Liberal capitalism: what makes it good? --presented by Stephen Hicks

I've known Stephen I worked with him since before there was this organization that takes both of us quite a ways back Stephen is a professor of philosophy at Rockford College in Rockford Illinois he's the chairman of the department and he's also the founder and executive director of the Center for Ethics and entrepreneurship at Rockford College Stephen is done of many many talks for us over the over the years that we've been running the summer seminar and now the outlet summit in I think it was 1999 Stephen was a senior fellow at our organization and during that period he wrote a book explaining post-modernism that has gone through which it which edition or printing now we've lost count it has been very very successful it's one of the things were we're extremely proud of and proud of Stephen for and grateful that he turned out such a great work I just learned today I think that or I hadn't appreciated that it's now been translated into five languages including Portuguese Persian and my favorite serbo-croatian and Steven was just telling me that there was a bit of a political Balkan balkanized battle over some of the trends translation in that particular one it's there's a Spanish edition coming out and a Swedish one as well Steven is deeply versed in the history intellectual history he he has produced several works a video recording a video course and as well as a book now on neat she and you I hope you've had a chance to take a look at it at the bookstore Stephen and I and this is actually how we met put together and this was really Stephens idea and mostly his work a book called readings and logical analysis that is in some ways an accompanying accompaniment to my logic book the art of reasoning although it can be used for any with any textbook and we have that available also at our and our bookstore Stephens is one of those academics who is not only good at his field of philosophy and has published in academic journals he's he is also an academic entrepreneur he practices what his Center is concerned with he started the organization by coming up with a great idea and going to John Allison at BB&T who had a program for funding ran friendly or ran compatible organizations to teach Business and Economics and so Stephens been successful with with that enterprise today he's going to be giving us an overview of liberal capitalism and where it comes from and why it's good in some of the internal debates so Stephen it's a pleasure to have you as always please give Stephen a welcome thanks a lot David I do want to talk today about the case for liberal capitalism obviously the big defining political economic moral issue of the modern world the last 250 years once we got rid of feudalism which had dominated the scene for millennia was the debate over whether a broadly free-market capitalist type of society should prevail in the modern world area more collectivize socialists type of society should prevail by the time we got to our generation the end of the 20th century the case for liberal capitalism had decisively won in some respects and almost everybody will sign on to the proposition that capitalism practically is much better than socialism is the issue of whether capitalism is good right in a broader sense and in a moral sense is much more heated and our intellectual opponents on the left and on some sectors of the conservative right will grant that capitalism is practically successful but they will not grant that it is morally justifiable and even among the many people now in our generation who are advocates of free-market capitalism there are heated internal debates about the degree to which capitalism is moral and even what makes it moral right to the extent that it is moral and it's that latter issue that I want us to focus on today it'll be the internal discussions over the nature of the goodness of capitalist and what that is so what I want to do is talk you through got everything up here on the on the PowerPoint but you do have the power or sorry there's slide a handout as a takeaway I would want to do is start by saying if we're talking about liberal capitalism right the the broader concept here is liberal there's a set of institutions right that have evolved right over time and then they came to be conceptualized as part of a network things like the rule of law as opposed to laws being made up by individual men to their circumstances in particular interests notion of limited government the government should have a specified set of functions and there should be closure clauses this is what it does and it does no more than this protection of property rights Democratic and Republican institutions about assigning power to two government officials dividing those powers putting them in tension with each other having things specified in a constitution and then notions that in the rest of society people are free to create whatever kinds of institutions they want including free markets protections of civil rights and so on there's a whole network of concepts here that I am broadly calling the liberal capitalist framework right now the next step in the argus is supposed to we say that we have a system in which those institutions are put in place right and practiced and then we go on to say this is what makes possible for a good society an awesome society a morally praiseworthy Society right in some normative li+ sense so how do we make the case for that well one line of argument is to say well if you have these liberal institutions in place the first great value there's a consequence of that is that the amount of freedom that individuals in that society are able to enjoy increases and so we have the green up arrow as the result of that people have the profit motive right as an incentive because they are able to do what they want they are able to keep the rewards of their efforts and that incentivizes them to to to pursue profit as a result of that they're going to work harder right then they would other under other installed institutional arrangements and as a result of that the amount of material wealth in that society is going to increase and this will be a comparative judgment on the incentive dimension so to speak other systems will incentivize people or disincentivize them in various ways capitalism is going to produce more