Chile, Peru and Mexico:

CLASSICAL LIBERALISM IS STILL KIDNAPPED, MUTILATED AND IMPOTENT

"Neo" liberalism has again risen, another social engineering

Alberto Mansueti  (*)

Centro de Economia de la Oferta (CEO)

Supply-side Economics Center

Maracaibo, July 2006

Nowadays all Latin American Governments are neo communist Chávez-type, or neo liberals Bachelet-type. But neo Communism is the reaction against "neo" liberalism which failed in the 90´s. How then new Governments - in Peru Alan Garcia, and in Mexico Felipe Calderon - try again a failed scheme?

The answer has two parts: 1) "Neo" liberalism is another social engineering, the present version of that same vice that Friedrich Hayek so brightly described and denounced, following Mises and Popper’s paths. And thus "neo" liberalism attracts politicians like honey to flies. 2) Classical liberalism - limited Governments, free trade and separated private institutions from the State - is not present in politics today, not even as a campaign offer. It is absent and without warning. This second part of the answer takes us to another great question: why so persistent absence of Classical liberalism? Let us see.

1. The "neo" liberalism is another social engineering

Is long far from the true, classical liberalism. See you all those "models" and "macro-economic balances". See you all those numbers, those percentages with their decimal. See you those profusions of statistics, graphs and equations. See you the "prescriptions of public policies" in a language so confusing as the Keynesian one. What is behind? Free market? No. We have the same exorbitant state cost as always, maintained with high tributary pressure and massive indebtedness, and justified with abundance of useless "social" programs and economic regulations, and services and bureaucratic agencies for ones and others. Very little market, and almost nothing free.

For that reason most enthusiastic worshipers, propagandist and diffusers of "neo" liberalism are the same old politicians as usual, together with the university professors and professionals with vocation of social engineers - as a new priestly caste - and those journalists turned into the new religion. All sharing the basic assumptions of social engineering: that economy and businesses are too important to leave on hands of current people - the market has "failures", and "information asymmetries", right? - so they must be directed, being of course the Government the obvious candidate to direct them (who else?) with aid of "qualified" people.

Bachelet is the model of Socialist politician reconverted to neo liberalism - via John Rawls {1} and the Euston Manifesto {2} -, combining "social conscience and technical efficiency", that it’s found most suitable to face the demons of wild neo Communism Hugo Chávez-type, like Ollanta Humala and Andrés Manuel Lopez Obrador. With small margins, electoral pyrrhic “victories” of Alan Garcia and Felipe Calderon raise doubts and questions, and many uncertainties; but nevertheless the newspapers and the media "analysts" suppose that applying the neo liberal prescriptions these new Presidents will gain popularity in few months, because they seem to have the politically correct economic science, guaranteed by Harvard, the IMF and the NYT.

From Plato, social engineering always resorts to supposedly scientific ideologies to direct people’s life. Supposedly government clerks and coryphaeus have well learned that knowledge, in the Universities, those "temples of knowledge". In the 20’s and the 30’s scientific ideologies were Fabian socialism and New Deal, Communism and Nazi-fascism. In the 40’s and 50’s they were - in Latin America – “cepalism” and economic development theory, "improving” Marx with generous doses of Keynes and Rostow, and a lot of statistic and operations research. In the 70’s and 80’s was dependency and center-periphery theory, spiritualizing Marx and Lenin with aspersions of Liberation Theology, and combining economic planning with "popular participation".

And neo liberalism? It is the present scientific ideology of social engineering, supposedly "fine tunned" by Chicago School, which doesn’t tell us go against the markets but only against their failures, imperfections and bad slopes.

2. Classical liberalism has been and is absent

Latin America’s drama is not Chávez, nor Ollanta, not even Castro. They are not the problem. The problem here is the absence of authentic classical liberal political parties, armed with a Government Plan and simultaneously a Program for the Transition to a free-market society, as can be our Plan of 11 Rights of Rumbo Propio (Own Course), Institute of Free Enterprise ILE and Liberal Hispano-American Conference CLH. But there are no political parties able to offer it and massively market it to all potentially interested public.

Interested public? Not those socialist bureaucrats, educators and clergymen, pusilanimous businessmen and other statists living under government’s subvention shelter, guarantees and typical protectionism of social engineering, or hoping to soon. They are not to be interested in a free-market political project inspired in Classical liberalism. But those unemployed, poor and without future students, professionals and technicians, traders (informal merchants and their even more poor employees and workers), poor housewives, families without a home, elderly without a family nor even pension. That is to say: we are speaking of victims of statism, who because of the lack of a consequent classical liberal political party throw themselves into the arms of neo Communists. And mainly, we speak of farmers, cattlers, retailers and middle-class people who live in the country side, in the provinces, where failure of the statism are more visible, and where there’s still some private initiative, economic, family and personal independence values.

