T. S. Eliot said, “Humility is the most difficult of all virtues to achieve; nothing dies harder than the desire to think well of oneself.”

If you’re not sure what humility is, these lyrics from an old Mac Davis tune will at least remind you of what it’s not:

Oh Lord it’s hard to be humble when you’re perfect in every way.

Oh Lord, it’s hard to be humble!

I couldn’t disagree more with those words. It’s not hard to be humble if you stop comparing yourself to others. It’s not hard to be humble if your focus is building your own character. It’s not hard to be humble if you first come to grips with how little you really know. “The wise person possesses humility. He knows that his small island of knowledge is surrounded by a vast sea of the unknown,” noted Harold C. Chase.

One of the greatest teachers and theologians of our day, Pastor Timothy Keller of Redeemer Presbyterian Church in New York City, makes this keen observation: “Until the twentieth century most cultures, including ours, held that having too high an opinion of oneself was the root of most of the world’s troubles. Misbehavior from drug addiction to cruelty to wars resulted from hubris or pride—a haughtiness of spirit that needed to be deterred or disciplined. The idea that you were bigger or better, or more self-righteous, or somehow immune from the rules that govern others—the absence of humility, in other words—gave you license to do unto others what you would never allow them to do unto you.”

These days, however, it’s a different story. Being humble rubs against what millions have been taught under the banner of “self-esteem.” Even as our schools fail to teach us elemental facts and skills, they somehow manage to teach us to feel good in our ignorance. We explain away bad behavior as the result of the guilty feeling bad about themselves. We manufacture excuses for them, form support groups for them, and resist making moral judgments lest we hurt their feelings. We don’t demand repentance and self-discipline as much as we pump up their egos.

Don’t get me wrong. Humility doesn’t mean thinking less of yourself. It means thinking of yourself less. It means putting yourself in proper perspective. It means cultivating a healthy sense of your limitations and the vast room you have to grow and improve. It means you don’t presume to know more than you do.

Fifty-three years ago this month (December 1958) Leonard Read’s essay “I, Pencil” made its debut. Let me summarize it for you here: No one person—repeat, no one, no matter how smart or how many degrees follow his name—could create from scratch, entirely by himself, a small, everyday pencil, let alone a car or an airplane.

A mere pencil—a simple thing, yet beyond any one person’s complete comprehension. Think of all that went into it, the countless people and skills assembled miraculously in the marketplace without a single mastermind—indeed, without anyone knowing more than a corner of the whole process. It’s impossible not to think of the huge implications of this lesson for the economy and the role of government.

It is in fact a message that humbles the high and mighty. It pricks the inflated egos of those who think they know how to mind everybody else’s business. It explains in plain language why central planning of society or an economy is an exercise in arrogance and futility. If I can’t make a pencil, holy cow, I’d better be careful about how smart I think I am.

Big Plans, Broken Shells

Maximilian Robespierre blessed the horrific French Revolution with this chilling declaration: “On ne saurait faire une omelette sans casser des oeufs.” Translation: “One can’t expect to make an omelet without breaking eggs.” He worked tirelessly to plan the lives of others and became the architect of the Revolution’s bloodiest phase: the Reign of Terror. Robespierre and his guillotine broke eggs by the thousands in a vain effort to impose a utopian society with government planners at the top and everybody else at the bottom.

That French experience is one example in a disturbingly familiar pattern. Call them what you will—socialist, interventionist, collectivist, statist—history is littered with their presumptuous plans for rearranging society to fit their vision of the common good, plans that always fail as they kill or impoverish people in the process. I’ve said it in this magazine before but I’m happy to say it again: If big government ever earns a final epitaph, it will be, “Here lies a contrivance engineered by know-it-alls who broke eggs with abandon but never, ever created an omelet.”

None of the Robespierres of the world knew how to make a pencil, yet they wanted to remake entire societies. How utterly preposterous and mournfully tragic!

The destructive acts of pride don’t always come from brash and fiery revolutionaries or egotistical tyrants full of pompous and hateful rhetoric. More often they come cloaked in benevolence and disguised as the wisdom of the elders, who have only the best of intentions for the whole community. An outstanding example of this type of hubris is the political philosophy in Plato’s Republic, in which he maintains, with breathtaking vanity, that the world would be a harmonious and prosperous place if only philosophers like himself were given absolute authority to run it as they saw fit!

We would miss a large implication of Leonard Read’s message if we assume it aims only at the tyrants whose names we all know. The lesson of “I, Pencil” is not that error begins when the planners plan big. It begins the moment one tosses humility aside, assumes he knows the unknowable, and employs the force of government to control more and more of other people’s lives. That’s not just a national disease. It can be very local indeed.

In our midst are people who think that if only they had government power on their side, they could pick tomorrow’s winners and losers in the marketplace, set prices or rents where they ought to be, decide which forms of energy should power our homes and cars, and choose which industries should survive and which should die. They make grandiose promises they can’t possibly keep without bankrupting us all. They should stop for a few moments and learn a little humility from a lowly writing implement.

So humility, in my book, is pretty important stuff. It may well be the one virtue of strong character that is a precondition of all the others.

What was this book, and who was its author? It was called, simply, Self-Help, and its author was a man named Samuel Smiles.

When he died at the age of 86 in 1904, only Queen Victoria’s funeral cortege three years earlier was said to have surpassed in recent memory that of Samuel Smiles. He was loved not only for his book but also for a wealth of other works that celebrated the virtues of independence, thrift, civility, character, and hard work.

Robert L. Bradley, in his 2009 book Capitalism at Work: Business, Government and Energy, calls Smiles “the father of the self-improvement movement.” Bradley notes:

Motivational self-help books were not new, but Smiles’ 400-page opus was systematic, combining age-tested wisdom with knowledge of the industrial present, and profusely illustrated with stories of individuals-made-good in industry, engineering, the arts, and music. Samuel Smiles, a medical doctor turned newspaper editor/political reformer turned businessman/moralist, would become the Adam Smith of applied commercial capitalism.

The cover of the 2002 Oxford University Press edition of Self-Help declares that the book “is the precursor of today’s motivational and self-help literature” and that it “awakens readers to their own potential and instills the desire to succeed.” In his lifetime the author inspired riots in Belgrade, carnivals in Milan, and plaudits from leaders the world over. But sadly, just a century since Smiles died, he is largely unremembered in his native Scotland. Needless to say, decades of the British welfare state have not been kind to a man who preached personal independence and entrepreneurial capitalism.

Dipping into the pages of Self-Help is a curious experience. You travel back in time to Smiles’s mid-nineteenth-century experiences and perceptions. To Smiles, the son of a poor farmer, human nature was both timeless and locationless. It is as good, he felt, for a Japanese man of commerce to exhibit the plain virtues of honesty, punctuality, diligence, and energy as it is for a Swede or an American.

Self-Help, which appeared in 1859, had the most humble of origins. It began as a series of evening lectures to apprentice engineers in Leeds. A kind of Victorian Dale Carnegie, Smiles thumped his message home in a way that moved and inspired almost everybody of his time. Live and trade with integrity and you lift all you meet, not just yourself, he argued. Character, the sum of one’s choices and actions, is of paramount importance; indeed Smiles called it “the crown and glory of life” and the very thing on which “the strength, the industry, and the civilization of nations” depend.

To Smiles the road to riches was not paved with overreaching ambition, disregard for others, or cutting corners when it came to matters of truth. It didn’t mean securing favors from government at the expense of the competition.

Welfare and Poverty

The welfare state was anathema to Smiles. He felt it was a woefully ineffective substitute for personal charity. “The value of legislation as an agent in human advancement has usually been much over-estimated,” he wrote. “No laws, however stringent, can make the idle industrious, the thriftless provident, or the drunken sober.” What he said about poverty legislation a century and a half ago would be a fitting description of the results of the welfare programs of today:

We have tried to grapple with the evils of [misery] by legislation, but it seems to mock us. Those who sink into poverty are fed, but they remain paupers. Those who feed them feel no compassion; and those who are fed return no gratitude. There is no bond of sympathy between the givers and the receivers.