material wealth as a result of this one incentive line of argument okay and we're familiar with that there's another line of argument that says if you have liberal institutions and people are very free well you've got a whole bunch of individuals and individuals don't all know the same sorts of things there's lots of different knowledge and people have our knowledge of their particular circumstances their particular interests right and so forth now what happens in a free society is people find ways to coordinate the knowledge that different individuals have and what they do is they set up all sorts of win-win trade networks sometimes it's in a business context sometimes it's in an educational context sharing knowledge sharing values and so all of these people's different knowledge –is and expertise and specializations come to being coordinated right in a way that is better than say in a centralised society where the decisions are being made by a small number of people who might know a lot of stuff but nonetheless they don't know nearly as much as all of the knowledge collectively held by people in a in a society so as a result of this right the free markets or capitalist kinds of societies make better use of the knowledge that is available in a society and as a result of that the material wealth in that society increases so particularly in recent generations when the economist will talk about the most important kind of capital being human capital and particularly the intellectual capital that we all have how well a society does at tapping into and utilizing that knowledge is a fundamental determinant of how prosperous it's going to be now there's another line of argument that says if we have individual freedom what happens in those kinds of society is a increasing amount of individuality because with freedom people make different choices and different interests and different personalities and so people put together different kinds of lifestyles and so you have a much more diverse right kind of lifestyle sir that people are living and out of that comes a whole lot more creativity and innovation than you're going to get in a society where people are encouraged to be more or less the same think the same thoughts do the same things at the same time right and so forth and it's out of this creativity and innovation right that you are going to have a more wealthy society so we have then is three lines of arguments here that say the virtues of capitalism right are that it incentivizes people to work hard it enables people to work smart and it enables people to work creatively right and those three jointly make capitalism a whole lot more effective at producing wealth compared to any other kind of society all right so we've heard these kinds of arguments and they're fairly powerful now the next kind of argument is to say well there's also the issue of not so much not only the capitals and produces a lot of wealth but we have to pay attention to who gets all of this wealth right that is created there's a line of argument that then says what happens in capital societies is they make everybody pretty much better off for everybody is better off living under capitalism than they would under various other systems or a closed variation on that if you're not quite as optimistic about the everyone to say well at least it makes the majority right better off not everybody is going to succeed right or it makes the common man better off using the common person in the middle as the representative of the society so some variation on that or we can make the argument that it makes the poor people better off by their because they have more opportunities or because there's so much more wealth created through various channels it wakes it makes its way to the poor with all of the extra wealth in the society there's going to be an increase in the amount of philanthropy in these societies compared to other societies and as a result of that people who are the weakest of the weak are also going to be better off then there's an argument at the other end of the spectrum that what is a great virtue of capitalism is that the best people right within a society not necessarily the morally best but the people who are the creative geniuses the the brilliant scientists the people who need enormous amounts of resources and freedom in order to be able to do what they do those kind of people are going to be better off under a capitalist system and various other systems and so what these things all in the right side of the page have to do is distribution issues and justifying capitalism in terms of who gets the fruits that are produced all right now these are arguments all that are focused mostly on economic issues and money issues and there's a whole other set of kinds of arguments that are not directly economic about the virtues of capitalism one is that the important value is happiness and if you're in a society where you're told what to do or you have to do what everybody else is doing you're not going to be as happy right in that kind of society that people if they're going to be happy and flourish in their lives we have to do our own thing our own way and so society that enables people to do that is going to be a society in which there are more happy people and also there's kind of an aesthetic argument that argues these societies are going to be more interesting societies because you're going to have people doing all of these different things there's gonna be lots of creativity and innovative stuff that's happening and of course you'll have eccentric people but you're going to have a society is a whole lot more diverse and it's going to be more enjoyable to live in a society like that as opposed to a society where again there's a whole lot more uniformity conformity and the same thing happening over and over again there's also going to be an argument about tolerance if you think historically of the kinds of social pathologies that have plagued us religious intolerance leading to social conflicts and war ethnic intolerances right and so forth if we have a society that says the important thing is the individual and respecting individuals for who they are and the judgments they make about their lives then that is going to bring with it a tolerance for people who are significantly different from the way that we are if your religion and my