|Edited by Gerard Radnitzky and Hardy Bouillon
Amsterdam-Atlanta, GA: Rodopi, 1993
The vision of Abraham Lincoln — that government would faithfully reflect the wishes of “the people,” that it would be managed by politicians and bureaucracies accountable to “the people,” that it would be run solely in the interest of “the people” — has not been realized. In the real world, government, to varying degrees in both socialist and capitalist countries in Europe, is “of” the politically inactive people, “by” the politically skilled people, “for” the politically organized people. New thinking and new measures are required in the election, the functions, and the machinery of government to make Lincoln’s vision of 1863 come to life in the 21st century.
The intuitive idea of freedom is clarified, and the concept of “private rights” is proposed as an explicatum. The origins of the idea of freedom, misuses of freedom-speak and the pre-history of freedom are discussed. The essay examines epistemological and axiological aspects of the idea of freedom, in particular, the relationship between economic freedom, civil liberties and political freedom. After surveying the historical development of freedom, it deals with the Constitution of Liberty and the prospects of its being respected.
In liberal political theory, governments legimately carry out society’s choices within the constraints of a choice rule, a “constitution.” If the constraints are of the “right” sort, government remains limited. However, if persons and their interest groups are utility maximizers, they will find it profitable to amend or subvert the constraints that stop decisive coalitions from deriving the greatest gain from redistributive social choices; choice rules will evolve toward democratic sovereignty. Only commitments that override utility maximization can ultimately limit the scope of government.
Key ideas of classic liberalism (from Locke to Hayek) are analyzed in search for intellectual instruments suitable for arresting the growth of government. The results are not very promising, and the recognition of possible limits of the growth of government in democratic societies is not comforting. The author claims that a wooly conception of freedom is to a certain extent responsible for the little persuasiveness of classical liberal ideas in our times. Distinguishing three kinds of restrictions on acting (natural, spontaneous and artificial), he ends up by defining freedom as absence of coercive artificial restrictions on acting.
The failure of the socialist command economy directs attention to purported alternative mechanisms of resource allocation that would be self-enforcing, simulate certain capitalist processes and outcomes, yet would preserve some socialist values. Tracing the effect of alternative types of ownership, severalty and commonalty, upon systematic behavior, the present paper argues that the principal-agent problem obstructs any self- enforcing efficient solution unless severalty becomes the dominant form of holding property. The latter, however, is inconsistent with other essential socialist goals.
Hyperinflations are a plague of discretionary monetary regimes often threatening the very existence of free societies. It is shown what conditions are necessary or (but not: and) sufficient to end such inflations by one sudden reform. By looking at the empirical evidence, it is demonstrated that a suppression of budget deficits, an increase of nominal and real money stock, a shattering of inflationary expectations, and credible institutional reforms restricting the discretionary power of government are necessary ingredients of such reforms.
Switzerland was after the World War II one of the few countries with a comparatively market oriented economic order. Because in the meantime, especially in the last ten years, many European countries have started to deregulate and to liberalize their economies whereas Switzerland does not show big efforts in this direction the once large advantage of the Swiss economic system is fading away. The paper describes this development, analyzes the causes and gives some normative directions for future developments.
Three turns mark post-war German economic policy. The first leads from the wasteland of 1948 to the liberal “Wirtschaftswunder” and the inception of the “social” market. The second is Karl Schiller’s “enlightened” market economy. A third turn, executed by the Kohl government, has by far not been sufficiently clear in conception and aim.
This is a study of the British maintained school system, considered as a service industry. It is in many ways a most peculiar industry. It supplies services which it is compulsory to consume, and supplies these free at the point of supply to sometimes reluctant consumers. Although, very strictly speaking, it is not a monopoly — since between 6 and 7% of parents pay twice, once through taxation and then again through private school fees, in order to buy independent education for their children — there can, surely, be no monopoly legislation anywhere which would not be activated long before any single provider had won a 93-94% market share; and that even before taking note of the policy of predatory not-pricing. Since there is no comprehensive system of independently assessed and criteria-related examinations there are no reliable measures of the annual production of this very peculiar nationalized industry; and hence no halfway adequate measures of productivity. One ruinous consequence is that the public — strongly encouraged by all the supply side interest groups and their political creatures — is in utter irrationality inclined to equate resource input with education output. In consequence of what in any other industry would be defeasible presumed to be an index of overpersonning — an increase in the teacher/pupil ratio — is here almost universally accepted with no supporting evidence either asked or offered as being decisive evidence of educational improvement. No one should be surprised to learn that the most militant teachers’ unions are opposed both to any independent assessment of the effectiveness of their members’ teaching, and to any publication of test results which might result in competition to serve the public better. And so on.
Jakob Sundberg’s paper first examines the factors which have contributed to the rise of the Swedish high tax society and to the special Swedish mentality which has evolved in response to it. The overview starts with a historical account and then goes into the more special areas where this mentality shows itself. What is it in the Swedish mind that makes the 100 percent tax acceptable, that makes the retroactive tax acceptable, that makes the tax bureaucrat a supervisor of morals, and allows the Swedes to grade foreigners abroad as to their morality and to find that many of them are immoral by tax definition? The author relates to the development of a very special socialist type of philosophy that has been allowed to go unchallenged in public debate and which thereby has been able to benefit from a kind of “Finlandization” process, what the absence of response has meant for the development of the mentality. Identifying high tax society with a manipulative technique, the author looks around for the moment of truth, a litmus test for the manipulated mind. Sketching the potential of the comparative law method in this connection, the author then turns to the independent judicial system. Making a few comparisons with American examples — Al Capone, the Child Labor Case, et.al. — the author focuses next on the tests which the Swedish tax system may suffer when confronted with the independent judicial review administered by the organs of the European Convention on Human Rights. By means of a few examples — the Max von Sydow case, the Profit Sharing Tax Act, and the case Darby vs. Sweden — the author attempts to show that this new European jurisdiction makes the moment of truth unavoidable and must mean a great crisis to the Swedish tax system.
The paper addresses two issues: the future of Yugoslavia as a political entity and the ability of the federal government to implement economic reforms. Economic problems in Yugoslavia have their origin in that country’s institutional arrangements and are aggravated by the rise of regional bureaucracies. Written in September 1990, today this monograph stands as an example of the explanatory and predictive power of the property rights economics. The paper correctly analyzes economic, social and political problems which brought the country to its end in 1991.
Totalitarianism is the institutional antipode to a free society. It is shown that the formation of a society believing in supreme values as absolute truths is a necessary condition for the development of a totalitarian movement. If the latter succeeds to harness personal interests, to win domination of a government, and to combine spiritual and secular powers, then the most important preconditions for a totalitarian state are fulfilled.