Freeman

ARTICLE

Freedom Versus Fear

Indulgence of Fear Inflicts Serious Economic Penalties

MARCH 01, 1994 by JOHN ATTARIAN

Dr. Attarian is a freelance writer in Ann Arbor, Michigan.

Friends of freedom tightly see government control as a threat. From this many have passed on to condemn government and to call for anarchy, a minimal state, and so on. But while this line of thought has been fruitful of much insight, it risks engrossment in technical arcana of libertarian theory anarchy, public finance via lotteries, and so on and quite forgetting that freedom’s real enemy is not government itself but the frailties of human nature that result in its illegitimate use. Some of these weaknesses have received careful study. Envy, for example, is the subject of a brilliant treatise by Helmut Schoeck.[1] But one of freedom’s worst foes is, quite simply, fear.

Fear of what, specifically? Fear of failure, fear of responsibility, and above all fear of uncertainty, insecurity, and financial loss and suffering brought on by competition, technological change, and the inescapable fact that “time and chance happeneth to them all” (Ecclesiastes 9:11). Fear, in short, of life and its mishaps.

These fears lead to demands for government to protect the fearful from what they fear. Indeed, much of today’s colossal government intervention into the free market can be traced, ultimately, in whole or in part, to fear on the part of some group, or to politicians’ appeal to that fear: antitrust laws, to fear of larger or more efficient firms; regulation of railroad freight rates, to large railroads’ fear of being underbid by their competition; agricultural subsidies, acreage restrictions, and price controls, to fear of commodity price fluctuations; protectionism, to fear of foreign competition; Social Security, to fear of destitution in old age; Medicare, to the elderly’s fear of unaffordable health care; unemployment compensation, to fear of hardship occasioned by job loss; minimum wages, to fear of being paid a lower wage (and, sotto voce, labor unions’ fear of competition from cheaper labor); graduated income taxes and inheritance taxes, to fear of large incomes and concentrations of wealth; deposit insurance, to fear of losing savings in a bank crash; and so on almost ad infinitum.

The High Cost of Fear

All this indulgence of fear has not only severely crimped our liberty but also inflicted serious economic penalties. Thomas Hopkins, of the Rochester Institute of Technology, has estimated the 1992 cost of regulations at $564 billion, counting such things as protectionist trade barriers (e.g., sugar quotas) and paperwork requirements.[2] The huge borrowings needed to finance the federal government gobbled up 62.8 percent of funds raised in our credit markets in 1991 and 51.8 percent in 1992.[3] One would think that, confronted with such huge costs of fear and its indulgence, most of us would find the case for stoicism and freedom self-evident and overwhelming. Unfortunately, thanks to certain hard facts of life, it is not so simple as that.

Freedom is not a free gift. There is no such thing as something for nothing. Like everything else in life, freedom has a price: responsibility, insecurity, and the possibility of failure, of unforeseen calamity, of suffering, of paying for the mistakes liberty leaves one free to make.

To most people these burdens are insupportable, or at least onerous. We are physical beings vulnerable to suffering and aware of our mortality, and therefore all of us are, or have been, or will be, afraid for our prospects in the material world. Hence human beings are inherently vulnerable to the temptation to indulge fear rather than be ashamed of it and strive to override it. And hence we will always face a powerful temptation to enlist government to interfere in the workings of a free economy to protect ourselves or others from suffering and to regard such interference as humane and necessary.

Enthusiasm for liberty tends to vary with the position of the economy in the business cycle. During a boom, with broadening opportunity and rising incomes and living standards, paeans to freedom and free enterprise abound—witness the business advocates of the nineteenth century, the twenties, and the eighties. When prosperity withers, so does allegiance to the free market; every economic downturn brings not only vulnerability to setbacks and actual suffering but also demands that the government “do something”: “stimulate” the economy, pass a jobs bill, drive down interest rates, protect industries from foreign competition, forbid plant closings, provide unemployment compensation, furnish national health care, and on and on.

