A recently published book rejects many political clichés and attempts to get people to reflect on such issues – in the hope of a shift away from erroneous thinking. Its co-author, Olivier Kessler, has penned an essay for finews.first.
This article is published on finews.first, a forum for authors specialized in economic and financial topics.
Nobel Prize winner Friedrich August von Hayek was critical of the view that everything that is to be observed in society can be traced back to a dedicated invention or a conscious concept. Many conventions, rules of behavior, or forms of interaction were not the result of human master planning or a given order but had developed over the centuries in an evolutionary and spontaneous way.
Human beings weren’t successful because they knew why they performed certain tasks and obeyed rules, but because their thinking and activities were guided by rules that evolved in society through a process of selection and therefore were the result of experiences of countless generations.
«Markets aren't the result of a thought process»
Hayek distinguishes between an order that was created on purpose – the order that serves the personal good of the one who orders, that has been generated consciously and is very concrete – and the order that has grown and stood the test over a long period of time. The grown order is spontaneous, a result of itself, abstract and complex. It fulfills a function but no purpose of a specific authority of thought.
Markets, and hence capitalism, belong to the category of orders that have grown in an evolutionary fashion. Markets develop as certain rules are being adhered to systematically and out of free will. Same as with languages, which have evolved through human interaction, markets equally are not the product of an ideology and a conscious plan.
Markets aren't the result of a thought process enforced by a political body that has to be imposed on society in an unnatural fashion. Markets develop based on the spontaneous interaction of a great many people – without any form of political influence.
«Markets flourish even where the state suppresses them»
Markets relate to human needs for exchange and betterment, which fosters the division of labor and specialization that helps all involved. It becomes apparent through the flourishing of markets, even where the state suppresses them. If for example, the state restricts the free movement of capital, black markets emerge for the trade of foreign currencies. Currently, this is the case in Argentina, where citizens wish to exchange the country’s currency into more stable monies due to inflationary pressures.
In the Soviet Union, where the trade of western products such as Jeans at times was strictly prohibited, black markets swiftly emerged and took the role of satisfying the needs of people.
«Capitalism doesn't just serve the rich in the first place as so often is being implied»
Capitalism is the economic order, where citizens’ goods are being protected and where the important ethical imperative of «thou shalt not steal» is being upheld. If your private property is being protected, you are free to trade what you own with other people. Hence, exchange procedures can grow – markets – where participants exchange with each other by mutual agreement and out of free will.
Nobody can command over such an economic order and it doesn’t just serve the rich in the first place as so often is being implied. The poorest people, relatively speaking, are doing the best in those countries that are closest to being «capitalist». They earn significantly more in the more-or-less capitalist countries than in places that are not free and they enjoy a massively higher quality of life and more prosperity.
«The consumer is king»
The owners of capital don’t own «the power» in capitalism as is often being claimed. Ludwig von Mises, the economist, emphasized that capitalism is the economic order where consumers are in charge and not the owners of capital. Consumers decide what will be produced. The consumer is king.
With their daily purchasing choices, they signal to owners of capital where to invest if they don’t want to lose their assets. In capitalism, in the absence of interventionist regulation that constrains consumers in their freedom of choice, consumers alone will decide where the means are being put to use. They decide which firms will survive and which are deemed surplus to requirements.
«Socialism has been tried out countless times in different places across the globe, without success»
In contrast to capitalism, socialism is an ideology – in all its forms of existence, brown, red, green or religious. Socialism is the result of a thought process that is there to be imposed upon society because it contradicts the natural course of things as well as human needs.
Socialism has been tried out countless times in different places across the globe, without success. Unfailingly, there was suffering, terror, hunger and death as a consequence, because the natural order was disturbed, the order that has developed in an evolutionary way over thousands of years.
«Frequently, they were sent to labor camps or executed»
While capitalism is the order, which is based upon a voluntary, non-violent and mutual exchange, socialism is the order, which can’t be introduced and exist without force and oppression. Legitimate owners must be dispossessed by force of the authorities. Frequently, they were sent to labor camps or executed, because they were deemed a «bourgeois danger» to the socialist system.
An all-powerful state is designed to assume power and instead of free citizens take the decisions over their heads. Socialism, therefore, is the unnatural and unsustainable order of sheer arbitrary rule, in which a small clique of thieves gets rich and exerts power over all others. This context has been graphically illustrated by George Orwell in his book «Animal Farm», where pigs who take the lead in a socialist farm revolution fill their bellies at the expense of the «proletariat».
«Do nothing as nothing will go unmade»
State interventionism – the meddling of politics in the exchange of human beings – is also an ideology. Actors of the state claim to know what is good for all, better than the interaction of a huge number of people that has grown over thousands of years. Their claim has been criticized by Hayek on grounds of the lack of basic information: given the restricted extent of human knowledge, politics should not dictate certain results of the self-ordering process, because this would cause untold damage.
Lao-Tse, the Chinese philosopher, put it aptly 600 BC when he noted that the most important of a government’s duties was to do nothing as nothing would go unmade. Doing nothing wasn’t a sign of weakness or indecision but true strength and wisdom.
Olivier Kessler is a Swiss author, campaigner and economist. He earned a degree in international affairs and governance as well as business journalism from the University of St. Gallen. From 2008 to 2012 he was secretary-general of the Swiss People's Party in the canton of Schwyz. Afterward, he worked for several public affairs and media companies. He was co-president of the campaign to abolish license fees for the state radio and television company. In 2016, he was named deputy director of the Liberal Institute and became the director in 2020. He has left the Swiss People's Party. He is the co-author of the book «64 Klischees der Politik: Klarsicht ohne rosarote Brille» together with Pierre Bessard.
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