But the great question here is: why reasons aren’t there consequent liberal political parties? The answer is that classical liberalism has had and has very few academic spokesmen. And they, at least in Latin America, except for counted exceptions, do not present it completely, and for that reason they lack political followers able to offer attractive proposals. They only present one side of Classical liberalism: Austrian Economy. {3} And leaves out two other sides, much more important from the political point of view: realistic Philosophy, firm world- vision of man and society under the framework of the created reality, the certainty of the true and objective knowledge, and the conservation of natural order and necessary and healthy balance between diverse spheres, social sectors and powers; and Natural Rights doctrine, where the Law is conceived to service Justice, and the State as not the only source of Right. Both views were the intellectual bases of the leasehold movement {4} in the Spain of the three cultures - Jewish, Christian and Muslim - where School of Salamanca as well as his heir austro liberalism come from. Liberalism did not begin in 1776 with Adam Smith, Industrial Revolution in England or Independence in USA; their roots, come from way back: they are Biblical, classical and medieval, Hispanic and federalistic ones.

But classical liberalism seems now to be kidnapped by Economic professors, and lack of representatives in other branches of knowledge, where a mutilated and impoverished partial image, historically trimmed and politically impotent is transmitted. This absence of classical liberal tradition in politics and in areas different from the Economy allowed the name of "liberalism", once loaded with brightness and prestige, be kidnapped for this reason by the left in the middle of the XX Century; and transformed itself since into a synonymous of its mega enemy, socialism. For this reason there are so many socialist and semi socialist parties calling themselves "liberal", constituted themselves in the International "Liberal". They plant everywhere in the world great confusion, practically identifying liberalism with democracy, and to mix it with illiberal doctrines according politically correct fad, disorienting thus many people - specially young - eager to find a way out, who become disappointed by not finding a clear and non-ambiguous signal.

That is the reason why liberalism - the strong doctrine of limited Governments, free markets and separation of private institutions from the State - before 1812 it was called "whiggism", or Biblical doctrine of limited Government - tends to be confused with the civilized tolerance between people who embraced opposite values. Or with the civilized respect between people who follow adverse doctrines. Or worse yet, with skepticism, which is systematic and generalized incredulity towards all doctrines, or irenism, which is relativist and pseudo pacifist tolerance between opposite doctrines, or with syncretism, which is its mixture and amalgamate of all of them. Or much worse yet, with "weak (or loose) thinking" which is really quit to think.

3. Hit of Lenin

In 1913 Lenin made a brief presentation of the Marxism in a short writing called "Three sources and three integral parts of Marxism". {5} He wrote that Marxism synthesized the teaching of "the greatest representatives of philosophy, the political economy and socialism". Making it clear that Marxism was "the legitimate heir of the best thing that humanity created in XIX Century: German philosophy, English political economy and French socialism." Lenin believed Marxism to be a realistic doctrine, a scientific socialism, which integrated and simultaneously surpassed the dialectic materialism in Philosophy; Adam Smith, David Ricardo and both Mill - father and son - in Economy; and the utopians Saint Simon and Proudhom in politics and Constitutional Government.

Lenin believed Marxism to be a very wholesome doctrine: able to draw up a complete and exhaustive panoramic vision of man and society, base and departure point for a successful political project; and in this point he was right, unfortunately - great ignorants are not exempt of successes, nor safe from errors great wise people - and Lenin himself was in charge to prove it immediately: he conceived and developed that political project, and he practiced it until the end. We are still paying the consequences of his tremendous success.

And what about classical liberalism? It is comparable because it also has three proper sources and three integral parts: philosophic, political and economic one. The Philosophy is Aristotelian realism, which includes the idea of natural order; and Political Science is the School of Natural Right, with its thesis of limited Government. And thirdly a scientific explanation of markets and Economy, that is without a doubt the best one: the Austrian School. Because classic English Economy however connect themselves to narrow constructivist rationalism and to utilitarianism (Bentham), and derived from it, its chronic unrealism and its long affinity with the variants of social engineering: socialism and "third way", Stuart Mill, Keynes and Welfare State. And with the chain of legal positivists from Hobbes to Kelsen. {6}

4. Complete liberalism:

But still being the best economy, Austrian School is only one part of Classical liberalism, and from the political angle not even the most important of its three components.

Classical liberalism is also a wholly doctrine, and a seriously realistic one, and true, not false like Marxism, nor cruel. However Fukuyama {7}, Post modernists - a sort of skeptics and relativists of today, with a touch of pseudo science {8} and pragmatists have decreed the XX Century as the tomb of all the great philosophical systems and their political doctrines, the truth it has been the tomb of the false ones, once the lies and its horrible cruelty - in intention and application - has been proven. That is not the case with classic liberalism, that "unknown ideal" of Ayn Rand, still never fully tried. That is the great trap of chit-chat talk on the "end of the ideologies" and Post modernism. So false are the collectivistic and statists theses - by the way no utopistic ones - which don’t persuade by a rational debate and argumentation, but prevails by pure emotional manipulation and the single force of the majority vote, or by the guns or pure violence. That is the reason why those doctrines are still alive.