The Challenge of Freedom

All this raises a hard question: does freedom demand too much of us? Is it unfeasible for fearful, mortal beings? Fyodor Dostoevsky feared so. In the famous “Grand Inquisitor” chapter of Dostoevsky’s The Brothers Karamazov, the Grand Inquisitor grimly predicted that Christ’s gift of freedom would be spurned by a humanity fearful for its material well-being, and that humanity would trade freedom for guaranteed sustenance:

Judge Thyself who was right—Thou or he [Satan] who questioned Thee then? Remember the first question. Its meaning was this: “. . . nothing has ever been more insupportable for a man and a human society than freedom. But seest Thou these stones . . . ? Turn them into bread, and mankind will run after Thee like a flock of sheep, grateful and obedient, though forever trembling, lest Thou withdraw Thy hand and deny them Thy bread.” But Thou wouldst not deprive man of freedom . . . . Thou didst reply that man lives not by bread alone. But dost Thou know that for the sake of that earthly bread the spirit of the earth will rise up against Thee and will strive with Thee and overcome Thee? . . . In the end they will lay their freedom at our feet, and say to us: “Make us your slaves, but feed us.” They will understand at last, that freedom and bread enough for all are inconceivable together.[4]

The economic collapse of the Soviet empire and the privations of the Communist bloc’s people have demonstrated that on the economics, at least, the Grand Inquisitor was wrong: bread for all is inconceivable without freedom. And during the eighteenth and nineteenth centuries, Americans and Britons, contrary to the Grand Inquisitor’s assertions, were perfectly willing to risk bread in exchange for freedom and a chance of perhaps more bread in the future, and so were the immigrants who came here. That is, they had sufficiently strong characters to accept the chances of life, and to function, and function well, in a climate of considerable uncertainty offering no guaranteed economic payoff for their actions.

It emerges that freedom is perfectly feasible but only given a certain sturdiness of character. The burdens of physical and financial insecurity and personal responsibility being higher in a free economy than in a mixed or socialist one, it stands to reason that the psychological demands of freedom are in many ways far heavier than those of servitude. One need not be sturdy or brave to collect entitlements and be shepherded by regulators and social workers through a life made artificially tidy by miles of red tape. But one does have to be brave to take one’s chances in a free labor market, assume responsibility for one’s own well-being, make one’s own provision for old age and ill-health. And one has to be something of a hero to venture out into the unknown as an entrepreneur, staking one’s all on an idea. A sturdy character is required to make freedom work—and to keep people loyal to freedom in the face of risk and adversity, and brave enough to face them without appealing to the state for succor.

It follows as well that if and when widespread sturdiness of character ever gives way to widespread fearfulness, freedom will be in trouble, and the Grand Inquisitor will have the grim last laugh. Indeed, amid the current demand for universal health care, one may almost hear the Grand Inquisitor whispering to today’s “democratic despots” on the Potomac: “In the end they will lay their freedom at our feet, and say to us: ‘Make us your slaves, but protect us.’ They will understand at last that freedom and health care for all are inconceivable together.”

Growth of government since the onset of the Great Depression in 1929 may be taken as an indicator of an alarming decline of courage in our national life, a decreasing willingness on Americans’ part to take their chances in a free market and to allow market forces free play.

In the same period, as many observers have noted, American life became increasingly secularized. This does not mean that most Americans became atheists or agnostics. Rather, religion’s grip on many people simply weakened; attaining earthly happiness and prosperity became a higher priority than leading a life pleasing to God. God was not so much deliberately dismissed as forgotten in the rush to attain an abundant and pleasant lifestyle. In intellectual circles, which unfortunately are also the opinion leaders of American life, atheism and agnosticism did become not only respectable but widespread—not only on the socialist, secular humanist Left but also on the libertarian Right, with the rise to fame of the atheist-egoist Ayn Rand.