religion are matters primarily of our own individuality then I will be more respectful of your prerogative to make your own different choices right as opposed to any system that says collectively we all have to be on the same page with respect to religious matters and so or that my salvation is contingent upon your also making the right choices then we to interfere with each other on religious matters and so on so liberal capitalist societies the argument goes are going to be a lot more tolerant internally and and so peaceful there another line of argument that says if we just one way of getting to it is to focus on this incentives issue that other traditional social problems of racism sexism and so forth automatically thinking of people of other races or the other gender as being less worthy less deserving of social standing right evil rights and so forth that is going to go away for a variety of reasons you know the most obvious argument is to say well those people are individuals too and so we should respect them for who they are but one line of argument it gets played up a lot in the economics literature is to say that the profit motive and the incentives that capitalism brings gives people an incentive to overlook racial differences and sexual differences so just as one example if I am hiring someone and I've got two candidates to keep the example simple and one is a male who graduated with a degree but was a C student and the other candidate is a female and she graduated but she was an A student but I'm just this dyed-in-the-wool old-school sexist and I would prefer not to work with women but nonetheless if I am profit motivated I'm going to look at these two candidates and say well I might otherwise prefer to work with the male and to hire the male but my realization that I'm going to make more money if I hire the woman because she is an A student and layer for likely to be smarter and a hard worker to add more value I'm going to be more likely to overlook my sexist attitudes and to deal with right someone who might not about otherwise deal with and the same thing will happen across racial issues was I'm trying to sell expensive equipment right now but I'm a racist right and some person with brown skin comes into my my shop and I don't like brown skin people I'm not as likely to say no I don't want your hundred thousand dollars you brown person right go away right I'm more likely to say right okay I have to deal with brown people right but I want to have your hundred thousand dollars so we'll do the deal and then the ice is broken and certain kinds of attitudes start to decrease right over time so the argument then is that institutionalizes incentives that will lessen the friction right between various kinds of groups and so on it's also an argument can be seen as a variation on that if you look internationally liberal societies or liberal capital capital societies are more likely to be more peaceful right with each other and here the argument is that if I am doing business right with people from another country they're my suppliers or they're my customers I I don't want war because war is very destructive you know if my supplier is in another country and I'm depending on him to produce or to send certain goods to me well I don't want his factory to be bombed because then I'm not going to get my goods and I'm not going to be able to make my money and so forth so the trading networks that develop across national borders that are peaceful win-win Trading Networks are going to then be an incentive for people not to push for war under certain signs of circumstances now you can look at this argument historically most of the Western European nations if you look at their history prior to the last two centuries they're almost constantly right at war with each other right the French prior to fighting the the British everybody fighting the Germans Italians right and so forth but to the extent that those societies made transitions to being more liberal capitalists right they don't fight wars right as much with you when was the last time Britain and France went to war with each other well it was almost two centuries ago prior to that they were almost constantly at war for what accounts for that significant change all right I wanna start putting some names to this so far is just a qualitative set of arguments that have given you here a name most significantly associated with the importance of individual freedom right as the great virtue liberal capitalist institutions Rand there's a quotation for example the moral right justification of capitalism she argues does not lie in the altar has claimed that it represents the best way to achieve the common good it's true that capitalism does but this is merely a secondary consequence the moral justification of capitalism lies in the fact that it's the only system consonant with man's rational nature and it's a deep truth about our rationality right that it needs or that it's it's volitional right that we need freedom who need to exercise it freely and in a social context we need to be free to think on our own terms and act on the basis of our judgment so the freedom right is the deep point right that man Rand is emphasizing here about the moral justification of capitalism now Milton Friedman has said lots of things right about capitalism's virtues but the arguments that he most strongly stresses tend to be the arguments about incentives and the profit motive and how institutionalizing that is one of the great virtues so here's from capitalism and freedom Friedman contrasting societies based on freedom compared with societies based on compulsion they says it might be that compulsion could be substituted for the incentive of reward though I doubt that it could one can shuffle inanimate objects around one can compel individuals to be at certain places at certain times but one can hardly compel individuals to put forth their best efforts so if we want people to be putting forth their best efforts right we need to leave them free and so it's freedom leads to people having a certain kind of incentive and then their efforts come from that and then we get the good results Friedrich Hayek developing insights from Ludwig von Mises is most associated with this notion of his first knowledge and FreeMarkets virtues in being able to coordinate all of the dispersed knowledge