The old classical liberalism as outlined by moral philosopher turned economist Adam Smith - the liberalism that worked to frame a truly humane economy & society starting especially around 1780 - is under attack. Recent posts by NYT Columnist David Brooks point to the ongoing attack, in The Great Struggle for Liberalism and The Authoritarians Have the Momentum .
Deirdre McCloskey, economic historian, and self-proclaimed former and reformed Libertarian Economist in the Chicago School style, has written 2980 pages in 7-books over the period 2006-2022 about the matter ( see the reviews of Leave Me Alone and I’ll Make You Rich … and Humanomics ) . Patrick Deneen has claimed that classical liberalism as it has evolved to the current time has been a huge failure: See Review . And, many others have been writing about the matter, including in my own book, Lynne (2020): See Metaeconomics: Tempering Excessive Greed .
So, what is going on? What are the key issues? Why are even the more traditionally classical liberalism based economic & social systems in the western Democracies straying away from what Adam Smith had in mind?
The answer is quite simple. In a phrase, ironically, as Adam Smith fully understood it way back in the 1700s and few got the memo: Laissez faire capitalism focused only on self-interest, especially when fed by the extreme versions of Libertarianism, does not work. Adam Smith was not a Libertarian. It is that kind of liberalism from which people stray to other isms. The evolution of liberalism after being put in place in the late 1700s strayed away from the Adam Smith plan that the arrogance of laissez faire self-interest be tempered by the ethic, what the other could go along with: Too many are opposed to ethical reflection, especially the authoritarians.
It strayed rather dramatically in the mid to late-1800s. Charles Dickens published the first version of The Christmas Carol in 1843. The Robber Barons of the late-1800s come to mind. It had especially strayed in the years leading up to the Great Depression in the 1930s, which led to all manner of turmoil, represented in many bad isms to replace it - like communism, extreme socialism, and fascism - about which especially WWII, and to some extent WWI, was fought. The World Wars were largely a war over which kind of economic & social system was to prevail, which ism was to be in play. The Cold War of the 1950s kept the battle over isms on the table. The war continues in such places as the Ukraine and most recently in the mid-East, and, as usual, war is over what is to be the shared other-interest at play: Ethics matter. It is an ethic based in sufficient reason, widely-shared, that gives content to the best shared-other interest, the best ism. Classical liberalism, as Adam Smith intuited, is the best candidate for said best ism - but you have to read both of Smith’s books, not just Wealth of Nations but also The Theory of Moral Sentiments, as in Wealth & Sentiments.
Like Churchill said: “Democracy is the worst form of government, except for all the others.” Well, we can also now say that Classical Liberalism as envisioned by Adam Smith (and now revived in the new Humanomics - read on ) is the worst form of economy, except for all the others.
F.A. Hayek, founder of the Mont Pelerin Society (MPS) in 1947, was very much concerned about all the other contending “isms” around in the 1940s (see Two Roads to Serfdom ) . The MPS was formed to bring some form of laissez faire capitalism back into play, which had started out as a good form of classical liberalism, while avoiding the shortfalls of the extreme version that had driven the turn to other isms in the first place.
Unfortunately, ignoring Hayek, the MPS morphed into all manner of Conservative Think Tanks like the Cato Institute and the Heritage Foundation which to the current time still go to excess. The good intent of the original Hayek version of the MPS morphed into once again ignoring the content of what the shared other-interest that would work for everyone would hold – the ethic ignored - taking the system down another Road to Serfdom . All such entities ignore the need to temper self-interest with the shared other-interest, the moral sentiment, what the other could reasonably go along with, ignoring the admonishment of Adam Smith.
Another perhaps more well-known frame: Most if not all the MPS generated Think Tanks and groups were formed under, and still operate under, the frame of Neoliberalism (for the 11-tenets of Neoliberalism, from Mirowski and Plehwe 2015 click here). In Neoliberalism, the ethic regarding what the other can go along with is narrowly defined around self-interest of the favored few. Said Neoliberalism led to all manner of political economic discontent over the last couple of decades, bringing about illiberal populists putting Trump into the US Presidency in 2016. As Brooks says it in the Struggle for Liberalism : “The enemies of liberal democracy seem to be full of passionate intensity — Vladimir Putin, Xi Jinping, Donald Trump, …. Meanwhile, those who try to defend liberal norms can sometimes seem like some of those Republicans who ran against Trump in the 2016 primaries — decent and good, but kind of feckless and about to be run over … liberalism is ailing and in retreat in places like Turkey, India, Brazil and, if Trump wins in 2024, America itself.”