The books of Samuel Smiles are full of inspiring stories of nineteenth-century entrepreneurs who often rejected the easy path of unprincipled compromise and the fast buck, and instead treated others according to the Golden Rule and went to their graves with their character and integrity intact.

In painstaking detail he explained why keeping high our standards of speech and conduct was not just worthwhile but also an indispensable ingredient of freedom and progress. Life to him was not an ego trip. It was not about calling attention to oneself but rather about being the best one can be in all endeavors. The fame and fortune that might follow were secondary and imposed additional responsibilities to foster virtue in others.

The final chapter of Self-Help is titled “Character—The True Gentleman.” It’s full of examples that illustrate Smiles’s belief that nothing is worth sacrificing one’s character. From proper manners to truthfulness to self-respect, Smiles laid forth the attributes that, if pursued widely and personally one individual at a time, would surely produce a far better world. Here’s a passage most readers will especially appreciate:

There are many tests by which a gentleman may be known, but there is one that never fails—How does he exercise power over those subordinate to him? How does he conduct himself toward women and children? How does the officer treat his men, the employer his servants, the master his pupils, and man in every station those who are weaker than himself? The discretion, forbearance and kindliness, with which power in such cases is used, may indeed be regarded as the crucial test of gentlemanly character.

Samuel Smiles—both the man and his message—epitomized the best of the capitalist spirit of the nineteenth century. This fact largely explains why he went from a well-known and respected figure by 1890 to a forgotten man by World War I. The rise of statist ideas at the turn of the century and the subsequent decline of individualism meant that a champion of such antiquated notions as self-help and responsibility had to be tossed into the closet.

Smiles’s message cries out for a new hearing in our times. Scandalous headlines and television spectacles that depict degraded standards suggest we would all benefit by dusting off the work of Samuel Smiles and learning again what we should never have forgotten.

The market is a complex order. A thief needs only violence to get rich; a cattle trader needs more things, such as order and justice; in other words, an environment where transactions can be safely completed. The market does not obey “the law of the jungle”—just the opposite: The law of the jungle prevails where there are no markets. Peaceful exchange with secure property rights is more productive than widespread robbery, but many criticize the rich regardless of the path they followed to opulence, as if they all had achieved their wealth illicitly. Apparently, George Bernard Shaw’s fallacious quotation still rules the day: “I am a gentleman: I live by robbing the poor.”

The most common way to make a fortune in a free market is organizing a successful company. How can this company succeed and pay handsome salaries? In a free market there is only one answer: by making something consumers appreciate. Under such circumstances, the businessman’s wealth is linked to the social utility of his labor, a utility proved by consumers who buy because they too benefit from the deal.

Of course, one can always make money breaking the law, as thieves and swindlers do. And there is also another method that, while unjust, does not always appear that way: to become rich by avoiding competition or gaining other privileges that only the state can grant.

Monopolies and protectionism exemplify these strategies. Both became the enemies of classical liberals, who argued in favor of the free market and against the privileged groups that injured the majority of the population by imposing high prices and limiting the ability to choose.

Alongside the state’s expansion during the past century, opportunities to profit from using the state to avoid competition have proliferated. Through the apparatus of government, lobbying groups have obtained power over their markets, subsidies, and every other kind of anticompetitive protection.

Blocking market activity breaks the connection between social needs and the supply of goods and services aimed at satisfying them. But it may turn out to be profitable: Fortunes have originated in anti-competitive privileges bestowed by political power or made possible by its regulations. In such cases it is fair to distrust the wealthy.

Often, however, no distinction is made when it comes to criticizing rich people. They all appear reproachable, and few dispute the need to impose on them specific burdens and progressive tax scales aimed at dealing with the “problem” of inequality. The state must force-fit all of us into a Procrustean bed.

Internal Robin Hood Service

Many thus would have the state play Robin Hood, robbing from the rich (no matter how they got the money) and giving to the poor. I do not dispute that this legend is open to several interpretations, including a plausible libertarian one. Robin Hood can be seen as an enemy of tyranny and the abuse of law, a friend of the people, a man who robbed tax collectors and privileged aristocrats, returning the money to the victimized peasants. This is a very appealing version of the story. My objection, however, is directed exclusively at the danger of casting the modern state in the powerful image of a hero seeking redress and justice. It uses this image to legitimize its vast distribution operations and to show its supposed liberality.

The notion of the state playing Robin Hood has two weaknesses. First, there is no way to prove that if the authorities take a dollar by force from a rich person and give it to a poor person, the collective happiness increases. As Anthony de Jasay says, the only way to solve the problem of comparisons between individuals is for the state to impose its preferences on the community. The outcome of these operations, in the words of Bertrand de Jouvenel, is not a redistribution of income from rich to poor but from everyone to the state.

The second weakness in the state-as-Robin-Hood argument is that it only works if the treasury is small. The state in the days of Robin of Locksley was limited, but when it takes on modern proportions, no matter what Barack Obama may say, it can no longer finance itself only by taking money from the very rich, who are by definition a minority. The state might pretend to do this, but in practice its only financing option is to take money from everyone.

One of the main arguments for the growth of the modern state is the fight against inequality. Some claim that without the state’s intervention, human beings would abandon the poor to their own devices and charity would prove both insufficient and insulting.

The allegation that, without the state’s helping hand, people would ignore their fellow human beings in poverty can’t stand even a cursory analysis. From the dawn of civilization, examples to the contrary abound. Voracious tax increases have not managed to extinguish the humanitarian impulse.

Charity is a noble and deep human feeling. Why is it dismissed and devalued? Why is it deemed humiliating, while state aid is viewed as a display of compassion?

Virtue Requires Liberty

Helping our fellow man and political distribution are very different actions. Let us take as an example the noble conduct of the Good Samaritan, a beautiful portrait of humanitarianism. A basic assumption—in truth, an essential element—of the parable is liberty. The Good Samaritan’s virtue stems from the fact that he acts voluntarily; if a centurion forced him to help the poor Jew, beaten and abandoned in the road, the parable would have made no sense. Virtue, in effect, demands liberty.

In this example, we see the demoralizing effect of state expansion. Many nongovernmental organizations, particularly in Europe, do not ask citizens to freely and voluntarily hand over a fraction of their income. Instead, they ask the state to extract sums from taxpayers’ pockets. Amazingly, the sacrifice of liberty and responsibility on the altar of political power is praised, while providing free and voluntary aid to one’s fellow man is dismissed as humiliating charity.

The fact is that where markets are permitted to work, fewer people need economic assistance of any kind. The centuries since Adam Smith wrote The Wealth of Nations have provided ample evidence to support his message: Free trade and security in one’s rights are the pillars on which individuals can improve their condition. Despite this, many people criticize the market economy and allege that it encourages marginalization. It is common to read statistics showing great poverty and accusations that market-oriented countries like the United States are infernos of inequality.

Not Condemned to Poverty

The problem with such statistics is that they are based on surveys that fail to track the same people through time. Thus they cannot provide the most important piece of information: Are the poor condemned to poverty or are they able to rise out of it? The statistics, in short, rarely measure social mobility. But when they do, they show that the poor have large possibilities of escaping the lowest percentile of income distribution. It is in fact more probable that a very poor person in America will climb to the highest income rung than that he will remain in poverty. One could argue that the data indicate mobility but not improvement, given that there is always a poorest 20 percent. Incomes in an advancing society like the United States, however, are not constant but rather are increasing—despite pervasive government interference—and this, not welfare, offers everyone the opportunity and the incentive to progress.