in society from his very famous peace use of knowledge in society in a system in which the null of the relevant facts is dispersed right among many people the virtue of the price system then prices can act to coordinate the separate actions of different people prices enable a coordinated utilization of resources based on an equally divided knowledge has become possible right so the price system is the more intermediate right set of signals that we send all to each other and what it enables us to do as millions of people and in some cases billions of people is to get ourselves all on the same page and efficiently move goods around because all of our knowledge it gets embedded in the prices that we're willing to offer and to accept and that gets communicated to other people very efficiently and we have a more efficient system just a couple of props here Adam Smith has kind of proto arguments about the incentive argument and about the division of labor and coordination I'll just skip over that for time reasons Joseph Schumpeter with respect to creativity in the middle part of the 20th century is the most famous name associated with the the the innovativeness in the creativity right of liberal capitalism his famous phrase about the perennial Cale Gale of creative destruction is exactly this point that what free markets do is is constantly innovate we're improving in various kinds of ways sometimes very turbulently but that is a great virtue of the systems ludwig von mises on my reading of him across several books mostly emphasizing the distribution issues that what makes capitalism great is that it makes almost everybody in society it makes the average person better off and so forth the majority of people and so this is from a work the anti capitalist mentality where he's setting the the most prominent feature of capitalism in his judgment is the unprecedented improvement of the average standard of living for a continually increasing population in another work a little bit earlier liberalism has always had in view the good of the whole right not that of any special group and then with qualifications he cites approvingly the utilitarian slogan the greatest happiness for the greatest number is the justification of of capitalism there's a group of younger mostly younger libertarians now called bleeding-heart libertarians and on their argument or the signal virtue right of capitalism is that it best benefits the poorest and the weakest right members of society and that's that's the moral standard that we should be applying so one huffs keep this person anonymous for now makes the argument that quote the moral justification of our institutions depends on how well those these institutions rather serve the interests of the poor and the least advantaged and then from this perspective the the the majority of the work that one is to do right as an economist political scientist philosopher is show how liberal institution benefit the poor in various ways and raise them up out of their sad condition bertrand de jouvenel is a representative of the argument that what's most important about liberal capitalism is its effect on the people who are the Trailblazers or i think of the the roark the rare orchids in society are at the ballet dancers the opera singers the original artists the deepest thinkers in the sciences and so forth and his argument is that what capitalism does is it proves is so much wealth that we can afford to support a significant number of these people and this has an enormous value right to society just in that it lifts our sights up in any number of directions makes us as a society more aspirational to think of things that we otherwise would not do and so they almost as a in a bootstrap way take society forward by various steps and there's a work the ethics of redistribution reprinted recently by Liberty Fund but it's about a half a century John Stuart Mill as the name of my judgment move most associate with making the argument that the pursuit of happiness and the achievement of happiness individual happiness is the standard by which we should judge and he does believe that in liberal institutions you're going to have happier people right on average he also makes the argument with respect to the the what I'm thinking of as an aesthetic criterion that is just there's a value to living in these kinds of societies because they're not boring they're not conformist right is there's always something going on and you're interested so I would if you've not read this recommend the third chapter of on Liberty where mill is almost poetic heiresses poetic as a as milk and get in singing the praises of liberal individualistic societies John Locke philosopher demigod right in the pantheon as most famously associated with the argument for individualism on matters of conscience individualism in matters of judgment and that this is a fundamental and this when he was writing a short piece called a letter concerning toleration in the 1690s shortly after he returned from exile this is the the work that probably more than any other work led to the institutionalization of separation of church and state in the 18th century in that politically turmoil century and here's just an excerpt from fairly early on where he makes a deep point that no man can talking about religion conform his faith to the dictates of another which is not possible to do this all the life and power of true religion consists in the inward and full persuasion of the mind whatever profession we make to whatever outward worship we conform if we're not truly satisfied in our own mind that the one is true and the other well pleasing unto God such profession and such practice far from being a furtherance or indeed great obstacles to salvation so the absolute fundamentality and of the individuals own conscience right and judgment if that is true then we must be tolerant right of people who went exercising their own judgment make different and in some cases to us offensive right practices in all over the A's and that argument carried the day all right so that's that's the charge and the first part of my talk is talking through this aside I think of this is everything that I've learned from all of the geniuses of the last three centuries and my my only value-added is to try to coordinate them all into a compatible right flowchart to show that they