Yet, one needs to be careful to define just what is ailing. In particular, it is Neoliberalism that is ailing, not classical liberalism. In fact, Neoliberalism has never worked, as demonstrated most recently by the collapse of The Neoliberal Order that operated from 1970-2008 in the US, as well as in Britain, brought to play in the Reagan and Thatcher “revolution” (See What Comes Next ). It never has, and never will. It does not work because it is not a natural order: It is not consistent with biological and cultural and economic evolution. It lacks empathy. It lacks altruism, which is the key to viable evolution. Something more akin to The New Deal Order that operated in the US during 1930-1980, and, the Order in the Viking Economies like in Norway to the current time, works. It had and has empathy. Said orders are more natural, because said orders understand the need to temper the excesses of ego with empathy.
Intriguingly, even The Neoliberal Thought Collective (the main ideas populating The Neoliberal Order, the Neoliberalism that failed and continues to fail, see Mirowski and Plehwe 2015) realizes it is not natural, and will never naturally arise unless forced into being. Ordinary, reasoned, and empathy-based people are not going to institute such an order. So, the Neoliberals now have turned to authoritarianism to impose the Market Forum onto every part of society, including operating the Political Forum in transactional terms like a Market. Even the politicians are to act like consumers: According to The Neoliberal Thought Collective giving content to The Neoliberal Order, one sees no need for citizens who consider what the other can go along with. The reasoned, widely shared other-interest, the empathy-based ethic does not matter.
The Neoliberals think the solution has been found in authoritarianism, while ignoring the political economic chaos it will cause (just look around: It is already here). Ironically, the Neoliberal solution which is about introducing authoritarianism to force the Market on every dimension of life (i.e., privatize everything from education to sustaining the Spaceship environment) is quite counter to the liberty and freedom, dignity and equality envisioned in the ostensibly failed classical liberalism. True classical liberalism saw the need for balance in the joint private & public good, as in good balance in private & public property, Market & Government. Authoritarianism to force everything into the Market Forum while denigrating the Other (Public) Forum is not going to make The Neoliberal Order work and will just stir the other isms it is intended to replace. The authoritarianism of Vladimer Putin, Xi Jinping, and Donald Trump, and throw in a few more like Victor Orban of Hungary, and the Neoliberalism with Authoritarianism to implement it arising even in places like Germany, France and Italy, and, even in Norway and Sweden, well, all are doomed to failure. Such authoritarianism is just another form of excess, and, it cannot work.
As Brooks (2024) says in Authoritarians Have the Momentum : “The great strength of the authoritarians who oppose liberal principles, from Trump to Xi … (seems Putin and Orban need to be in the list) is that they play straight into the primordial sources of meaning that are deeper than individual preference — faith, family, soil and flag. The authoritarians tell their audiences that the liberals want to take all that is solid — from your morality to your gender — and reduce it to the instability of a personal whim. They tell their throngs that the liberals are threatening their vestigial loyalties. They continue: We need to break the rules in order to defend these sacred bonds. We need a strongman to defend us from social and moral chaos.” It is authoritarian nonsense, balderdash to the extreme.
What does work? Well, The MetaEcon Order holds the most potential. It would be built using Humanomics, which recognizes the need for primordial sources of meaning. As McCloskey and Carden (2022, p. 176) say, Humanomics is “an economics with the human and their ethics left in” … also pointing out that Adam Smith had it correct way back in the 1700s, “Though he wrote two and a half centuries ago, he is fresher than today’s newspaper. In particular, the Scottish professor of moral philosophy and father of modern economics never, ever said that ‘greed is good.’ Nor did he, unlike his friend David Hume (1711–1776), lead towards a Benthamite notion (before Jeremy Bentham) that ‘utility’ from benefit minus cost runs the human drama. On the contrary, Smith practiced ‘humanomics’ …” (see the review of the 2022 book at Leave Me Alone ). Neoliberals, take heed: Go back and read Adam Smith, carefully. Adam Smith would not approve of Neoliberalism.