State-Sanctioned Inequality

Socialists and interventionists of all parties have reluctantly ended up accepting the market, but they claim government intervention is necessary to tackle inequality. However, inequality is only objectionable if there is a lack of competition and freedom. The modern state’s onerous and inefficient distributive structures, ostensibly built to wipe out inequality, have had perverse effects and a demoralizing impact on society, pushing different groups to fight over public favors. It is an out-of-control process in which, as the German liberal Ludwig Erhard said, everyone puts his hand in the pocket of everyone else.

The clamor from interventionists against inequality morphs into a clamor for a larger and larger state. This path leads to the loss of liberty and a distortion of both democracy and justice. It distorts democracy because, by attempting to solve inequality, it removes limits to power and expands the field of state action. It distorts justice because the only way to solve inequality politically is for the state to have the power to treat individuals unequally. Thus the struggle to eliminate inequality ends up destroying the most important form of equality for an open society: equality before the law.

In fact such arguments have been a recurring feature of the politics of modernity, a point developed at length by Ian Buruma and Avishai Margalit in Occidentalism. However, the history of this division goes back further than their account does, and it reveals something profound both about historic human societies and the distinctive nature of the social order that we inhabit, that of modernity. The division between the merchant and other social types is found throughout history and is reflected and articulated in literature, music, and the arts. Only in recent times, however, has the merchant, the producer, the bourgeois found many champions.

In most human societies since the advent of agriculture and complex social organization, the merchant and manufacturer have been placed on the lowest rung of the social hierarchy. Even when members of this class attained wealth, political influence, and some degree of social standing, they were the butt of social criticism and ridicule. Above all, they were seen as less worthy than other social groups because of the morally questionable nature of their activities. Trade was seen as base, lacking in the crucial quality of honor.

Honor has been associated with the warrior, along with courage, daring, magnanimity, and generosity. The ideal aristocrat is open-handed, does not think of the future or have a cautious and prudent approach, is brave, proud, and sensitive to slights, yet generous and gracious in victory while defiant in defeat. Historically, the other figure contrasted with the bourgeois is that of the priest, or sage and holy man. The virtues ascribed to him are those of wisdom, asceticism, and respect for tradition.

By contrast, the merchant, or bourgeois, is seen as obsessed with money, comfort, and the affairs of this world; as cautious and fearful, lacking in passion or pride; and as unfeeling and introverted. Trade and production are seen as lacking in glory and romance and as being dull, domestic, and mundane.The small producer, the artisan or peasant, is also slighted in this way of thinking, but is still placed higher than the merchant. This is because he is seen typically as simple yet honest, while the merchant is seen as devious and cunning.

This kind of thinking finds expression in many ways. In pre-modern Japan the official social hierarchy was Emperor, Shogun, Daimyo, Samurai, Artisan/Peasant, Merchant. In Europe the socially ambitious bourgeois was mercilessly ridiculed, as for example in Molière’s Le Bourgeois Gentilhomme. In India the merchant was seen as having an especially difficult task in accumulating merit, a view also found in both China and much traditional Christian thought (including of course the Gospels).

In representative art for much of history the main subjects were either mythological or the pastimes of aristocrats, notably war and the hunt. The merchant and his lifestyle are conspicuous by their absence. There are partial exceptions to this, of course. In China the Confucians have a minority tradition that is favorable toward merchants and producers, particularly under the Song and the later Ming. Initially, the Islamic civilization was actively favorable to trade and commerce, not least because the Prophet himself had been a merchant before his calling. However, the underlying sociology of most Islamic lands gradually reasserted itself, while in China more conventional Confucian views, which saw the career of the merchant as a barrier to virtue, were reiterated.

In certain parts of medieval and early modern Europe, particularly England, the Low Countries, and Northern Italy, the legal status of the bourgeois was higher than the historical norm, and this was reflected in a greater than usual degree of representation in literature and the arts. Even here, however, the bourgeois virtues, in Deirdre McCloskey’s expression, were seen as less worthy than those of the warrior.

The critical change takes place in the Netherlands, during the “Golden Age” of the seventeenth century. At that time we see the first appearance of a truly mercantile culture, in which the values and lifestyle of the bourgeois are held up for approbation and emulation, while the virtues of the aristocracy and clergy are slighted and attacked. This finds expression in both literature and art, with its focus on domesticity, production, and trade rather than public religion and war. This expression was a feature of the Dutch Republic that most struck contemporaries, along with the independence of Dutch women and the degree of free speech and religious toleration. Above all, trade was presented as an honorable and dignified occupation, which brings benefits and blessings to humanity in the shape of convenience, comfort, and tranquility.

The Scottish Enlightenment

This kind of argument was developed further by the thinkers of the Scottish Enlightenment, notably Smith, Hume, and Lord Kames.They added the idea of the civilizing effect of commerce, the way it brought about a “softening” and “refining” of manners, behavior, and taste so that people acquired a greater degree of sensibility sensibility or sympathy with the experience and feelings of others and became less harsh, brutal, and overbearing. Wealth was seen therefore not as corrupting but rather as morally elevating and praiseworthy. This favorable view of the bourgeois and the associated critique of the traditional virtues of the aristocracy and clergy was continued in the first part of the nineteenth century, in the works of authors such as Stendhal, Dickens, and Balzac and composers such as Verdi.

However, the later nineteenth century saw a reaction, well described by Buruma and Margalit. In the sphere of music Wagner’s Ring was among other things a savage attack on the values of the bourgeois, not least through the figure of Alberich. One striking aspect of the literature of the time was the reappearance of arguments for the virtue-creating function of war. As found in the writings of figures such as T. E. Hulme, this was one reason for the excitement and delight with which young intellectuals such as Rupert Brooke greeted the onset of war in 1914.

Today, while the kind of self-consciously reactionary argument made by Sombart is rare in much of the world, hostility to trade as demeaning and lacking in moral grandeur is common. The kind of arguments analyzed by Buruma and Margalit have now appeared prominently in the form of Islamism. Generally speaking, in popular culture the businessman is as disreputable as ever. One important reason for this is the changing perspective of artists. Between the early seventeenth and mid-nineteenth centuries many artists and writers were supporters of mercantile values against those of the aristocracy and clergy. In the later nineteenth century, however, many came to associate the life of the bourgeois with stultifying conformity, hypocrisy, and philistinism. The works of authors such as Ibsen and Flaubert are classic examples. There is no essential reason, however, why this should be so, and it reflects the particular features of late-nineteenth-century society. To reconcile the bourgeois and the artist is one of the tasks of our time.

Fear of the unbridled individual is at the root of the conservative/libertarian conflict over freedom and virtue. The conservative fears that people unleashed from the power of the Leviathan state will bring society to rot and ruin; indeed, at least one writer here (Frederick Wilhelmsen) argues that it already has. Libertarians think that, given the corruption of man that conservatives are so prone to emphasize, granting corrupt men power to enforce their vision of virtue is dangerous and that for various reasons both moral and prudential, violence (the root of all state power) should be used solely to repel or reverse assaults on one’s own person or property.

The essays collected here limn some of the difficulties that arise when libertarians and conservatives debate. The debate isn’t settled because the combatants don’t clarify the two positions or even prove that there is in fact a coherent conservative position. Even the libertarian side seems incoherent, with John Hospers, author of a book called Libertarianism and first presidential candidate of the Libertarian Party, having trouble sticking to the basic Millian position that state power oughtn’t be used except to prevent harm to others. “Freedom is a great thing,” he opines, “but one should not run the danger of destroying oneself in the pursuit of it.”

Anthologies raise more issues than a brief review can note; I here concentrate on a couple of themes. The obvious, though unintended, lesson of this book is that there is no coherent conservative position. Some people seem to choose the term for sociological reasons of loose affinity and thus define it to mean whatever they believe. Comparing the views presented here by such supposed conservatives as Richard Weaver and L. Brent Bozell shows that the word means, as Humpty Dumpty said, whatever we want it to mean. Bozell thinks enforcing virtue through violence quite proper; he claims that within the Christian metaphysic he posits as essential to both conservatism and American civilization, “freedom is hardly a blessing; add the ravages of original sin and it is the path to disaster.”