have an affinity right with each other and if you'll have flowcharts as I do then this is a this is a beautiful thing okay I was there just on methodological grounds I like flowcharts because you know if you can't make everything fit the second part we now have then is a whole lot of claims about the virtues of capitalism with the balance of capitalism what makes capitalism good and if I started a list about the exhausted by capitalism increases freedom increases productive effort and uses innovation always well well it benefits everyone economically improves civil society develop properly nonprofit sector for example increases in our happiness in society interesting increases in tolerances increases sexism racism of those pathologies promotes international peace and so on and so forth that's a very impressive list and a couple of questions I ran through all these arguments in like 20 minutes and sketches of them but into those arguments there's a whole lot more thing you can do the question is is each of them true and maybe these as well political issues horrible issues of capital address before judging in our minds in fact they are not and then as a follow-up question which is our food most of us not closely those arguments why have we not carried that they might not have more people particularly intellectuals and thinking people who accept some or all those arguments what's going on there it doesn't important question it points out that despite in many cases people were reflectable adversaries being able to recognize spending virtues of capitalism there's something going else going on with them that means that we downplay the significance of those other things but I'm not going to talk about that today there so what I want to do is turn inwardly and talking about people who are fellow travelers with us as we say people who are probably on the same image as objectivism breathe that liberalism capitalism free markets right and what's returning inside the movement broadly speaking all kinds of other debates so we go through here once that's made in America originally they make all these claims of what makes capitalists are good but what's the most important good ethics we'll put out a lot of values so it's an evening of life very long but we have to prioritize and organizing maybe some kind of standard which you are measuring or weight or evaluating all the values in order to accomplish that prioritization so if we ask the question what is the most important most important value that any society we truly achieve and here then our candidates is it free or frequency good thing is it happiness race happiness for the greatest number I won't say anything right now prosperity it's helping the poor toleration quality piece we need to make some judgments all now return to the kinds of arguments that focus on today primarily we ran Friedman and Hayek a little bit of pieces as well the Giants of the 20th century the whole standard right that we are using to compare these two types of society and the implicit premise it's necessary very clear that a society is justified by its wealth generally games process you can't do that advanced society can do bad or good society never find that it's a similar or a commitment slightly different variant with Mises and Hayek they are going to collectivise Society is less effective well it's not a compulsion issue that focusing on is that who's making the decisions in that society is it a collective decision making by centralized movement of the property upon behalf of all the society every it is and those people will be very less effective at generating wealth and individualized societies more effective at generating wealth and then therefore collected by society is good or bad rather than individualized society is good and if we blow up the implicit premise is the same one as in the Freedman or an event a society is judged a little bad by its wealth generating problems contrast that with the kind of argument that Brandon makes or her conscience to say that individuals need freedom we need to think exercise good judgment be able to act that's the freedom point liberal institutions protect freedom therefore local institutions say inclusion of liberal societies were good but the assumed premise is different here society is judged good or bad by its protection of freedom all right now we have a detention over what moral standard we're going to use ran the same the top standard is freedom that's a good thing and frequent high pieces of what we're saying as well and both is also a good thing so with the contracts directly liberal capital suggested by individuals in equal freedom versus they're justified by their beautiful love wealth which is another way to put it is in terms of ends and means language that our enemy socially is the protected freedom of individuals and liberal capitalism institutions means to that end on the other hand if we think that Creed the end I started reading a lot of wealth for in societies then we're thinking of individuals as a means and the Royal Institution says incorrectly so set up the raw institutions that's one means that empowers individuals to be free by those individuals and then produce a whole lot of wealth and that's our ultimate goal and here's where we get interest on heart questions and I want to put this up in form of a puzzle because when you read one of the literature by probe regarding people who are savvy about the plan and Hayek thesis treatment and so on today it's full roxrite in a certain way and that was problematic about that polarization is that neither of those choices is really attractive we have a horrible dilemma sometimes it's Theory literature between consequentialist and do not walk at all approaches with moral justification deontological approaches will say that you should have these very firm absolute principles that we can know to be true ahead of time and once those institutions are in place we don't think about the long-term consequences we just act on principles and however things work out that's still going to be morally right the other side must say well principles should be seen as a little more flexible the way we figure out what the right thing to do is we have to project the consequences it's by their fruits that we know various things and so sometimes we should not stand absolutely on principle is that