The Reverend Dr. John K. Williams has been a teacher and is a free-lance writer and lecturer in North Melbourne, Victoria, Australia. He was resident scholar at FEE from April to October of this year.
The distinguished scholars of the British Royal Academy once were asked why it is that, when a live frog is immersed in a container filled to the brim with water, the water does not overflow. A lengthy and vigorous discussion resulted. Rival theories explaining this phenomenon were elaborated and analyzed. At long last, however, one member of the Academy filled a beaker with water, lowered a frog into it, and the problem which had so perplexed the scholars was solved. The water did overflow! The asking of a flawed question had spawned countless flawed theories!
In seeking to understand the freedom philosophy, it can be helpful to consider not only the vision Of a “good society” held by people embracing this philosophy, but also the subtly different questions these people ask and seek to answer. Indeed, one helpful way of attracting people to the freedom philosophy is simply to raise the questions that give birth to that philosophy. Let us consider some examples.
Nearly two and a half millennia ago the Greek philosopher Plato asked a question that he and numerous thinkers after him sought to answer. Putting Plato’s question in contemporary terms, we could phrase it thus: What social structures maximize the good that the best people can do, given that such people exercise political power?
Plato’s answer, elaborated in The Republic, demanded the isolation and rigorous training of a genetically superior group of people he called “the Guardians.” They would rule. To ensure that they would not be distracted from their task or open to corruption, both family life and personal possessions would be denied them. Such deprivations, however, would be a small price to pay: Freed from emotional ties and the desire to accrue wealth, they could devote themselves to the contemplation of truth and goodness. Knowing the truth, and loving the good, they would be fit to govern.
Throughout the ages, many variants of Plato’s question have been asked, and diverse answers given.
• Jean Jacques Rousseau in France dreamed of rule by men with privileged access to what he called “the general will” of a community—a “will” wiser and more beneficent than any individual’s will or any group of individual wills.
• The “Radical Tories” of early nineteenth-century Britain advocated rule by an aristocratic elite, whose financial security and refined tastes would lift them above self-interest and enable them to steer a nation in directions benefiting all.
• Karl Marx depicted rule by class-conscious workers and a liberated intelligentsia: Understanding that the ultimate goal of human history is the creation of a post- market, stateless society in which “class war” would be no more, their temporary dictatorial rule would lead to the truly “good” society.
Yet a question raised by the great successor of Plato, Aristotle, has long haunted philosophers: Who guards the guardians?
Plato, of course, would have dismissed the question. It assumes that the Guardians need to be guarded, whereas in truth the Guardians are so wise and so good that no safeguards are needed. That confidence, however, Aristotle did not share.
Neither did the classical liberals, the thinkers upon whose shoulders contemporary advocates of the freedom philosophy stand. They thus asked a very different question to that posed by Plato and his successors.
“How,” asked the classical liberals, “can men and women organize political life so that, should the least morally admirable members of a community acquire political power, the damage they could do would be minimized?” They did not assume that such people would gain power. But suppose they did.
The point can be made another way. Opponents of classical liberalism shared a belief in human perfectibility. They asserted that at some point in time a superior class would exist which would be free from the flaws of most human beings. This class would be fit to role.
This belief was rejected by the classical liberals. Writing in 1881 to Mary Gladstone, Lord Acton gave succinct expression to this viewpoint: “The danger is not,” he wrote, “that a particular class is unfit to govern. Every class is unfit to govern.” Why? Because all human beings are finite and fallible.
Hence, the classical liberals’ vision of the role of government. That role is no less and no more the protection of the equal liberty—the equal rights—of all. All men and women are to be free to formulate their own peaceful visions of the “good life” and to strive to make those visions a reality. No man or woman, no group of people—even the majority—is to be entrusted with the power coercively to “correct” the hopes and dreams of their fellows.
The corollary to this is economic freedom. In the absence of omniscience—complete and perfect knowledge—the centrally planned, socialist economy is a fantasy. No planners, however intelligent, could even begin to list the diverse and changing needs of the millions of human beings making up a modern nation, or somehow collate and synthesize all the information diffused among these millions of people.
Edmund Opitz once summarized the key political precept of the freedom philosophy: “Never give to a friend in government power you would not willingly cede to an enemy in government.” And that precept is born of the question first raised. Instead of asking, “What politico-economic structures maximize the good that the best can do, assuming that the best enjoy political power?” we should ask, “What politico-economic structures minimize the evil that the worst could do, were they to enjoy political power?”
Means and Ends
Typically, opponents of the freedom philosophy believe themselves to be in possession of a detailed pattern to which a truly “just” society must conform. They know what distribution of wealth is fair. They know how men and women should use their property. They possess a blueprint for perfection, or at least near perfection.
Recent philosophers have called this view of “justice” the “end-pattern” understanding of justice. The justice of a society is measured by the extent to which that society corresponds to the ideal pattern or blueprint.
The classical liberals, rather than asking what rules or laws make such outcomes possible, asked questions about rules and laws themselves.
