that is, through a supply–demand–price mechanism. No one can, in principle, exist under such conditions unless he buys goods on markets with the help of income derived from selling other goods on other markets. But what makes a market economy is its self-regulating character. This springs from the inclusion of the factors of production, labor, and land into the system. No society before our own ever permitted the fate of labor and land to be decided by the supply–demand–price mechanism. Once this is the case, society is economically determined. Why? Because labor is only another name for man, and land for nature. Market economy amounts to the handing over of man and his natural habitat to the working of a blind mechanism running in its own grooves and following its own laws. No wonder that the picture of economic determinism arose for a society governed by the action of an economic mechanism. This was a picture of actuality.
But, as the economic historian is bound to add: of a unique actuality. Normally the economic factor is merely a limiting factor in human history. – Sure, no powerful navies are ever developed in countries that have no coast; nor are polar bears hunted in tropical waters. But the pattern of culture, the major cultural emphasis in society, is not determined by either technological or geographical factors. Whether a people develops a cooperative or a competitive attitude in everyday life, whether it prefers to work its technique of production collectively or individualistically, is in many cases strikingly independent of the utilitarian logic of the means of production, and even of the actual basic economic institutions of the community. The very same occupations and techniques of production are worked in the spirit of antagonistic competition by one group of people, while another prefers to work them in a harmonious spirit of mutuality and noncompetition. The work of modern cultural anthropologists like Margaret Mead, Forde, or Thurnwald has made this abundantly clear. Yet it was such a mistaken belief in economic determinism as a general law that made many Marxists – not, to my knowledge, Marx himself – prophesy that our personal freedom must disappear together with the free enterprise system. Actually, there is no necessity for this whatever. Emphasis on liberty, on personality, on independence of mind, on tolerance and freedom of conscience is precisely in the same category as cooperative and harmonious attitudes on the one hand, antagonistic and competitive attitudes on the other – it is a pervasive pattern of the mind expressed in innumerable ways, protected by custom and law, institutionalized in varied forms, but essentially independent of technique and even of economic organization. Under private enterprise public opinion may lose all sense of tolerance and freedom, while under the strictest regulation of a war economy the power of a free public opinion was greater in Britain and in the USA than ever.
German and Russian planned economies certainly were accompanied by an almost total absence of civic liberties. But where's the proof that institutionalized freedoms were ever intended in Germany, or in Russia since the setting aside of the new constitution? And whether intended or not: the laissez-faire argument hinges on the alleged effects of the absence of freedom of choice in employment. Yet reliable investigation has shown that, in practice, no individual direction of labor even took place either in Germany or in Russia. Political intolerance and political regimentation were entirely a matter of propaganda, supplemented by political and administrative methods. Yet police methods would be applicable in any police state, laissez-faire economy or not: That crucial link was missing. Or take more recent developments: Is there any evidence that, during the relatively free economy period of 1946–8 in the USA, civic liberty standards improved, as against 1932–45? As everyone knows, the opposite was the case; but – again – for reasons independent of economic policies and directly related to more general factors. Or, finally, England: According to laissez-faire standards, England has long passed the line that separates freedom from serfdom. The government has, formally, absolute powers with regard to the direction of labor, and on very rare occasions has even used them. But has Britain ceased to be the country whose standards of civic liberties are a model for the world?
But this self-same determinism reappears today with another emphasis. Ironically enough, it is often voiced by those who imagine themselves to be the protagonists of anti-Marxism. We are warned that, unless we uphold the market system in its nineteenth-century form, which is in principle identical with that of a market economy, we inevitably lose our freedoms.
But is there more truth in the new adage than there was in the old? True, appreciation for freedom of conscience, freedom of speech, of religion, of association, and so on was institutionalized together with the spread of the market system. True, the rights of radical, religious, national minorities were increasingly safeguarded as the century became older. The basic argument is that these freedoms would necessarily and inevitably disappear again, together with the economic institutions of the period. Such views are being strongly held by well-meaning persons of integrity, among them Professor Hayek.
The origins of these gloomy prophecies lie in the beginnings of market economy. They are no truer today than they were then. It was prophesied that under our economic system of private ownership we can have liberties only as long as we do not have democracy, for under democracy capitalism would either be destroyed by the mob or survive only at the cost of liberty, in other words under a dictatorship. Nothing could be more deterministic, and at the same time more untrue. This view was strongly held by Lord Macaulay, the typical representative of Whig opinions – the views of the enlightened but uniquely class-conscious aristocracy of Britain.
I beg your leave to read to you parts of a letter that he wrote in 1857 to an American friend living in New York: the Honorable H. E. Randall. Judge for yourselves how much truth there was in the forebodings of economistic prejudice.