Weaver, on the other hand, thinks that “the conservative in his proper character and role is a defender of liberty. He is such because he takes his stand on the real order of things and because he has a very modest estimate of man’s ability to change that order through the coercive power of the state. He is prepared to tolerate diversity of life and opinion because he knows that it is fight within reason to let each follow the law of its own being.” In this, Weaver finds himself embracing the libertarian argument, derived from Scottish enlightenment thinkers and promulgated most thoroughly this century by F. A. Hayek, that man can and does form complex workable orders without government control or management.

One issue that is perhaps even more divisive between libertarians and conservatives comes up frequently: war and peace. Conservatives tout the importance of an activist U.S. world military to fight off Soviet communism, or now that that is dead, what Robert Nisbet here sees as the “aggressive, imperialist totalitarianisms in the world.” The only specific examples he gives are China and Cuba. While none of the libertarians collected here talk about foreign policy, the conservatives clearly are irritated that many libertarians refuse to bow to the exigencies of U.S. world imperialism.

This volume is worthwhile for interesting contributions from both sides, such as M. Stanton Evans’s intriguing contention that pre-enlightenment traditions contain more support for limited state power than many moderns customarily suppose and Doug Bandow’s argument from an evangelical Christian perspective that, contra Bozell, state power has no useful role to play in the enforcement of Christian morality.

But essays like Russell Kirk’s, where he condemns libertarians as “metaphysically mad,” and obsesses over his notion that libertarians are disproportionately gay and very unpleasant characters besides, show that however much they may find themselves allied in specific instances against state encroachment, the relationship between libertarians and conservatives is apt to remain one of occasional alliance and persistent mistrust.

The history of civilized societies is a timeless effort to enhance freedom. Freedom must be viewed as a whole, and anything that reduces it in one aspect of life is likely to reduce it in others as well.

Free people make decisions through their independent minds and have the courage to pursue their own convictions through exchange relations in the market. Thus a free person rejects attempts by others to exercise power over his own choices. He treats other people as equals, thus limiting interaction to voluntary transactions. The market is the expression of economic freedom. In the absence of any form of discretionary power, it is an institutional process in which individuals interact with each other in pursuit of their economic objectives.

The economic and political processes are linked: one generates and sustains the other. Thus a society’s economic process would have ultimate consequences for the kind of political process it ends up with. This is because the state, as a monopoly of legitimate force, is in the position to impose restrictions on the individual’s action. A free person realizes the benefits derived from free-market relations, that is, the absence of discretionary power, and seeks a compatible political process. Political freedom means freedom from coercion in the sense of arbitrary power—freedom even from the coercion exercised by the government.

In a historical context, politically free societies and the market have a common origin. In Capitalism and Freedom, Milton Friedman states: “I know no example in time or place of a society that has been marked by a large measure of political freedom and that has not used something comparable to a free market to organize the bulk of economic activity.”^[1] The rise of the market is associated with the rise of political freedom and the gradual removal of governmental and religious constraints on the individual.

However, it appears that while a market system is necessary for political freedom, it is not sufficient.^[2] R.E. Lane agrees that “historically, a free market has seemed to be a condition of political freedom, as exemplified in the bill of rights and free elections, but it has not been a sufficient condition.”^[3]

I am skeptical about this argument. I believe it was developed because in the 1960s and 1970s the political situation of the world was bleak with respect to political freedom. Suppression of political freedom was widespread in the form of authoritarian political structures, especially military dictatorships, where tenure was based on power instead of reason and irresponsible political power functioned outside the discipline of law. The argument raised by Friedman and Lane is an unfortunate simplification that does not correspond to reality anymore; in fact, while in the short run within a market system political freedom may be restricted, in the long run authoritarian political processes cannot survive alongside markets. This is demonstrated by the fall of military dictatorships in the end of the 1970s and in the 1980s and the collapse of authoritarian socialism that stimulated the re-establishment of political freedom.

In essence, people enjoying the benefits of the market process will question and undermine the power of authoritarian governments. Individuals who experience the benefits of freedom through market relations are likely to require freedom in the political process. The market and political freedom are internally linked: one generates and sustains the other.

Markets and Authoritarianism

The point is not obvious. Some countries have developed political systems featuring a hierarchically structured bureaucratic organization that gives privileges to an elite class. While the market is the main process for decision-making, political freedom is restricted in order to serve the purposes of this elite minority. In these instances the political process results in a loss of personal control and encourages dependency. It rewards conformity, obedience, and affiliation instead of innovation, enterprise, and autonomy. Individuals feel powerless and helpless. Such people perform less efficiently in a market system than do self-interested, competitive individuals. In addition, political authorities distort the market by allocating resources by coercion. They control a large part of the resources, and the influence of their decisions on the remainder is substantial; that results in effective control of the entire spectrum of economic decisions.^[4]

Market-Produced Opposition

But the market plays an important role in providing the mechanisms of opposition to the suppression of political freedom. The market should be evaluated not only as a process for achieving the optimal allocation of resources but also as one of learning and personality development. In the market, individuals learn to be free and independent and to follow their own convictions. Freedom is a skill that is generated and sustained by the market.^[5] People preserve these values throughout their adult life once they have been developed in their formative years.^[6] If the market encourages self-direction, how can that behavior be restricted only to economic relations and not extended to the political process in the form of political freedom?

Despite differences among markets, they have essential features that tend to promote the acquisition of qualities important for personality development. Lane identified the qualities necessary for maximizing the development of personality: ^[7]

Cognitive complexity. This involves the capacity to understand abstractions, to hold preferences, to be able to judge others and oneself, to change concepts to fit reality rather than fitting reality to fixed conceptions, and finally to hold several ideas in order to arrive at original solutions.

Autonomy. This is the desire and ability to remain independent, which encourages free initiative and free expression in all areas of life. Through this quality an individual is at liberty to conform to tradition and authority—or not. Each authority is treated as a source of information rather than of command.

Sociocentricity. The thoughts and claims of others are understood and given recognition. Sociocentricity comprises socialization, experience, understanding, and reasoning. Individuals learn the rules of the game and conform to them. It is a guide to social reality and a necessary ingredient in good interpersonal relations.

Attitudes towards self. A combination of self-knowledge, self-acceptance, and self-respect are necessary for the establishment of an identity. With these qualities people avoid internal conflict and uncertainty about values.

Identification with moral values. This is necessary to secure moral reasoning and moral behavior without taking refuge in tradition and authority.

Lane aimed to identify the effects of markets and politics on personality development.^[8] Unfortunately, in his analysis the influence is one way: markets and politics influence development of personality, but individuals are unable to influence markets and politics.

But contrary to Lane, social processes are reflexive. Individuals in the market acquire qualities for personality development that will influence the political system. A market participant will require a politics based on freedom.

In the market people develop through trial and error the skills, qualities, and behavior necessary to participate effectively. They need to think for themselves. They slowly reject intellectual dependence on others. They dismiss dependency on family, village, community, ethic group, or social class. They need to make difficult complex decisions with respect to education and careers. As the market becomes increasingly complicated, with more sophisticated products, proliferating brands, and aggressive advertising, people need to search, examine, and analyze what is offered. Thus they are faced with difficult, complex choices that require complex cognition.

A sense of autonomy is achieved through the market, since the participants learn that the environment around them is responsive to their actions. Individuals work, get paid, and buy goods through the market process; this enables them to control their own destinies. Within the market individuals can afford to be self-dependent, since they have alternatives. They can follow their own convictions. Rewards are individual instead of collective. So the market participant learns that effort will be rewarded and wrong decisions penalized; he will need to bear the burden of his mistakes, but also enjoy the outcome of correct decisions. The market thus contributes to the desire for, value of, and belief in one’s own competence to control one’s own destiny and to develop along a unique path. It instills an appreciation for the same in others.

