Discussion

Tibor Machan: One of the points raised by Milton Friedman and Raymond Gastil has to do with ends versus means. I think only individual persons can have ends. They may get together with others in their pursuit of ends. But individuals have ends, and thus social and political institutions are means for individuals to pursue certain ends of theirs.

The other thing upon which I want to comment is whether a society that has socialist or statist laws must thwart freedom in all areas. Let me take the analogy of a zoo. There are zoos with very small cages where the animals can’t do anything, and there are zoos like the San Diego Wild Animal Park which is practically not a zoo. Nevertheless there are certain limits; both are zoos.

In Hungary, for example, there is officially a Soviet-style socialism, but most bureaucrats don’t bother to implement it. So people go to Hungary and come away and say, “See, the thawing of socialism.”

It has nothing to do with the thawing of socialism; there is practically no socialism going on in many parts of Hungary. I don’t think that the fact they give lip service to socialist ideology should be taken seriously in our discussion of the practical effects of political and economic institutions. Walter Block I would like to approach the original Friedman thesis from a different perspective, although I think Tibor’s points are very well taken. I would like to attempt to make a serious bifurcation between economic and civil freedom on the one hand and political freedom on the other hand.

I claim that the former two are legitimate forms of freedom but that the latter is not. I would go so far as to say that political freedom is an oxymoron or a contradiction in terms. By freedom, what I mean is the absence of initiatory coercion, or that there is no violation of personal legitimate property rights. Now, economic freedom under this rubric is easy to understand; it defends the right to trade or to engage in any consensual activity of an economic sort. Civil freedom would mandate that there be no laws against pornography, prostitution, drugs, religion, free speech, et cetera. But political freedom is very different.

Economic and civil freedom are just capitalist acts or non-capitalist acts between consenting adults. Now, if politics is, as I contend, just a futures market in stolen goods, then political freedom is only a right to get in on this ganglike behaviour. If we do not have it, all we are kept away from is the right to control other people’s lives—and that, improperly. If there are no elections, and we have no government, or we have a benevolent government that doesn’t violate economic or civil freedoms, then we are free.

On the other hand, we can have all the political freedom we want, and if the majority votes for rent control, as it does in the People’s Republic of Santa Monica or New York City, then we have “political freedom,” which is a misnomer. What we have really is a warlike activity where people gang up on other people and determine what they can or cannot do with their own property. This is not political freedom; this is just licence. This is allowing people to control other people unjustly. Economic and civil freedom are legitimate freedoms, political freedom is not.

Ingemar Stahl If I remember my history, most of the constitutions and political systems we call democratic were instituted to control a despot or a king with a very limited size of the public sector. We are now using exactly the same system to run economies where 65 percent of the economy is channelled through the public sector. So, of course, it would be remarkable if political freedom in the sense of controlling a despot would apply to the situation of controlling 65 percent of GNP.

Tullock made a plug for public choice, I want to make a plug for Wicksell.

This is the 90-year anniversary of the publishing of his text wherein he proposed the unanimity rule as the basic rule for government. We must remember that political freedom in everyday talk, even including the Friedmans’ paper, is a kind of acceptance of a democratic system where the majority rules. But I think we could sharpen the conditions and say that we should also include protection of minorities, for example, by qualified majorities, or that there should be some restrictions on the competence of government. It is a little bit dangerous here—and I will take that up later when we come to the Gastil/Wright paper—to put an equals sign between democratic institutions where the majority rules and political freedom.

Economists should look at the unanimity principle as the basic principle of democracy, which can then be compromised by accepting a qualified majority or certain restrictions on all government behaviour. Majority rule has created 40 percent ownership of industry in Austria.

Majority rule has created 65 percent channelled through the public sector and most of the services and transfers in Sweden. There is a lot of coercion included in the majority rule concept, even though we find it somewhat difficult to accept the strong statement of the point in the form that Walter Block, for example, is inclined to make it. If we say lack of coercion is the most basic political freedom, we are back to having to advance the unanimity principle.