we should and the consequences do cost-benefit analyses figure out what the consequence is going to be and do what we need to do in order to receive those consequences there's a problem that if we go this way so if we take for land we differ this kind of interpretation we say the important thing is that in a society the freedom of individuals must be protected as fundamental that is foundational that is an absolute set of all principles then it sounds like we're saying that all of the things that are good that come from capitalism don't really care for very much or are not important in evaluating the merits of capitalism so if we say hey the whole capitalism is good because it protects people's freedom then why does it matter that capitalist societies are so good at producing lots and lots of wealth and lots of other benefits right so it seems like that should be an insignificant maybe a nice statement it's that important and the argument that goes the other way if you say that capital societies are justified because they create lots and lots of wealth that's the ultimate world good thing well are we saying that individuals are not important and worthy in their own right that there are important men working to the extent that they are contributing to this overall creation of social wealth and that also sounds not very happy as well as in the same individuals as means the various kinds of social ends and that's starting to sound just a little bit collectivistic so here's a quotation for example for all Mises who is a positive integer arguing against slavery saying there's only one argument that can and did review all the others why slavery is bad slave labor but there is an implicit or a judgement call going on here and we put it in the form of a hypothetical or a counterfactual what what if that weren't true right what if a slave society were say equally compatible are equally able to produce wealth as a free society or maybe a little bit more productive right than a society of people with with free labor would we then say well therefore a free society or Sarria slave society is the morally justified one because after all the the the the the economic productive power of labor is the thing by which we are measuring the merits and demerits of various kinds of society and that should grate a little bit on your ears because we might want to say yeah right free societies are more economically productive but slavery no matter what is just wrong hey that's just absolutely wrong to treat individuals right that way but then of course if you go that direction and you tweak the argument then are you saying say well then you're perfectly happy with saying if everybody is free but they all turn out to be say really lazy and prejudiced and they just you know drink beer and watch baseball and read philosophy books and society becomes you know poor and bigoted but everybody's free right then you're fine with that right all right so our problem is that we want to have both right we want to have a free society and we want to have a society it has all of these social benefits that we think a free society right can Bay but we need to have the theoretical apparatus to show how those claims are integrated right with each other and the standard way right of of characterizing Rand and the other positions is to put them in this dilemma situation where it seems like you have to choose one or the other and at the same time did you say ten minutes five okay that wasn't really a negotiable kind of a response was it all right also that problems that interpretation doesn't really fit with the text because Rand lots and lots of places talks about the virtues of capitalism to creating wealth Friedman Hayek and the others are constantly singing the praises of individual freedom and talking about how it's an important fundamental value end and so on so let me throw my solution at you in four minutes I'm not making any claims about originality right about this but I do think that it cuts the Gordian knot right in certain ways now when we talk about liberal capitalism right we shouldn't see it as like a unitary right set of institutions instead we are evaluating really three things right obviously there are individuals and so we ask the question what is it what is it to be a good individual or what's good for individuals as individuals and here we're talking about our personal ethics but it's individuals in a certain set of institutional arrangements right that we call liberal liberal capitalism but the institutional arrangements that we call liberal capitalism are is made up of two different kinds of institutions or it's the governor as an institution and then there's all other right social institutions and that's a very broad category now the distinction here are examples of other socialist assisters sports teams museums travel clubs right and so forth now so we have individuals we have government and we have all other social institutions now government is a social institution but qualitatively government is a distinctive right institution so here's a definition a government is a social institution that makes rules right and enforces them that's very generic because all social institutions make rules right and enforce them the differential are that government rules apply universally to everyone in a society it's Universal in its scope right no one is exempt from the laws right or the regulations right that are our past whereas every other social institution is more particularist right the rules of the atlas Society right only apply to people who choose to associate with the ATLA Society or a sports team right or a business and different social institutions can have different rules and they don't make claims about their rules applying to everybody in society so government in that sense is an overarching institution the other ones are not the other differentiy is the means of enforcement right you break the rules of the Atlas Society right the worst they can do is just kick you out right just say we're not going to associate with you anymore you break the rules of your church or your college or any other institution the most they can do is dissociate great from you governments by contrast are authorized to use compulsion against individuals who break their rules right they send the police you go to court there are bailiffs you