Economic transactions bring people together under the rule that any exchange must be voluntary and thus mutually beneficial. Participants thus need to understand one another’s point of view. Agreement will only be reached when market participants realize they need to work together, communicate, bargain, and compromise. In this way, individuals become sociocentric, since success in the market requires good interpersonal skills.

Participation in the market process encourages self-knowledge, self-acceptance, and self-respect. Through successes and failures, participants realize their potentialities. They learn through their mistakes rather than through tutelage, and they succeed through their own analytical and planning strategies. The market increases awareness of the participants’ potential in solving problems and realizing goals. The sense of accomplishment contributes to one’s satisfaction with life.

Lastly, the market encourages fair dealing since exchange is voluntary. Capitalism contributes to identification with moral values.

Transference of Virtue

Behavior learned in one aspect of life may be applied in others. The qualities gained through the market process can be used in politics, for example, because those qualities become part of the personality. The political structure does not exist in a vacuum. Moreover, market participants equipped with the five qualities discussed will require a political process that protects their personality, that is, political freedom.

Thus economic freedom and political freedom are internally linked. One generates and sustains the other. While in the short run political freedom may be restricted in a market-oriented society, individuals enjoying the fruits of economic freedom will eventually question and undermine an authoritarian political process. Because the value of self-control is taught, exercised, and mobilized by the market, in the long run, authoritarianism cannot exist alongside free markets.

Notes

1. Milton Friedman, Capitalism and Freedom (Chicago: University of Chicago Press, 1962), p. 9.
2. Ibid., p. 10.
3. R.E. Lane, “The Dialectics of Freedom in a Market Society,” The Edmond James Lecture, April 16, 1979, University of Illinois, Urbana-Champaign.
4. F.A. Hayek, The Road to Serfdom (London: Ark Edition, 1986 [1944]), p. 45.
5. K.R. Minogue, “Freedom as a Skill,” in A.P. Griffiths, ed., Of Liberty (Cambridge: Cambridge University Press, 1983), p. 21.
6. R. Inglehart, The Silent Revolution (Princeton: Princeton University Press, 1977).
7. R.E. Lane, “Markets and Politics: The Human Product,” British Journal of Political Science, 1981, p. 5.
8. Ibid., p. 7.

Although each of my Freeman columns will stand alone, let me emphasize at the outset that economics is far more than a series of unrelated concepts. Economics provides a coherent and powerful framework for seeing order in the seemingly unrelated actions of hundreds of millions of individuals as they struggle to improve their lot in life.

Improving our circumstances is always a struggle because of the fundamental problem of scarcity. All economic concepts are rooted in the problem of scarcity. No matter how productive we become, there always will be limits on what we can accomplish. Each individual confronts the fact that he must choose among many different ways to use his time and talents, and he makes those choices to achieve his particular purposes. No one else can know as much about another person’s purposes as that person himself. So while we may not understand the actions of others, we can be confident that they are doing the best they can to realize their objectives; from their own perspectives, they are acting rationally.

The Power of Economics

But economics is more than just a consideration of how individuals improve their well-being. The power of economics comes from the fact that the implications of scarcity and rational decision-making allow us to understand how certain social institutions make productive cooperation possible among large numbers of people, each of whom is concerned primarily with achieving a better life. This explanatory power goes back to Adam Smith, who elaborated on the connections between “the invisible hand” and the “Wealth of Nations.” It was Smith who first explained systematically how the social institutions of the free market encourage the creation of wealth by motivating people concerned with their own interests to behave in ways that best serve the interests of others.

In some respects, the economics profession has made little progress since Adam Smith. Economists have been ineffective at communicating to the public the tremendous benefits we all realize from the cooperation promoted by the free market, or the threat to that cooperation from the political influence of organized interest groups. In part, this failure can be explained by the difficulty of the task. The benefits of the market are spread so wide in the form of lower prices, improved products, and better opportunities that they tend to go unnoticed or be taken for granted. Because the benefits are primarily the indirect and unintended consequences of the actions of millions of individuals, people fail to connect those benefits to their source.

In contrast, political benefits tend to be concentrated in visible ways and are easily connected to the intentional actions of particular people, while the damage done is spread over the entire economy and difficult to trace back to its cause. But economists could have done more to promote a widespread understanding and appreciation of economic fundamentals. Even in their teaching, professional economists tend to focus on the trees of technical details while overlooking the impressive forest of market cooperation and coordination.

But in other ways, economists have made much progress since Adam Smith. While technical economic concepts can divert economists into analytical minutia, when appropriately used, these concepts improve our economic understanding in important ways. For example, the concept of comparative advantage extends Adam Smith’s insight into the benefits of free trade. The concept of marginalism (which, among other things, drained the “labor theory of value” swamp in which Smith and Karl Marx became mired—Marx more so than Smith) explains a wide range of economic activity that most people find puzzling. Those, and many other economic concepts can help economists better explain the power of the market to promote a pattern of social cooperation impossible under any other arrangement. Communicating this power as widely as possible is one of the most important contributions economists can make. I shall connect the discussion in each column back to the goal of social cooperation.

The Problem of Achieving Cooperation

Despite the common belief that economists are interested only in narrow material concerns, they are primarily concerned with explaining how the spontaneous market process expands the opportunity for people to achieve their objectives, no matter what they are, through cooperation with one another. Whether your goal is accumulating personal wealth, protecting the environment, or assisting the needy, you will be more successful if you can enlist the cooperation of others.

But how do you enlist this cooperation, given the variety of conflicting goals people are intent on pursuing? Reformers usually believe that social cooperation depends on appealing to people to put aside their narrow personal ambitions (such as amassing personal wealth) and concentrate on promoting broad social goals (such as protecting the environment or helping the needy). Achieving more social cooperation requires more virtuous people. The great economist Ludwig von Mises explained in Human Action (page 2):

If social conditions did not fulfill the wishes of the reformers, if their utopias proved unrealizable, the fault was seen in the moral failure of man. Social problems were considered ethical problems. What was needed in order to construct the ideal society, they thought, were good princes and virtuous citizens. With righteous men any utopia might be realized.

In contrast, good economists realize that, regardless of one’s idea of “virtue,” cooperation through the division of labor and exchange—the kind that people engaged in long before there were economists and moral philosophers—is what creates a better society.

Good Intentions Are Not Enough

Without denying the desirability of people behaving “virtuously,” economists see it as largely unrelated to social cooperation on a broad scale. Attempts to change behavior with conventional moral appeals are sometimes frustrated, and even if people were persuaded to put the “interests of the larger community” ahead of their own, the problem of knowing how best to do so would remain.

Economists recognize that people will behave consistently in ways that are simultaneously self-interested and socially cooperative only when market incentives are permitted to reward that behavior. But this means that not just any incentives will do; they have to be incentives that embody information on the best course of action. Next month I will examine the effect of incentives on human action.

Will you use your power to save your friend? Almost surely the answer is yes. Will saving your friend be an act of virtue? The answer to this question is more complicated. Saving your friend’s life will be widely perceived as a virtuous act, but a strong case can be made that it would be a harmful act of callous self-interest. The sharp contrast between perception and reality in this fabricated example is unfortunately relevant to the world of politics, and explains why organized interest groups can capture small private gains at great social costs through political actions widely seen as virtuous.

I readily admit that if a good friend of mine were desperately ill, I would save him by shortening the life of everyone in the general population by a few seconds if I had the power to do so. Although the gain in life for him would be less than the total loss of life for others, the gain would be dramatically visible, greatly appreciated, and easily associated with my act of “kindness,” while the loss would be so diffused that it would go completely unnoticed. Even if the others were aware of their cost for saving my friend, a large majority of them would probably vote in favor of making their individual sacrifice (and obligating others to do the same) to extend his life, since that sacrifice was so low. We could all feel the warm glow of compassion over our virtuous sacrifice for the good of another.