In large part this was born of their skepticism that any person or group of people is in posses sion of a detailed blueprint for a perfectly “just” society. Yet a further insight led them to raise the questions they did.
Suppose one decides that in a “just” society, great disparities of wealth should not exist. To achieve this end, wealth must be transferred from rich to poor. Clearly, a rule specifying two groups of people—the “rich” and the “poor”—is required, and institutions must be created to effect the transfer.
Consider this rule in more general terms: Wealth shall be taken from group X and transferred to group Y. Given such a rule, and given the institutions making its enforcement possible, an obvious problem emerges. Who is to determine the identity of group X and group Y? Clearly, those in political power. Why should we assume, however, that these people will decide that group X shall be “the rich” and group Y shall be “the poor”? Why not a rule transferring wealth from the elderly to the young? From people of Jewish descent to Gentiles? Indeed, why not from the poor to the rich? Everything turns upon who happens to enjoy political power!
Considerable evidence has been gathered by public choice theorists for saying that the moment we accept rules discriminating between various groups in a community, wealth is invariably distributed from unorganized, information-poor individuals and groups to well-organized, information-rich special interest groups. The ideal situation, from a politician’s point of view, is to distribute wealth from people who do not know what they are paying to people who know precisely what they are receiving.
To use an example from Australia, high tariffs on textiles and clothing achieve just such an outcome. The owners of textile and clothing companies know precisely how such tariffs benefit them, as do unions involved in these industries. But most Australians have no idea that the tariffs cost the average Australian family some $900 a year. The politicians imposing the tariff alienate few of those who lose but are guaranteed the support of those who win.
Thus is born the politics of the jungle. Politicians carefully calculate how many special interest groups they must reward to be elected. These special interest groups shove their way to the government trough, utterly indifferent to the least organized, least politically significant members of society. And the entire sordid exercise is possible because rules discriminating between different sets of people are deemed proper!
The classical liberals saw one and only one way to avoid this state of affairs. They insisted upon the Rule of Law—and they defined law very carefully. They did not identify the Rule of Law with rule by any edict passed by representatives of the majority. Rather, they insisted that rule must be by general principles of just conduct, equally applicable to all people, in an unknown number of future instances.
Consider a law against murder. It applies to all. It is irrelevant to ask to what ethnic, financial, religious, or other group a murderer belongs. Justice is blindfolded. When such a law was passed, it was impossible to predict in advance what persons would run afoul of the law.
Compare a government which passes a rule imposing a wealth tax, It is perfectly clear when the rule is passed just who will be affected by it, and what reordering of the community will result.
Two very different understandings of justice have emerged. The first focuses upon some ideal pattern, the “justice” or “injustice” of a society being measured by its conformity to that pattern. The question to be asked is what rules and institutions enforcing these rules are needed to achieve conformity to the pattern.
The second meaning of justice focuses upon the form of the rules which govern a society. The question asked is whether those rules are laws classically defined—general rules equally applicable to all in an unknown number of future instances—or edicts which single out particular groups, awarding them special privileges or condemning them to carry special burdens. Once again, the question asked is all important!
The Problem of Poverty or the Problem of Wealth
In thinking about the different questions people ask, it is worth noting that questions often arise when people are confronted by the unusual or the unfamiliar. A bird in flight occasions no bewilderment; a man flapping his arms in full flight would.
Today the big question asked by men and women anxious to solve the problem of poverty is, “Why poverty?” The question is legitimate. Yet I suggest that the intensity and frequency with which the question is asked indicates that poverty is perceived as the puzzling exception to the normal state of affairs.
That abundance—material plenty—is taken for granted is perfectly understandable. Those of us living in relatively free-market economies have always known supermarkets with bulging freezers and groaning shelves. Yet, historically, the abundance we assume has been the exception rather than the rule. The life of all but a handful of men, women, and children who have walked this planet has been an unrelenting struggle for the material goods bare survival demands.
Two economic historians recently described historical reality by noting that the “economic lives of our ancestors . . . [were] of almost unrelieved wretchedness. The typical human society has given only a small number of people a humane existence, while the great majority have lived in abysmal squalor. We are led to forget the domineering misery of other times in part by the grace of literature, poetry, romance, and legend, which celebrate those who lived well and forget those who lived in the silence of poverty. The eras of misery have been mythologized and may even be remembered as golden ages of pastoral simplicity. They were not.”
The ex-Marxian French historian, Fernand Brandel, has authored a superb three-volume study, Civilization and Capitalism: 15th-18th Century. it constitutes an antidote to the romanticizing of humanity’s economic past.
As Brandel so devastatingly documents, European nations from the fourteenth century until the eighteenth century were caught in what is sometimes called a “Malthusian trap.” Frequently, communities increased their productive outputs, technological innovations leading to more plenteous crops. That, if you like, was the “good news.” The outcome, however, was an increase in life expectancy. There were more mouths to feed. The rate at which population increased was greater than the rate at which economic growth occurred. In a few years, people were back where they had started.