might have your property take and go to jail or in extreme cases be killed so what this then means is that we have really three justifications that we need to be asking right one is a personal ethics question what makes an individual good or what's good for me as an individual and here we talk about virtues and values right that are appropriate here when we turn to the institutional issues the question about what makes a government good and what makes all of the other social institutions good the answer is different right for those two in the case of government the question is what makes the use of compulsion or the use of force in principle against anybody who breaks certain rules what makes that a good thing to do there the answer is for practictioner of freedom anybody who is going to violate someone else's freedom that authorized and justifies the use of force now as far as the government trade as an institution goes that's the end of the justification right we use force when necessary to protect individual freedom what people do with their freedoms in the society that's not the government's business or Annette forms no part of the moral justification of the government as an institution but the answer is different when we look at all of the other institutions the voluntary institutions that we set up create maintain tweak right and so forth the presumption already is that we are free individuals able to form whatever kinds of institutions that we want to do and if we're asking what makes this institution good right then the question is well what values right is it pursuing and what are the consequences of having this kind of institution in place with respect to those consequences so freedom is already built into the system there and we are concerned with the long-term consequences right of that particular social institution if that social institution is not achieving those longer-term consequences then we change it or we get rid of it right if our if a marriage is not working it's not yielding the right kind of consequences then we dissolve the marriage if the business is going bankrupt it's not achieving its goal of state maximizing profit then we disband the business right if nobody believes in our religion anymore we disband the church and so forth and these are all consequentialist answers so my conclusion then is if we are careful right about distinguishing what we are trying to evaluate right when we're talking about capitalism are we're talking about the individuals are they good individuals are we talking about the government as an institution or are we talking about some other kind of social institution then the answers that Hayek ran Friedman and Mises can be made compatible now Rand is of course an ethicist right when she's doing philosophy right so that or she's doing a great deal of emphasis and she's also concerned with justifying the role of government she's not a professional economist right and so those issues are not central to her right Hayek Mises Friedman and so forth are professional economists and so naturally from their perspective the thing that's really important to them is economic efficiency and economic productivity and what kind of institution is going to achieve that so there might be some professional biases rather that creep into the rhetoric but if we distinguish the questions carefully we should be able to make them compatible with each other all right I'll stop there and take any questions I assume that the the original divergence into the three paths are all occurring simultaneously in reality yes and all feeding off each other as well my question is about sexism and racism you have a red down arrow if you were to have said reducing sexism and racism would that have changed it to a green arrow surgeons ask you about the graphics yeah yeah there are the graphic conventions here they're reducing yeah it would be then a green up arrow yes because it seems that it doesn't fit with the rest of the conventions there yeah right yeah or so we could do the same thing with respect to say International Peace if I'd said international war then that would be a down red arrow yeah right or material wealth I just put poverty in there right that would be a red downer so in some cases yet it is a symmetrical judgment thank you sure will you be producing a similar flow chart for statism I have one no it's actually it's posted at my site I think it's called pathologies of the mixed economy that's at least the polite name right for for that right and what it does is it it takes a more centralized version of this as is how capitalism works then how socialism is to go and then if you blend those two you get a mixed economy and then there are certain necessary things that come out of a mixed economy so I do have in a flowchart it's longer than this it's it's like this but you can get it at my website so just go there and I think Jeff you just take pathologies in the search window it'll will come up if you have any trouble or just email me and I'll send it to you what's the base URL for the website Stephen Hicks org thank you so yeah fair disclosure Stephen Hicks com is a porn site got there ahead of me okay so I think I may have repressed nihilistic tendencies and so when we get to the point to where we establish the difference between you know is it individual freedom that we're focused on or something else why is individual freedom so great I mean cuz I have a hard time I like it I think I'm a fan but I have a hard time taking anything as as grounded or justify them hmm so this is something I'm working on so where do we begin saying yeah that once we get to that point hmm okay well the short answer right the question is that it's not just a quirk of your personality right that you like freedom I I would say that that is a deep need right that we have as a human being to exercise freedom we are a potentially intelligent species right the way that we survive in the world is by the exercise of our brain we're not physically strong Swift Hardy right and so forth and so if we relied exclusively on those things we're perish as individuals right and and as a species we need to think to think conceptually right about the world to figure out the way things work to formulate plans and act on the basis of those plans and the point is that the exercise of our minds our rational faculty