There is a problem here, however. If it is so noble to save my friend’s life by transferring a few seconds from everyone else, then it must also be equally noble to extend this benefit to others. But consider the destructive consequences of each of us having the power to add years to our best friend’s life (which in most cases would be our own) by reducing the life of everyone else by a few seconds (but with the total life lost being twice that gained). With everyone trying to lengthen his or her life at the expense of others, the result would be an early death for everyone. Generalizing the earlier example of a two-second loss for a one-second gain, if everyone attempted to capture 41 years of additional life by transferring seconds from others, everyone would have his or her life shortened by 41 years. For someone my age this would, at best, mean instant death, and more likely a retroactive one.

So if the ability to extend one person’s life by shortening the lives of others were immediately generalized to everyone, the consequences would be quickly recognized as disastrous. But if only a few had this ability initially, and it was expanded to more people very gradually, it would take a while for the harmful consequences to be noticed.^[1] And probably people would be unaware of the connection between the reduced life expectancy of most and the longer life span of the few, the result being a clamor to expand the method prolonging the lives of the few. Even when the connection between the expanded transfer process and the ever-shortening life expectancy began to be recognized, no one would willingly cease attempting to benefit from the transfers. The person who unilaterally refused to transfer years from others to himself would lose twice the life expectancy as before, as others continued to transfer life from him to themselves. Of course, there might be a movement to stop the transfer process if anyone were left alive to initiate it.

But what if the destructive effect of the transfer process were masked by medical advances that caused a slight increase in life expectancy? Then the life lost because of the transfers might go largely unnoticed. Some would understand the harm being imposed by the transfers, but they would find it difficult to get people exercised by the loss of what they never had, which exists only in a counterfactual setting with which they are not familiar. Also, any attempt to get people to oppose the transfers faces a serious free-rider problem. Why should an individual incur a private cost in an effort that, even if successful, provides general benefits to everyone regardless of his or her contribution to the effort? For each person the advantage is in devoting the effort necessary to benefit from transfers, an effort that concentrates a benefit entirely on him or her, rather than in making the far less decisive effort to achieve benefits for the general public.

Real-World Transfers

Of course, my example of extending the lives of some by reducing the lives of others is fortunately a fanciful one. Unfortunately, it describes all too well the type of transfer that increasingly dominates the political process. The coercive power of the federal government to perform its few legitimate functions has always been a source of temptation for those who see the possibility of solving their problems through transfers from others. The case for yielding to this temptation is superficially appealing because government transfers could create concentrated and visible benefits for politically organized and appreciative groups while spreading the costs so widely that they go largely unnoticed.

Fortunately, for approximately the first 100 years after the ratification of the U.S. Constitution, the prevailing understanding was that the role of government was a limited one. Government was not intended to solve the problems of individuals; rather it was to establish a setting in which they could best solve their own problems in productive cooperation with each other. That view was exemplified by Grover Cleveland’s 1887 veto of a bill passed by Congress to provide $10,000 to drought-stricken farmers in Texas. In his veto message Cleveland stated, “A prevalent tendency to disregard the limited mission of [the government's] power and duty should be steadfastly resisted, to the end that the lesson should be constantly enforced that, though the people support the Government, the Government should not support the people.”^[2]

Unfortunately, as Cleveland was vetoing seed bills, U.S. Supreme Court decisions began opening the door for increased government regulation of the economy.^[3] Regulation, supposedly aimed at protecting the general public against abuse by business and other organized interests, is invariably controlled by those interests to reduce the competition they face. That amounts to a transfer from the general public to those being regulated, in the form of higher prices and a less productive economy. The growth of such transfers began rather modestly. Resistance to it was well entrenched, but the concentrated benefits appeared larger than the diffused (but actually larger) costs. As the number of beneficiaries increased with little apparent cost, the case for including more beneficiaries seemed compelling. Even when the costs of government transfers were noticed, they were seldom associated with the transfers that caused them. Indeed, the costs created by the transfers were commonly cited as problems that justified government solutions in the form of yet further transfers. The most egregious example of hoping the cause can be the cure was the expansion of government control in response to the depression of the 1930s, a depression prolonged, if not caused entirely, by a combination of federal tariff increases and Federal Reserve mismanagement of the money supply.

Soon government transfers were going beyond protective regulation and increasingly taking the form of direct payments and subsidies. In 1900 the entire federal budget amounted to only about 3 percent of the nation’s GDP, with little of it devoted to transfers. By 1962 federal transfers to individuals (not including interest payments) amounted to 27 percent of federal outlays and to 5.2 percent of GDP. By 1993 federal payments to individuals had increased to 56 percent of federal outlays (85 percent when interest payments and national defense are excluded) and to 10.5 percent of the GDP.^[4]

Noble Objectives

These budgetary transfers are almost always rationalized in the name of some noble public objective—helping the poor, protecting American jobs, saving the family farm, making the American economy more competitive. The reality is that the benefits from these transfers are concentrated primarily on organized interest groups and do little to achieve the noble objectives. Indeed, progress toward the goal is invariably retarded as the costs of transfers spread inefficiencies throughout the economy. Poverty programs have increased the number and dependency of the poor, trade restrictions and export subsidies have destroyed more productive jobs to save less productive ones, farm subsidies have done more to help large corporate farms than small family farms, and corporate welfare has hindered American competitiveness by subsidizing failure.

Those failures are rooted in the fact that, just as in my life-extending example, government transfers add less value than they destroy. Government transfers systematically reduce the productivity of the economy, productivity essential for solving the social problems the government claims to be addressing. The wastefulness of government transfers is inherent in the very process that explains them. Because the benefits of transfers are concentrated, they are magnified by the political process, while the dispersed costs are devalued. The result is that the political benefit-cost comparison continues to show gains from transfers long after the social benefit-cost comparison is decisively negative. The ratio of losses to gains from many political transfers is far larger than the 2-to-1 ratio assumed in the example of life-expectancy transfers. For example, in California taxpayers are paying for water-diversion projects that provide water at $212 per acre-foot to farmers who pay for it at a rate of $3.50 per acre-foot.^[5] Or consider amendments to the Clean Air Act that protected Eastern coal producers against competition from Western coal by imposing scrubber requirements on electric generating plants to remove sulphur even if they burn low-sulphur Western coal. It has been estimated that this requirement costs electricity consumers approximately one dollar for every nickel it transfers to coal producers, not to mention the resulting reduction in environmental quality.^[6]

Yet, attempts to point out the failure of an ever-expanding government role in the economy are typically met with complacency and often hostility. Again, as with the example of transferring life expectancy, it is easy to see the concentrated benefits from government transfers. It’s even easier to ignore the generalized costs and see them as unrelated to the benefits. The economy, after all, has continued to grow. It would be difficult for anyone to know just how much greater that growth could have been, and most people are unaware of how costly even a slight reduction in economic growth is over time.^[7] And even if people were aware of the general costs of government transfers, no individual would see the advantage in opposing them in general since the private advantage lies in getting more transfers for your group. Those who do suggest cutting back on transfers will encounter hostility from the beneficiaries, who realize that the amount they have to pay for the transfers to others is independent of whether or not they continue to receive theirs. Even many of those paying for a benefit going to others often respond negatively to advocates of reducing, or eliminating, that benefit because of its visible virtue and the lack of a detectable cost to any individual.^[8]

The dynamic of government transfers is an insidious one that invariably leads to the disastrous situation Bastiat predicted: the state becomes “that great fictitious entity by which everyone seeks to live at the expense of everyone else.”^[9]

Both the fanciful possibility of helping some people with transfers of life from others, and the factual possibility of helping some people with government wealth transfers from others, illustrate the perversities that result when people attempt to do good at others’ expense. Such attempts always give the appearance of promoting virtue while destroying the discipline and accountability that make real virtue possible.