Then something unprecedented happened. In sixteenth-century England and the Netherlands, economic growth became a reality. More food, for example, began to be produced. The popu lation of these two nations began to increase. So far, so familiar. But then came the historical shocker. As the population increased, economic growth continued at a rate surpassing the population growth. Fewer children died. Life expectancy began to climb. Two nations actually had escaped the Malthusian trap!
The economic lot of surrounding nations enjoying equal or greater supplies of natural re sources and an equal or greater percentage of arable land remained as it always had been. Neither England nor the Netherlands was in possession of some new technological process. Nor could this marvel be ascribed to the acquisition of colonies. For no obvious reason, sixteenth-century England and the Netherlands were beginning to experience the abundance we today take for granted. Why there? Why then? The questions seemed unanswerable.
At long last economic historians, particularly Fernand Braudel and another ex-Marxian French historian, Jean Baechler, have thrown light on these questions. In the sixteenth century, England and the Netherlands independently witnessed the birth of a new system of property rights, a system approximating what we today call private property rights. The legal and political structures defining and enforcing this system were taking form. And the specters of recurrent famine and destitution began to retreat.
This system—private property rights—is the key to understanding a free market economy.
Voluntary exchanges of goods and services are as old as human history. Markets where such exchanges can take place are not new—Jerusalem of biblical days was a market city, as were all the great ancient cities. Private property in a limited sense obtained before the emergence of the free market economy, being one of the few constants of human history. The notion that primitive peoples rejected the concept of private property defies all available evidence. For example, prior to the coming of white settlers, the natives of South Africa took private property for granted, even though, not surprisingly, different tribes had different rules as to what sort of property could be privately owned.
What is unique to the system of private property rights at the heart of the free market economy is (!) the extension of private ownership from some goods to virtually all goods, (2) the extension of the right to property from some class or caste of people to all people, and (3) the efficient enforcement of private property rights by governments. Do not misunderstand me: The system of private property rights which emerged in sixteenth-century England and the Netherlands did not display these features in their fully developed form. But even if only embryonically present, the free market economy, and its handmaiden of limited government, began to grow.
Given that private property rights are fundamental to the operation of a market economy, the distinction between production and distribution collapses. Admittedly, that may sound strange at first hearing. After all, did not even John Smart Mill make the distinction? In the first chapter of Book II of his Principles of Political Economy Mill writes:
The laws and conditions of the production of wealth partake of the character of physical truths. There is nothing optional or arbitrary in them. . . . [I]t is not so with the distribution of wealth. That is a matter of human institution solely. The things once there, mankind, individually or collectively, can do with them as they like.
The point is that the phrase, “the things once there” is incomplete. What is “there,” so to speak, are owned things. At every stage of the productive process, what exists is owned, from machinery through raw materials through partially completed goods to the final product. To speak of a distribution of wealth that somehow is distinct from the production of that wealth is to make the absurd statement that, at the end of the productive process, there is a huge pile of unowned goods.
Such thinkers as Adam Smith, Carl Menger, Ludwig von Mises, and Friedrich Hayek, to name just a few, have shown us how any attempt to redistribute wealth disrupts the productive process, so that the creation of wealth declines. But even in a hampered market, production goes on. The United States continues to produce wealth even though the operation of the market has been sadly fettered. However, resources, particularly labor, are increasingly misallocated. The decisions of men and women whether to buy or to refrain from buying, to consume or to save, to invest in one industry or another, are more and more influenced by political decisions, rather than by price signals through the market.
When people owning some good find that their liberty to peacefully use or dispose of that good is curtailed, they “own” that good in a very attenuated sense. An element of uncertainty is introduced that affects people’s decisions and the productive process. Add to that what many of us perceive as the sheer immorality of transgressing an individual’s property rights, and a most disturbing state of affairs has been created. And all this is ultimately bred by confused thinking which separates the productive process of the market from the allocation of goods and services it creates.
Let me summarize my three main points:
• Ask not how to maximize the good that the best people can do with political power. Ask rather what economic and political structures minimize the evil that the worst people can do, were they to achieve political power.
• Ask not what laws are needed to impose upon a people some blueprint of an allegedly “just” society. Ask rather what limitations upon the law are needed if tyranny is to be avoided.
• Ask not how wealth is to be distributed. Ask rather how it was that a world which hitherto had known only destitution suddenly witnessed the birth of nations where abundance prevailed; and, how what these nations learned can be used for the enrichment of humanity and thus to the glory of God. 
6. Buchanan, J. and Tollison, R. (eds.), Theory of Public Choice: Political Applications of Economics (Ann Arbor: University of Michigan Press, 1972); Borcherding, T. (ed.), Budgets and Bureaucrats: The Sources of Government Growth (Durham, NC: Duke University Press, 1977).
7. Hayek, F., Law. Legislation and Liberty, Vol. I (Rules and Order) and Vol. II (The Mirage of Social Justice) (Chicago: Chicago University Press, 1973 and 1976). Cf. Dietze, G., Two Con cepts of the Rule of Law (Indianapolis: Liberty Fund, 1973).