3. The Institutional Case for Liberals

As an economics student I learned of Say’s law, the idea that production is the source of consumption, and believed it in a sincere but naive manner. So much so, that I could only scoff during a class where the professor warned that every successful entrepreneur had failed seven times (on average) before finding success. I couldn’t believe that to be the case, and certainly not for myself. After all, one merely had to produce something, and the ability to consume and spend would quickly follow. I was certainly capable of producing, especially as I wasn’t much interested in conforming to and appeasing expectations. In fact, I was rather desperate to be free of such expectations.

Fast-forward to only one year later, and I was in complete agreement with that warning of almost certain failure. Pursuing independence, I had started up in business whilst studying, but could never sell enough product to justify even half the marketing spend, no matter the avenue or approach. I had an ‘elite’, holier-than-thou attitude about my failure. I believed that I possessed the vital knowledge, and therefore it was the character of others that needed retooling. I considered my worldview, my very character as infallible. Perhaps I even saw additional truths as increasingly inconsequential. So, what could possibly bring me to total agreement with the lecturer whom I had scoffed at? And what could do so in a matter of minutes?

I had seen Say’s law posted online. I was angered, even mocked by it. That’s certainly not true I scoffed — production does not allow consumption. However, it got me to reflect on past events in terms of barter. That is, instead of considering the consumption-side of the economic equation, I focused on the production-side, all in an effort to justify my initial instincts to myself. Considering various scenarios such as easily picked flowers for hard caught fish, it dawned on me that in many instances I’d rather keep the efforts of my own labour, rather than exchange for something of lessor value. Further, I realised that in a barter system, that the amount I produced would necessarily limit my ability to consume. That I would have to choose between 3 of 10 desirable exchanges, even if I was very lucky; and that this was also the case for everyone else.

Production allows consumption so long as another party is willing to exchange their labour for yours. Otherwise they will exchange for something else or save. Further, the proportion of people willing to exchange needs to be greater than the cost of reaching them. That all said, Say’s law holds in a subtle way, bar a few disclaimers. So subtle that one can scarcely tell the tale. I wondered whether Say was lazy with his words, or I in reading them, or a third in retelling them? Money, I realised, merely extends and conceals barter, and in proportion to one another. Nevertheless, I had realised that I was not yet in possession of the vital knowledge.

I have told this story in service of my aim, which is to further convince liberals of the dignity of the individual. Firstly, that no individual can succeed in twisting reality to his conceptions, his mere will, and will fail in the attempt. Sure he may succeed in making an attempt, as Mugabe successfully attempted transformation in Zimbabwe, but he did fail to produce the ends aimed at. Secondly, I am suggesting that wherever you find people acting together without being acted upon, that their acts must necessarily embody some vital knowledge that you cannot yet understand. Especially in those Institutions (read organic groups) that have stood the test of time. That sort of success requires many failures and corrections, and an ongoing and reciprocal co-adaption between people and reality.

I am not suggesting that you merely submit or conform yourself to traditional ideas that you could not believe if you tried. In fact, I am certain that the way to true belief (knowledge) is through desire. Indeed, William Blake warned that we should “sooner murder an infant in its cradle than nurse unacted desires.” However, we shall worry about psychology and pathology in the final chapter.

For now, I am simply suggesting that what you don’t yet know, is always much more important than what you already know. That each of life’s lessons is greater than the previous, with the greatest for last. That additional truths are not increasingly inconsequential, but increasingly so.

Ultimately, I want liberals to understand that in the absence of coercion the whole Truth becomes effective, and wealth is generated. That outcomes are greater than their originating intentions. Conversely, operating with coercion, with the attitude that the ends justify the means, results in destruction, in outcomes antithetical to their originating intentions. Dystopia results from an intended utopia, as the road to hell is paved with good intentions. We shall explore the reasons here and in the next chapter.

Now we should turn specifically to Institutions, their functioning and their corruption. Consider again the central commitment of Liberalism; the freeing of the individual from coercion by larger groups. Are all groups coercive? And if not, what constitutes coercion? What is liberty, or the absence of coercion? I shall answer these questions in reverse.

Thomas Jefferson described “rightful liberty” as “unobstructed action according to our will within limits drawn around us by the equal rights of others.” Ayn Rand adds further clarity explaining that, “In civilised society, force may only be used in retaliation and only against those who initiate its use.”

Thus, we can softly define coercion as the use of ‘force’, a rather vague concept requiring further definition. Perhaps it is clearer to describe coercion by its effects. The use of force requires that parties become involved in exchanges to their detriment. That is to find yourself on the losing side of a win-lose exchange, and lose the result of your labour for something of lessor or no value.

Additionally, coercion is the lost opportunity of entering instead into a mutually beneficial win-win exchange. To illustrate this idea, consider the common desire for freedom of expression. Censorship is the related coercion, in that it represents the lost opportunity to exchange mutually beneficial ideas with others.

The act of theft demonstrates that coercion does not require a group, and such acts are often considered to be criminal. The imprisonment of a thief necessarily requires the use of force, yet only against a party who initiated its use. Coercion quite simply, requires that one party take the fruits of some others labour.

Group coercion requires redistribution of labour gains from individuals via a proxy. Historically, this has been done as redistribution via government taxation, hence the famous American dictum that ‘taxation without representation is tyranny.’ But even unfettered taxation naturally limits the coercive element in society, especially as the tax base is repeatedly diminished. Additional coercion must then be conducted as redistribution by diluting the purchasing power of producers. That requires the creation of money without production, money that competes with earned money, which receives a smaller share of total production. This is illustrated below:

Such effects are often blamed on capitalism by those unaffected, and who meanwhile attack the middle-class for supporting Trump and being mislead by their ‘false consciousness’.

We must remember that the cost of coercion is not incurred only by those whose means are stripped from their hands, but borne by those who exercise it, in forms of psychology that obstruct subjective satisfaction.

Coercion by groups can occur in three ways. Forced participation in an inorganic whole (universal healthcare), forced participation in an organic whole (marriage), or forced exclusion from an organic whole (censorship). The first two are more widely understood, whilst atomisation is much less so. Alexis de Tocqueville perhaps clarified the democratic despot best explaining that, “[He] does not break mens wills, but softens, bends and guides them. He seldom forces anyone to act, but consistently opposes action. He does not destroy things, but prevents them coming into being. Rather than tyrannise, he inhibits, represses, saps, stifles and stupidities, and in the end he reduces each nation to a flock of timid and industrious animals, with the government as it’s Shepard.”

It is this democratic despotism that modern Conservatives must focus their energy upon. As should be clear by now, not all groups are coercive. As such, Conservatism includes the Liberal goal of freeing the individual from coercion by larger groups, and it goes further still. It seeks to promote and protect organic groups from coercion by inorganic groups and atomised individuals. It seeks to protect societal gains, won over centuries, for it is far easier to destroy than it is to create.

Society is indeed a contract…it becomes a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born.
— Edmund Burke

Both the university and marriage are legitimate institutions, both of which have become corrupted and corrupted in different ways. Marriage has been corrupted by atomised individuals forcing their inclusion into an organic group. University corruption takes the form of one group imposing an external cost on contemporary or future taxpayers, and which society at large may pay via inflation. The big question now, is how do we go about returning Institutions to their former glory?