Notes

1. I assume here that there is a strict limit on how much life can be transferred from others.
2. Quoted in Robert Higgs, Crisis and Leviathan: Critical Episodes in the Growth of American Government (New York: Oxford University Press, 1987), p. 84.
3. Higgs discusses many of these decisions and their consequences in ibid. Also see Terry Anderson and Peter J. Hill, The Birth of a Transfer Society (New York: University Press of America, 1989).
4. These figures come from Herbert Stein and Murray Foss, The New Illustrated Guide to the American Economy (Washington, D.C.: The AEI Press, 1995), p. 212.
5. See Dennis C. Mueller, Constitutional Democracy (New York: Oxford University Press, 1996), p. 11.
6. See George Daly and Thomas Mayor, “Equity, Efficiency and Environmental Quality,” Public Choice, vol. 51, no. 2 (1986): 141-59.
7. It should be noted that the larger government involvement in the economy, the more the official national income statistics overstate the national income. The growth in the private sector is determined by the amount people voluntarily pay for goods and services. Since there is generally no market for government-provided services, they enter into the national income accounts at the cost of providing them, which is almost always greater than their value. So GDP can, and often is, increased by government transfers that reduce the total value of economic output. To bring my example of transferring life expectancy in line with government transfers, the additional life one received from a transfer would have to be counted for more than it actually is.
8. Because the influence of any individual voter on a political decision to make a transfer is effectively zero, the opportunity cost of favoring a transfer is also effectively zero, even if the transfer is known to be individually costly. Therefore, if a person has been led to believe that a transfer is virtuous and he places even a modest value on the sense of virtue that comes from supporting the transfer, he will vote for it regardless of the personal cost if it passes. See Geoffrey Brennan and Loren Lomasky, Democracy and Decision: The Pure Theory of Electoral Preference (Cambridge: Cambridge University Press, 1993).
9. Quoted in George Roche, Free Market, Free Men: Frederic Bastiat, 1801-1850 (Hillsdale: Hillsdale College Press and The Foundation for Economic Education, 1993), p. 150.

Capitalism and freedom are inseparable. In our society we believe that human beings, merely by virtue of being human, possess the capacity to exercise freedom and the right to do so. Each person should be free to own property, choose a job and a career, worship, speak, move freely within the society and to other societies, promote and protect one’s self-interest, contract, compete, create, innovate, trade, and associate with others.

Those of us who favor freedom and free markets are a diverse lot. Our worldviews differ, too. To find common ground, let us briefly consider in turn the libertarian, Judeo-Christian, and Objectivist perspectives on the nature of capitalism and its relationship to liberty.

The Libertarian Perspective

Libertarians elevate personal freedom to the highest good—as an end to be achieved. Freedom is viewed as prerequisite to, and integral with, the achievement of any of man’s goals. Libertarians defend each person’s right to be protected against all forms of external aggression initiated by the state or by private individuals. A basic principle of libertarianism is that individuals have the right to live life as they choose, as long as their actions do not constitute an aggression against the freedom of others.

This nonaggression or noninitiation-of-force principle is related to the libertarian idea of self-ownership. Self-ownership means that one’s own decisions about what to do with one’s life, property, body, energies, and speech are the decisions that count. Because individuals are equal, not only does a person own himself, every other person owns himself as well.

The self-ownership principle creates a zone of privacy and freedom of action for each individual. When dealing with others each person should respect them as equals in moral status and human dignity who have the right and responsibility to make their own decisions regarding their own life, property, body, energies, and speech.

Libertarians reject the notion that people need a guardian to protect them from themselves or to tell them what is good and bad. The state should therefore confine itself to the minimum necessary to protect individuals in the way they choose to pursue happiness. The proper state is therefore neutral with respect to its commitment to one or another conception of happiness or the good life. The role of the state should be limited to providing the freedom that allows individuals to pursue happiness or the good that each defines for himself.^[1]

The Judeo-Christian Perspective

According to this worldview, God, the ultimate moral authority, created man. Each person is free, self-responsible, and accountable before the Creator. Between a man and God, the appropriate relationship may be viewed as one of agent, steward, or trustee to owner. Each person has a God-given responsibility to answer to Him for his choices including the uses he makes of his individual human potential and his possessions held temporarily as a steward of God.

Only when a man has choice and its inherent responsibility can he be moral. Choice (free will) is the foundation of virtue. Morality involves choice and the use of reason in making that choice. Freedom, a gift from God, does not mean freedom from the law or license to do whatever is not forbidden. Real freedom is not the power to do whatever we like but, rather, to choose to do what we ought to do.

The purpose of freedom is not freedom for its own sake but for the purpose of serving God through self-actualization and the promotion of human flourishing and the common good. Freedom is simply the means toward a higher end and should not be viewed as an end in itself. When one has freedom, the important choices become how to order one’s life, what values to pursue, and which virtues to practice.

Each person should be politically free to choose and pursue his own values and should allow others to choose and pursue their own values. Man is endowed by God with inalienable rights, the exercise of which is strictly a matter between the individual and the Creator, until he trespasses on the rights of another person. To force another to adhere to my value judgments is to deny him his right and responsibility to answer to God directly for the choices he makes.

The underlying idea is that each individual should be able to encounter God without the mediation of any other person, group, or nation. When self-responsibility before God is viewed as prior to, and determining of, political philosophies and systems, it follows that government should be limited to protecting this relationship between man and the Creator. The state is simply a man-made means of securing liberty and justice for all men alike. The legitimate aim of government is to provide the social and political conditions that protect each citizen’s right to individual action.

From the Judeo-Christian perspective, governmental authorities are the civil distributors of God’s higher law. There is a realm of natural law, over and above positive man-made law, involving unwritten and unalterable laws of God. Natural law, the ultimate source of right and wrong, is timeless and well beyond the political realm. The idea of governmental restraints rests on the premise that a natural law higher than that of the state limits and qualifies the power of the state. Capitalism properly emerges from such a political system, is consistent with Judeo-Christian values, and involves the voluntary exchange of goods and services between free and self-responsible persons.^[2]

The Objectivist Perspective

Objectivism, the philosophy of Ayn Rand and her followers, contends that the universe has existed eternally and repudiates the idea of its creation by a rational, omnipotent God. For Objectivists, the idea of God is offensive and humiliating to man, because it denies that man is the highest being in the world. The Objectivist position is that without God it is up to man alone to pursue his own happiness and create his own values. Freedom for Objectivists comports with the non-existence of the Creator.

The Randian view is that reality is objective, absolute, and comprehensible, and that man is a rational being who relies upon his reason as his only means to obtain objectively valid knowledge and as his basic tool of survival. The concept of value presupposes an entity capable of acting to attain a goal in the face of an alternative. The most basic alternative in the world is existence versus non-existence. Life makes the concept of value meaningful. An organism’s life is its standard of value. Whatever furthers its life is good, whatever threatens it is evil. The nature of living persons is to determine for themselves what they ought to do.

Man’s life is therefore identified as the proper standard of man’s value, and morality is identified as the principles defining the actions necessary to maintain life as a man. If life as a man is one’s purpose, he has the right to live as a rational being. To live, man must think, act, and create the values his life requires. In other words, since a man’s life is sustained through thought and action, it follows that the individual must have the right to think and act and to keep the product of his thinking and acting (the right to life, liberty, and property). As men are creatures who think and act according to principle, a doctrine of rights is intended to ensure that an individual’s choice to live by those principles is not violated by other human beings. All individuals possess the same rights to freely pursue their own goals. These rights are innate and can be logically derived from man’s nature and needs—the state is not involved in the creation of rights and exists merely to protect an individual’s natural rights. Because force is the means by which one’s rights are violated, it follows that freedom is a fundamental social good. The role of government is to protect man’s natural rights, through the use of force but only in retaliation and only against those who initiate its use.^[3]

Metaphysical Agreement Is Not Required

Capitalism may be defined as a system of voluntary relationships within a legal framework that protects individuals’ rights against force, fraud, theft, and contract violations. Advocates of capitalism differ in their arguments for a social system that maximizes individual freedom and in their views with respect to the nature of man and the universe. Underlying these separate views, however, is the need for freedom of the individual to choose how he wants to integrate himself into society. All agree that:

1. Freedom is the natural condition of the individual—each person from birth has the ability to think his own thoughts and control his own energies in his efforts to act according to these thoughts.