To take Classical liberalism for an equivalent of economic austrianism is an injustice, almost as if Classical liberalism were another social engineering, being precisely the opposite. And a danger, because thus Austrian economic teaching is deprived of the fruitful and politically fertile company of the compatible trends in other two disciplines: realism in Philosophy and jus-naturalism in Political and Legal Sciences. In this form isolated, Austrian Economy is leaved in serious risk of falling in front the attack of any fashionable philosophical trend (the case of Post modernism) or generalized subjectivism and relativism, or Christian socialism, very popular among people of all classes. Or to pair with opposite philosophical-political currents, nihilists, sterile and purely destructive as anarchism, or inclined to social engineering, as the philosophical positivism or the legal contractualism (case John Rawls). The "Public Choice" and other attempts to connect Economy and Rights are praiseworthy, but almost all are under the framework of contractualism and utilitarianism or positivism. They need their appropriate and historical frame, the realistic Philosophy, always emphasizing the character and characteristics not purely conventional but natural of basic human rights - life, freedom and property; and of social institutions - among them the Government, equipped therefore with their own functions, contents and limits, beyond arbitrariness human will, even majority.

To take the part by the whole is not only a serious intellectual error; it is also a sure cause of political impotence and failure. It was seen in 1989, after the fall of the Berlin Wall and the implosion of USSR, when in Eastern Europe several insolvent attempts from transition to the free market failure. Diverse causes can explain that failure, but one of them and not of smaller weight was to offer a very incomplete and purely economics presentation of Classical liberalism, incapable of providing a more solid and convincing justification, and to draw a more complete, colorful and attractive picture of free market society, and to propose and describe the intermediate steps to reach it.

5. Error of Hayek

To hope political success for Classic liberalism only on Austrian Economy basis is unrealistic. Nevertheless, and with few exceptions, on that unrealism some Foundations and institutions associated to Classical liberalism base their activities, being most famous the Mont Pelerin Society, founded by Hayek and other liberal thinkers in 1947. Why? In good part because many of them and their associates and employees followed Hayek’s {9} unfortunate advice, a genius without a doubt, but wrong then when recommended intellectual and academic efforts and to discourage political ventures. When geniuses are mistaken, their errors have enormous importance and consequences. By the way, the Mont Pelerin Society is so called like the hotel used for the first meeting in 1947, because Professor Frank Knight, reputed Chicago economist, stupidly insisted on vetoing two names proposed by Hayek: Acton and Tocqueville, magnificent exponents and practitioners of philosophical realism and political jusnaturalism in XIX Century, Roman Catholics both of them. Thus the bridge of liberalism and religion was finally cut, when Hayek wanted to reconstruct as one of the cardinal objectives of the rising Society.

Can you imagine how the world might have been in the last 100 years, if Lenin in 1913 hayekianally had advised his followers not to dedicate to political ventures but only to philosophical speculations and scientific, historical or bibliographical researches? In such a case probably Marxist and socialist of other observances would have been reduced to small circles of non conformists, looking for libraries and documents, and writing monographic articles, essays and books up to this date. And today they would be stoke to Internet, like the esperantists, philatelists, classical liberals and birds observers.

Can you imagine how the world might have been in the last 50 years, if Hayek in 1947 had considered that academic departments and production and transmission of ideas and knowledge centers were actually in hands of the Socialists or in verge of fall? And if consequently and leninially Hayek had advised to faithful classical liberals to dedicate to politics as much or more than the studies and academic reflections, distinguishing in this form - and biblically - between ignorance and evil, that is to say: sin? In such case classical liberals probably had to organized political parties, win elections in many countries, abolished the supremacy of the State - with their inflations, wars, unemployment and miseries - by the way of free-market revolutions, changing the history of world. And thus forced the social scientists, journalists, politicians and curious people in general, to run to libraries (and now to Internet) to discover which authors, works and principles inspired the liberal politicians for so beneficial changes for humanity. And then a passion were bloomed for genuine liberal knowledge, and profusion of essays, volumes and Websites and TV series on successful fulfillments of classic liberalism and not on its unfulfilled potentialities!

According to the St. Lucas Gospel, Our Lord Jesus Christ observed that often the children of the Dark were more astute and sagacious than the children of the Light. {10} He was not mistaken.