Milton Friedman I just wanted to clarify that in Capitalism and Freedom we explicitly take the position you just took. We take the position that the only real principle is unanimity. The majority rule is an expedient, and various forms of qualified majorities are various forms of expedients. So there is absolutely no difference between your view and the one we expressed in Capitalism and Freedom. Peter Bauer Autocracy is compatible limited government. I should like to refer to two sayings, one from the 18th century, the other contemporary. Dr. Johnson said, in the 18th century, “Public affairs vex no man.” He meant two things by that. First, that when people complain about the government they more often than not project their own private unhappiness in various ways.

But it was also an apt comment in the middle of the 18th century, because government was so limited in its impact on people that this statement had much greater validity then than now. Second, it used to be said before the war in British Malaya that the Chinese there did not mind who owned the cow as long as they could milk it.

This last statement reflects the familiar misconception, namely that wealth is extracted not created. The Chinese on Malaya had created their wealth; they didn’t take it from the Malays. But the saying also embodies the important truth, namely that when a country is relatively lightly governed, people are not so desperately anxious who has the government.

The Chinese in today’s Malaysia would not say that they did not mind who had the government.

We should remember this vital distinction between elected government or non-elected government on the one hand and limited and unlimited government on the other.

Second, I think Gordon reminded us of a very important consideration which we are apt to overlook, namely that much of the world’s greatest art was created in autocracies of various kinds.

There is an asymmetry between the size of the public sector and government control of the economy. A large public sector implies government control over much of the economy. But the converse doesn’t apply. Even if public spending is small, the government can still control the economy closely by licensing, ethnic quotas, price and wage regulation and the like. The last point is the question of how fundamental is freedom of speech or freedom of expression of ideas. Academics habitually insist on the freedom of ideas and their expression. Simultaneously they often insist on the need for government control of the production and distribution of other goods and services. Some years ago Coase published a very informative article on this dichotomy titled “The Market for Goods and the Market for Ideas.” Brian Kantor I wouldn’t want to abandon the links between economic and political freedoms. I come from a country where democracy, that is, political freedoms, are greatly feared because of the economic outcomes that are expected from it. In other words, the popular government is feared because of the great power that government would have and exercise. There is thus a violent competition to control economic outcomes through government. Clearly, unless you can get people to agree to limit those powers, you won’t get democracy, political freedoms or civil freedoms either. So, I think the links are extremely important, although some of the evidence, as Gordon has pointed out, seems rather unclear. I suggest trying to save the hypothesis that there are these links between economic and political freedom by looking at the realities again, and governments may be very important in that their share of the economy may be very large, especially if the amount of transfer payments they indulge in are included. Yet, despite this, the economic outcomes may not be terribly much affected by it.

For example, you may have a very high level of taxation, but when you look at the benefits of government expenditure, how are they distributed? Aren’t the people who proportionately pay much of the taxation, in fact, actually getting a lot of the benefits? We know that educational expenditure goes largely to the middle class. So, the reality is rather different than what it may appear as. That is, even though governments are big, maybe they don’t affect the economic outcomes very much, especially when people are free to move their capital and are free to migrate. Douglass North I guess I am going to be supporting Gordon a lot. This goes against my grain, but, truth will out. I do think there is confusion, as I hear it around the table, about really what you mean by institutions and freedoms or the outcome of institutions, which is part of what we are talking about. It seems to me what we are always interested in is not the institutions per se; we are interested in the outcomes. That is, we are interested in the set of choices that follow from this. One of the things that I have been at pains over the years in learning about institutions is that it isn’t just rules, it isn’t just enforcement characteristics, it is also this illusive thing that I call “norms of behaviour.” Restraints on behaviour by individuals in society really exist, and they exist above and beyond rules and enforcement characteristics. We don’t know a lot about them, but they make a lot of difference in the outcomes we get. That means that the same rules imposed on different societies produce very different results. What would be a rule that would deny freedoms in one society wouldn’t be exercised in that way at all in another society.

I remember, Alan, when we had that conference on immigration that you gave a paper at, and I commented on. A critical question at this conference was this bill that was before Congress which was going to have everybody having an identification card, and it was immediately raised, and properly so, that this sounded like the Soviet Union. In fact, what you would be having was people being done the same way. But it is not clear that in the United States it would produce that result at all, or that in a lot of other countries it would produce that result. You cannot make simple, facile statements in which you shift and talk about the consequences of a rule in one place and another place without thinking about the fact that they are also constrained both by enforcement characteristics and the norms of behaviour in different societies.