You are surprised to learn that I have not a high opinion of Mr. Jefferson, and I am surprised at your surprise. I am certain I never wrote a line and I never in Parliament, in convention, or even on the hustings, a place where it is the fashion to court the populace, uttered a word indicating the opinion that the supreme authority in a state ought to be entrusted to the majority of citizens told by the head; in other words, to the poorest and most ignorant part of society. I have long been convinced that institutions purely democratic must, sooner or later, destroy liberty or civilization, or both.
In Europe, where the population is dense, the effect of such institutions would be almost instantaneous. What happened lately in France is an example. In 1848 a pure democracy was established there. During a short time there was a strong reason to expect a general spoliation, a national bankruptcy, a new partition of the soil, a maximum of prices, a ruinous load of taxation laid on the rich for the purpose of supporting the poor in idleness. Such a system would, in 20 years, have made France as poor and as barbarous as the France of the Carlovingians. Happily, the danger was averted and now there is a despotism, a silent tribune, an enslaved press; liberty is gone, but civilization has been saved. I have not the smallest doubt that if we had a purely democratic government here the effect would be the same. Either the poor would plunder the rich and civilization would perish or order and property would be saved by a strongly military government, and liberty would perish.
You may think that your country enjoys an exemption from these evils. I will frankly own to you that I am of a very different opinion. Your fate I believe to be certain, though it is deferred by a physical cause. As long as you have a boundless extent of fertile and unoccupied land, your labouring population will be far more at ease than the labouring population of the Old World; and while it is the case, the Jeffersonian policy may continue to exist without causing any fatal calamity. But the time will come when New England will be as thickly peopled as Old England. Wages will be low and will fluctuate as much with you as with us. You will have your Manchesters and Birminghams. Hundreds of thousands of artisans will assuredly be sometimes out of work. Then your institutions will be fairly brought to the test. Distress everywhere makes the labourer mutinous and discontented and inclines him to listen with eagerness to agitators who tell him that it is a monstrous iniquity that one man should have a million while another cannot get a full meal. In bad years there is plenty of grumbling here and sometimes a little rioting. But it matters little, for here the sufferers are not the rulers. The supreme power is in the hands of a class, numerous indeed, but select, of an educated class, of a class which is and knows itself to be deeply interested in the security of property and the maintenance of order. Accordingly, the malcontents are finally yet gently restrained. The bad time is got over without robbing the wealthy to relieve the indigent. The springs of national prosperity soon begin to flow again: work is plentiful, wages rise and all is tranquillity and cheerfulness.
I have seen England three or four times pass through such critical seasons as I have described. Through such seasons the United States will have to pass in the course of the next century, if not of this. How will you pass through them? I heartily wish you a good deliverance, but my reasons and my wishes are at war and I cannot help foreboding the worst. It is quite plain that your government will never be able to restrain a distressed and discontented majority. For with you the majority is the government and has the rich, who are always a minority, absolutely at its mercy. The day will come when, in the state of New York, a multitude of people, none of whom has had more than half a breakfast or expects to have more than half a dinner, will chose the legislature. Is it possible to doubt what sort of legislature will be chosen? On one side is a statesman preaching patience, respect for vested rights, a strict observance for public faith. On the other is a demagogue ranting about tyranny of capitalists and usurers and asking why anybody should be permitted to drink champagne and to ride in a carriage while thousands of honest people are in want of necessities. Which of the two candidates is likely to be preferred by a workingman who hears his children cry for bread?
I seriously apprehend that you will, in some such season of adversity as I have described, do things which will prevent prosperity from returning; that you will act like people in a year of scarcity, devour all the seed corn and thus make the next year not of scarcity but of absolute distress. The distress will produce fresh spoliation. There is nothing to stay you. Your constitution is all sail and no anchor. As I said before, when society has entered on this downward progress, either civilization or liberty must perish. Either some Caesar or Napoleon will seize the reins of government with a strong hand or your republic will be as fearfully plundered and laid waste by barbarians in the twentieth century as the Roman Empire was in the fifth, with this difference: that the Huns and Vandals who ravaged the Roman Empire came from without, and that your Huns and Vandals will have been engendered within your country, by your own institution.
Thinking this, of course, I cannot reckon Jefferson among the benefactors of mankind.b
May I conclude by saying: America is still there. She is a democracy and has lost neither her freedom nor her prosperity. And it is my firm belief that, another century hence, a reformed American economy, stable, just, and prosperous will be the answer to the Macaulays of today: the answer of a people stronger than ever in its liberties and freedom.