The MetaEcon Order needs to be built using Metaeconomics, which is a Humanomics with Dual Interest Theory (DIT) at the core. Adam Smith was a MetaEcon. DIT points to the key role of the ethic operating among ordinary people who have the liberty and freedom, dignity and equality of opportunity to have a go at betterment. Said betterment is tested in the Market Forum, a key idea in the 7-books by Deirdre McCloskey. Yet, McCloskey misses the other key point: Said Market Forum is given content by a legitimate Other Forum as represented in Community: Government, the “:” meaning an inclusive, truly representative Democracy in the Government in place. The Market Forum would be tempered by the ethic held in that Community: Government. It would not be set aside as in Neoliberalism, where any form of Government other than the form that imposes Market Order is framed as intervening, distorting, and otherwise to be denigrated. It would also temper the notion that extreme greed is somehow extremely good, as is the frame of Neoliberalism. Another way to think of it: Neoliberalism has turned to being a Market Fundamentalism not unlike a Religious Fundamentalism, wherein something is etched in stone to never be reconsidered, as in extreme greed is extremely good, always, forever without any empirical basis in fact to support the claim.
Like Brooks (2024) in Authoritarian Momentum says it: “If liberalism is to survive this contest, we have to celebrate liberalism while acknowledging its limits. It’s a great way to construct a fair society to help diverse people live together in peace. But liberalism cannot be the ultimate purpose in life. We need to be liberals in public but subscribe to transcendent loyalties in the depth of our being — to be Catholic, Jewish, stoic, environmentalist, …. or some other sacred and existential creed. People need to feel connected to a transcendent order; nice rules don’t satisfy that yearning. … Liberal politicians need to find ways to defend liberal institutions while also honoring faith, family and flag and the other loyalties that define the purposes of most people’s lives. I feel that American presidents from, say, Theodore Roosevelt to Ronald Reagan knew how to speak in those terms. We need a 21st-century version of that.”
Absolutely. Metaeconomics pointing to The MetaEcon Order is a Humanomics sensitized to include the ethic about what the other can go along with, an ethic that tempers the excesses. DIT in Metaeconomics clarifies that such things as the Catholic, Jewish, stoic, environmentalist shared other-interest must be in place to do that tempering. The transcendent order is what is held in the shared other-interest as DIT makes clear. Said order is essential to temper the primal excesses of self-interest only: Again, Neoliberals, take heed.
But, be careful here: It is not about imposing Catholic, Jewish, stoic… or any kind of narrowly shared other-interest on everyone else. So, Fundamentalists and Fascists, take heed, too. Also, Authoritarianism to impose Market Order on every aspect of life - everything becomes transactional with no room for the sacred, as the Market Fundamentalists in Neoliberalism favor - also does not work. It is about finding common ground as in empathy-based ethics, like in a shared ethic to sustain the Spaceship Earth on which we Travel together around the Sun and through the Universe. It is about an inclusive Community: Government, not the narrow interests of a few as in Authoritarianism and Fascism.
So, for anyone reading here who is concerned, yes, it is concerning, in that Fundamentalism, whether Market or Religion or any other kind is relentless. It never goes away because it is driven by ego-based self-interest, which is primal. Yet, if one waits long enough, it also assuredly crashes: The challenge is to not get crushed by the crash.
And, why does it crash? Well, as Evolutionary Biologists James Sloan Wilson and E.O. Wilson make clear: Selfishness beats altruism within groups. Altruistic groups beat selfish groups. Everything else is commentary (Wilson 2015, p. 23). Fundamentalism, to include the Market Fundamentalism of Neoliberalism, is all about ego-based selfishness, which beats in the short run, but, ultimately it loses. Empathy-based altruism is essential to long term evolution and success. The selfishness of Market Fundamentalism ultimately loses, and, that is why it keeps crashing, as it did in 2008 (and has done over and over and over, like in 1929). So, hang in there. And, if you are tired of the crashes (as am I!) work to temper it with some empathy-based other-interest, some empathy-based ethics, please, as The Metaeconomic Order makes clear is essential.
There, that is it. See the many other posts here on the Metaeconomic Order Substack for the Details.
Reference:
Mirowski, Philip and Plehwe, Dieter. The Road from Mont Pelerin: The Making of the Neoliberal Thought Collective. Edited by Philip and Plehwe Mirowski, Dieter. Cambridge, MA: Harvard University Press, 2015.
Wilson, David Sloan. Does Altruism Exist? Culture, Genes, and the Welfare of Others. . New Haven, CN: Yale University Press, 2015.