These are not merely parallel and unrelated developments. As Aldous Huxley observed, a teleological chain runs from metaphysics all the way to economics and politics: “It is in the light of our beliefs about the ultimate nature of reality that we formulate our conceptions of right and wrong; and it is in the light of our conceptions of right and wrong that we frame our conduct, not only in the relations of private life, but also in the sphere of politics and economics. So far from being irrelevant, our metaphysical beliefs are the finally determining factor in all our actions.”[5]

Thus one set of metaphysical beliefs will yield one set of political and economic beliefs, behaviors, and institutions, and another metaphysic will generate a quite different politics and economics. The contrast between the limited government and free economy of early America under the Founding Fathers, most of whom were Christians or at least theists and who lived in a thoroughly Christian culture,[6] and the total state and rigidly planned economy of the atheist, materialist Soviet Union confirms Huxley’s statement. A being dignified by possession of an immortal soul has an unalienable right to be free; a mere piece of matter conditioned and determined by forces and relations of production does not.

Metaphysics affects economics and politics through, among other channels, the prevailing attitude of the population. Faith is a powerful wellspring of courage. Faith in God leads to faith in existence and life themselves. If the world is the work of a benevolent personal God, and one is God’s child, then it follows that existence is fundamentally good and that the world is one’s home in which it is possible to live, prosper, and work out one’s salvation. This bedrock metaphysical confidence enables one to function: to decide, choose, act—indeed, to run risks. To a person with such psychological underpinnings, the hazards and burdens of the free market are tolerable. With faith in the essential goodness of life and in the ultimate outcome, such setbacks as occur can be taken calmly.

Put another way, religion deflects fear upward, replacing fear of existence with fear of the Lord. In liberating people from fear of living, religion makes them fit for freedom.

Religious Decline Breeds Fear

The corollary is that a decline of religion, marked by a loss of faith, yields a decline of courage. Without God, the universe becomes inexplicable and alien, and therefore frightening—and one has no one to turn to for strength, succor, consolation. Nor does one have metaphysical grounds for seeing life as fundamentally good or for having faith in the future. One’s fear of life rises. This in turn yields a weakening allegiance to the free market and a greater demand for state succor.

The consequences of religion’s decline ramify harmfully in other directions as well. A declining attachment to God goes hand in hand with greater attachment to the things of this world, which produces, understandably enough, a greater fear of losing them. This too diminishes willingness to run the risks freedom entails, and more appeals to government for protection.

The rising fearfulness attendant on loss of religion results in more government intervention into a free economy indirectly as well as directly. The problems of sin and fear are intertwined. When people are afraid they are more likely to be ruthless in pursuit of their interests, partly, perhaps, to create a zone of security and power in an uncertain and frightening world; scruples become unaffordable luxuries, and without belief in a divine Judge, they become impotent to curb wrong behavior. Hence a frightened, secularized population is more likely to engage in fraud, breach of contract, rapacious looting of corporations (via exorbitant salaries, bonuses, and stock options), and so on. Observers will perceive this conduct as “greed,” “selfish capitalism” and “market failure.” Blind to the underlying cause, they will proclaim that the market is incapable of policing itself, and so they will demand more government control.

Friends of freedom have undoubtedly done well to master and disseminate economic arguments for free markets and limited government. In economics, liberty’s advocates have done the most work, and the achievements of Ludwig von Mises, Friedrich Hayek, Milton Friedman, Henry Hazlitt, Israel Kirzner, and others have been enormous. Granted their premises, their arguments for the market are overwhelming.

But we delude ourselves if we think that, having demonstrated logically that the free market is the optimum economic system and that interference is dysfunctional, we have routed the enemy. One of the drawbacks of the assumption of human rationality popular among classical liberals and libertarians is that it ill equips its believers for coping with irrationality. It produces the dangerously optimistic corollary belief, as the British historian Correlli Barnett wrote, “that once something has been demonstrated to be absurd or self-destructive it is as good as written off. However, while you may rightly tell a drunkard that drink will kill him if he does not give it up, how do you stop him drinking?”[7]

Since the true and perennial enemy of freedom dwells in a part of human nature that is largely irrational, it is no more than superficially amenable to rational persuasion. Few people frightened of insecurity and hardship are really interested in, or moved by, economic arguments about how freedom and acceptance of risk produce widgets. They do not want abundant widgets, they want their fear to go away. In the eyes of the fearful person, the danger is real, and his fear is rational. After all, pain hurts. And anyone promising relief from pain or the threat of pain will receive his unwavering support—witness the incredible loyalty of the American electorate to Franklin Roosevelt, the enduring Democratic strength among poor and blue-collar voters, and Bill Clinton’s support in the 1992 election from those worried about health care.