2. Individuals are free to initiate their own purposive action when they are free from man-made restraints—coercion by other individuals, groups of people, or the government; freedom is not the ability to get what one desires—other non-man-made obstacles such as lack of ability, intelligence or resources may result in one’s failure to attain his desires.

3. Freedom is a necessary but not a sufficient condition for one’s happiness.

It is not necessary to first reach metaphysical or religious agreement to agree on the desirability of a system in which individuals do not use violence or fraud to injure others or to deprive others of their legitimately held possessions. Various proponents of capitalism therefore agree that the proper role of the state is limited to that of protector of property and punisher of those who rob and cheat others.

1.   Exemplars of the libertarian perspective include Murray N. Rothbard, For a New Liberty: The Libertarian Manifesto (New York: Collier Books, 1978) and Robert Nozick, Anarchy, State, and Utopia (New York: Basic Books, Inc., 1974).

2.   Models for those who work within this worldview include Edmund A. Opitz, Religion and Capitalism: Allies, Not Enemies (Irvington-on-Hudson, N.Y.: The Foundation for Economic Education, 1993 [1970]), Ronald H. Nash, Poverty and Wealth (Richardson, Tex.: Probe Books, 1986), and Michael Novak, The Spirit of Democratic Capitalism (New York: Simon and Schuster, 1982).

3.   See Ayn Rand, Atlas Shrugged (New York: Random House, 1957) and Leonard Peikoff, Objectivism: The Philosophy of Ayn Rand (New York: Dutton, 1991).

Any persuasive argument for liberty must involve a connection between liberty and human excellence. The reason for this is clear. An argument for liberty is an argument for its goodness. The ultimate context for all human evaluation of good news is human life. To ask if liberty is good is to seek a connection between it and human goodness or excellence.

Does freedom of speech have any value if we take human excellence seriously? I think so. First of all, freedom of speech has a value in the realm of political economy. The ability to speak one’s mind concerning matters of common interest is useful insofar as it helps preserve a more general freedom. A power that is not open to the scrutiny and conscientious objections of those over whom it is exercised is almost certain to be exercised irrationally. The price of liberty, to paraphrase John Philpot Curran, is eternal vigilance. Freedom of speech in this political sense preserves a sphere for the exercise of that vigilance. Freedom of speech is of instrumental value to a jealous love of liberty, without which, freedom of speech is completely impotent. Freedom of speech concerning political matters is worth preserving because it acts as a check against the arbitrary use of power.

Preserving Nonpolitical Speech

However, considered merely as a political tool, freedom of speech is quite limited. It can only be understood to have a bearing on matters that are of common concern. This is quite compatible with a severe repression of speech about private matters. Freedom of speech in this sense could involve my freedom to exhort my neighbors into barring the opening of an X-rated theater in our neighborhood, or in the suppression of the use of foul language. The question then is can there be a justification for expanding freedom of speech to these other areas? Such a justification must show that the protection of certain types of speech in other, non-political, areas (e.g., the arts and sciences) has a connection to human excellence. And it seems that it does; scientific and artistic achievement seem to be fostered by freedom.

How far ought this freedom to extend? The description of sexual function by biologists can be clearly connected to the advancement of learning and maybe even to the curing of disease or preservation of life. The depiction of violence in some artworks might be justified for its cathartic effect. When, for example, Mel Gibson is being disemboweled in Braveheart and refuses to submit as an act of defiance to tyranny, this serves primarily as a representation of fortitude and strength of spirit, and only secondarily as a depiction of human cruelty. The cruelty is conquered by the virtue and is overshadowed by it.

What then of the obscene ranting of rap musicians glorifying disregard for law and common decency? Or books and films in which people are senselessly murdered by the sociopathic protagonists, or those which amount to character assassinations of well known individuals based on outright lies and half-truths? Can there be any justification of these things?

Two arguments can be made. First, human excellence is most fully manifest in what we might call a morally mature person. This is a person who manifests all of the classical virtues, including courage, prudence, and justice. Now virtue, as such, cannot be compelled, though people can be compelled (that is, forced against their own judgment) to behave in the same way that a virtuous person would. Such behavior is not an expression of virtue. Virtue requires freedom to act in light of one’s own judgment. Granted, certain types of self-expression are defective, but to prohibit them, and thus force people to behave as if they were virtuous, will not make them actually virtuous, since the element of judgment and choice is removed.

There are cases where we are justified in compelling people to behave as if they were virtuous. Parents do this to their children in the hope that the children will, by so acting, become virtuous. This is the moral equivalent of putting training wheels on a bicycle.

To treat an adult this way is to treat him as if he were not only without virtue but so defective in this regard that force rather than reason is required. Someone who is less than completely virtuous can be persuaded and shamed into behaving and may, given time, actually develop virtue. For example, someone who desires to produce a movie which plausibly presents his fantasies as if they were true, and in so doing dishonors the memory and reputation of a former president, might be dissuaded by means of reason or shame. Using such means is an acknowledgment of a capacity for virtue and is the best means of inculcating it. If because of irrationality or shamelessness, he persists, stronger measures might be called for. Such measures would be in place particularly if significant and foreseeable harm was caused.

The bottom line is that since moral maturity requires the freedom to act according to one’s judgment, such freedom should be granted except in extreme cases. The authority of virtue is quite different from the authority of strength. Forcing someone to do or refrain from doing something tends to obscure the beauty of the same action when it is done from virtue. Because freedom, including freedom of speech, favors the development of virtue, it is valuable and ought to be preserved.

There is another persuasive argument that can be made in favor of freedom of speech. Though this is more of a cultural than a political argument, it is based on the vast difference between being moral and being a moralist. The morally mature person—the virtuous individual—seeks always to do that which is noble and praiseworthy. In doing so, he becomes the standard of moral excellence. The moralist is the person who, in lieu of noble and praiseworthy actions, seeks merely to condemn the base and shameful. The moral man only condemns vice insofar as virtue requires it, the moralist only acts virtuously (or seems to) in order to retain the right to condemn vice.

Toleration is an attitude that acts as a check against moralism. It should be noted that toleration is not the morally skeptical refusal to make judgments and to condemn certain types of behavior or speech. Rather, it is the recognition that such judgments should be made only when and to the extent that some good may come of them. Whereas a moralist takes pleasure in the mere condemnation of shameful behavior, a tolerant person finds such condemnation distasteful and can only make it palatable to himself if he can combine it with some noble action. The moralist is mean-spirited, the man of virtue is magnanimous. A tolerant culture is one which encourages the virtue of magnanimity or greatness of mind.

To Tolerate or Not?

It is not possible from one’s armchair to say exactly what types of speech would be tolerated in such a culture, and it is probably not even possible to arrive at universal criteria for which types of speech should be tolerated. The types of sexually explicit material, for example, that ought to be tolerated in New York City are probably not the same as those that should be tolerated in Opelika, Alabama. The point is that whatever they are, such forms of speech would be tolerated, i.e., they would be put up with although they are acknowledged to be base or defective in some way. This toleration would not be based on the hidden, subjective value of what is tolerated, on some moral skepticism which relativizes all values, or on some right to express oneself. Instead, it would be based on the recognition that to use force to restrain such speech would be pointless or ineffective for inculcating virtue and would be out of proportion to the smallness of the act. It would be out of revulsion at the mean-spiritedness involved in such a use of force that it would be tolerated.

It seems then that freedom of speech is connected to human excellence in several ways. Politically, freedom of speech is useful for the protection of freedom to act in as much as it acts as a check against arbitrary power. As one type of freedom it can also aid in the development of virtue by opening up a sphere in which one can act according to one’s judgment. Such freedom is necessary for virtue. It is culturally useful for the development of the arts and sciences, and, finally, because it requires toleration, it fosters greatness of soul.