6. And now?

Between 1901 and 1902 Lenin wrote one of his more famous works, suggestively entitled "What to be done" {11} described the then weak Marxism and socialism situation as political movements, at the same time argued with various trends and organizations, criticizing acidly their incapacity to obtain results. And drew up one each one of the masterful lines of the communist project; that same one that concluded (we hope) in 1989. "What to be done" is very voluminous, but was written with the intention of developing the ideas contained in a brief previous work, entitled - more suggestively "Where to begin".

Perhaps the nowadays distressing situation of the classical liberalism is comparable. Ambiguities persist, and institutions identified with it generally aggravate them, confusing university professors with intellectuals - serious error of concept -; and they spend every year several U$S million in supposedly “formative” activities for several hundreds or thousands of people in Latin America, but political results are not seen. They also tend to believe intellectual condition completely incompatible with exercise of politics - serious error of judgment - and thus political jobs and steering positions and Legislatures are open to ignorant people and improvised and/or dishonest demagogues and statist adventurers.

Today’s classical liberals are paying the costs of all those accumulated errors, together with the Latin America countries, and the entire world. Classical liberalism is very far from winning elections in any country, and except for one or another praiseworthy exception, completely absent of electoral competitions.

What to do – is there a way out? A voluminous work is not necessary. A paragraph is enough: we must begin again, retaking the roots, and as it was with the leasehold movement in medieval Spain, in the liberties and guaranteed regional autonomies with local Statutes, like in Santa Cruz, Bolivia; Loreto and Puno, Peru; Guayas, Ecuador; Zulia, Venezuela; and Limon, Costa Rica. And others regions to come. To continue with the studies - now more than ever {12} - and intellectual production, but no longer limited on Economy field. Nor separated from political activities but in a parallel and connected form, supporting a programmatic rational platform and simultaneously attractive, able to appeal to thoughts but also to the legitimate and noble emotions of the people. Not after foolish proposals and cruel theories, but of true, beneficial ideals for all,  attainable, viable, decent and practical.

God willing we may be able to do it soon.

http://www.rumbopropio.org.ve

(*) Alberto Mansueti belongs to the Supply-side Economics Center (CEO), founded in 1985 by Néstor Suárez, his President. Together with the Metanoia Foundation they impells in Zulia (the West of Venezuela) the Political Regional Movement “Rumbo Propio” (Own Course), which they define as "liberal in the economic, conservative in politics, and Christian in its principles". And its electoral arm, the Liberal Autonomist Party of Zulia. The CEO, Metanoia and Rumbo Propio, together with the Free Enterprise Institute ILE of Peru - presided by Jose Luis Tapia, the Liberal Party of Peru PLP and other groups and  individualities, promote the Hispanic-American Liberal Conference CLH, and the autonomists liberal movements in other regions of the continent.

Notes

{1} John Rawls, credited philosopher of Harvard, published A Theory of Justice in 1971, book to which Ayn Rand responded with “An Untitled Letter”, commenting that "certain evilness are protected by their same enormity" (The Ayn Rand Letter Vol. II, no. 10 February 12, 1973.)  It can similarly be said of certain errors.

{2} Euston Manifest, available in http://eustonmanifesto.org/joomla/

{3} "Austrian" usually takes people to think that it is the about the present Social-Democratic Governments of Austria.

{4} Leasehold movement in medieval Spain the local movement of "Fueros" (the privilege or exemption granted to a province as Castile, Leon, Navarre, etc.) guaranteed the people of those localities their natural rights and other complementary ones, long before the English Magna Carta of 1215.

On local federalism and municipal statute law and the Puebla Letters, and very special the "Fuero Viejo de los Infanzones" - it is to say of the on foot bourgeois and common people, it is worth consulting:

http://www.ih.csic.es/departamentos/medieval/fmh/fuero.htm

http://pci204.cindoc.csic.es/tesauros/Derecho/HTML/DER_F13.HTM

{5} Version in Spanish available in the "Lenin Library"   http://www.marx2mao.com/M2M(SP)/Lenin(SP)/Index(sp).html

{6} Much had been noted the Kantian common substrate of these approaches and the accidental coincidence of the three "K" in Kant, the Keynes and Kelsen. One could add a fourth: the English Priest David Kingsley, Marx contemporary, and much more famous at his time, Archbishop of Canterbury, and the Queen Victoria’s chaplain, he was the founder of modern Christian socialism.

It is accidental, but certain that the four were very ruinous respectively in Philosophy, Economy, Law and the Christian Religion.

{7} Francis Fukuyama, known by his publicized book "The End of History and the Last Man", of 1992. Some confused people think that a Hegelian can be a liberal, which demonstrates the extremes reached by confusions on liberalism.

{8} On Postmodernism it is worth to consult who showed the emperor in all nakedness with the farce of the "Social Text": Alan Sokal, Co-author with Jean Bricmont of "Impostures intellectuelles", originally published in French by Éditions Odile Jacob, Paris, October 1997. There are several editions in English, and Spanish by Editorial Paidós, Barcelona, 1999.