The Necessity of Soulcraft

Hence to secure the foundations of a free society we must cultivate the character of the people who live in it. Because fear of suffering and dread of insecurity are inherent in human nature, and because time and chance happen to us all, we are always vulnerable to the temptation to seek state succor, and the battle against fear and for freedom must be waged anew in every generation. There is no permanent victory. Economic arguments are not enough. Philosophical arguments are not enough. Proofs that yielding to envy, desire for unearned gain, and fear is economically counterproductive are not enough. The only effective antidotes to evil and irrationality are soulcraft and character formation.

And the greater the erosion of character, the more attention lovers of liberty must give to it. The first great economist of freedom, Adam Smith, consciously grounded his economic thought in moral character.[8] But many later economists of freedom—the thinkers of the Manchester School, Carl Menger, Eugen von Bohm-Bawerk, Ludwig von Mises coming to maturity and formulating their theories and their economic defenses of the free economy in societies and cultures grounded in Christianity, when the underpinnings of soulcraft were still in place and when civilized people with sturdy characters were so numerous as to invite being taken for granted, rarely concerned themselves with the interplay of character and economics. For the most part, they did not have to; it was not an issue. Today, with soaring crime and violence, endemic illegitimacy and divorce, and rampant pursuit of “victim” status, we can almost take fear of living for granted, and with it widespread repudiation of the free market and demands for government help. In a disintegrating post-Christian society friends of freedom can no longer count on family, church, school, and society instilling the metaphysical and other core beliefs underlying a successful free economy.

Unfortunately, no one has ever explained how a free economy can work in the context of a decadent national character—if indeed it can. Economists, including free market economists, continue to spin theories and build models as if the problem did not exist.

A religious revival would aid the cause of freedom, but religion cannot be preached simply because it supports free societies and free markets. Such a pragmatic approach is too cynical to work and would be worse than no effort at all; atheists and statists would see through it immediately, and the resultant firestorm of disdain would set back the causes of both freedom and religion.

Nevertheless, if a return to religion is not feasible unless and until people are genuinely ready to hear it for the right reasons, friends of freedom should meanwhile grasp every opportunity to preach and reward the virtues that make for a sturdy character, and, better still, to provide that most powerful of teachers: a good example. In the end, a society, and an economy—is no better than the people in it. And in the end, if character formation and soulcraft are neglected, all the other work of freedom, however useful, will be in vain. []

  1.   Helmut Schoeck, Envy: A Theory of Social Behaviour, tr. Michael Glenny and Betty Ross (New York: Harcourt, Brace & World, Inc., 1969; Indianapolis, Liberty Fund, 1987).
  2.   “Cost of Regulation Isn’t Easy to Figure But Estimates Exist,” Wall Street Journal, September 23, 1992, p. A10.
  3.   Federal Reserve Bulletin, May 1993, p. A39, Table 1.57, Funds Raised in U.S. Credit Markets. Percentage calculations are mine.
  4.   Fyodor Dostoevsky, The Brothers Karamazov, tr. Constance Garnett, Book V, Ch. 5.
  5.   Aldous Huxley, Ends and Means: An Inquiry into the Nature of Ideals and into the Methods Employed for Their Realization (New York: Harper & Brothers Publishers, 1937), p. 11.
  6.   See M. E. Bradford, A Worthy Company: Brief Lives of the Framers of the United States Constitution (Marlborough, N.H.: Plymouth Rock Foundation, 1982), and John Eidsmoe, Christianity and the Constitution: The Faith of Our Founding Fathers (Grand Rapids, Mich.: Baker Book House/Mott Media, 1987).
  7.   Correlli Barnett, The Collapse of British Power (New York: William Morrow & Co., 1972), p. 48.
  8.   Smith’s Inquiry into the Nature and Causes of the Wealth of Nations was but an application, in both philosophical and empirical fashion, of his moral philosophy—set forth earlier in his Theory of Moral Sentiments and Lectures on Jurisprudence—to market relationships.

Filed Under : Free Markets, Poverty, Health Care, Competition

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March 1994

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