upon on which upon which rather our survival depends it's a volitional capacity we have to choose to exercise it we can't be forced to think and we can't delegate the thinking responsibility to other people and then having thought and figured out the world this is we really need to do this that's an absolute we have to then act on the basis of our judgments we can't only theorize we have to actually act in the world create value so that we can consume those values in order to survive and the acting in the world on our best judgment is also something that has to be volitional we have to be able to put that into practice and so the coercion of other people that stops us from acting by by damaging our bodies or in time not enabling our bodies to move all of these things in principle are interfering with what we need to do in order to stay alive right so freedom or it is a need and it's grounded in our psycho biological nature as human beings all right so that's a two minute response there a wonderful lecture enjoyed it like you I did I thought I would give you the chance to expand on something you said you did not have time to address in the course of a or in the body of the lecture and that is given the glories and efficacy of freedom and and markets why why is why does socialism continue to be so seductive and appealing and why did that you know freedom yeah my my too intellectual history books are are my investigations of those questions because the two great enemies of liberal capitalism in the modern world have been an ax fascist National Socialism and then left-wing types of socialism Marxist and other right inspired so the explaining post-modernism to a significant extent is how socialism came to be packaged and repackaged in various ways in response to all of the the evidence of the successes of capitalism right in the modern world and then a similar question for national socialism and fascism how those came to be so popular and so powerful as intellectual moral and political forces right in the modern world now their whole philosophical stories here I think you can make a strong case that of all of the philosophical issues the moral issue is the the most important one and so the kind of moral standard that people internalize and not a lot of people internalize it and are able to conceptualize it right explicitly but it becomes nonetheless kinda their their operating system if that operating system morally speaking does not emphasize individual self responsibility right an individual freedom at a certain optimism about your ability to achieve your goals in the world and for us in win-win ways to to satisfy our needs mutually then you're not going to have a society that is is amenable to capitalism right people might recognize certain virtues of it but it's still going to jar against their right yeah so fairness is going to be right one of the that one of the issues you know in fairness is one of those things where everybody is in favor of fairness but you just push one step further and we have very different notions of what counts as as fair and that's the moral issue right that needs to be to be addressed but then connecting to the question from Nathaniel epistemological issues I think also are are important in a free society free societies put enormous amounts of responsibility on people and for people to be able to handle that strong degree of self responsibility in their lives they make all of these decisions and you know as David talks about being the the entrepreneur of your life well entrepreneurship in business is scary enough right it for many reasons or being the entrepreneur of your whole life Wow right you need to have a great deal of confidence in your abilities right and for us as human beings that means having confidence in our ability to think about things figure out what's what consider alternative plans evaluate them and so we do need to have an explicit and internalized the epistemology and so to the extent then that we have cultures that don't prize rationality right as a as a virtue or entire philosophical traditions that militate against rationality then you're not going to have one of the preconditions so epistemology and and ethics now we could say if we look back a little bit earlier there are metaphysical issues but I'm de-emphasize metaphysical issues because I think we essentially won that battle three to four hundred years ago right if you think that life on Earth is not that important it's not that big of value but all the good resides in another dimension and that life is only a Waystation and preparation for that or then you're not going to get a capitalist society right so but I think intellectually that position has receded at least in our culture and it's not very intellectually interesting to me and I don't see it really as having much bite right right now so thank you David there's a very common lament of many and it's a long line of fairness and that is level the playing field I get so hard it's so tired of hearing that statement and I don't have a good intellectual response to it I guess right well again I would say there are deep notions about fairness here or tying in to Eric's question and yeah one of the big divides is people who will say if we look at individuals and we see that say by nature and by circumstance some people are favored and other people are not favored so some people seem physically right more robust or stronger or better-looking or smarter right or they have more advantages socially because of where they were born who they're were and so on what is your moral reaction to that fact do you say well what your natural endowments are that is a basic non normative fact of nature that's just your starting point that's the given right so it's not unfair right that giraffes have long necks and so they have an advantage over gazelles right it's not unfair right that lions are stronger than hyenas right so they're not equal it's just that's the way right things are so you take whatever the natural endowments are as the given and morality then kicks in it's about what you do with that what's under your control that's what you evaluate and the institutional rules that we put in place we judge those to be fair now the other side of the debate wants to say that there is because of those inequalities a deep unfairness right so those are not normatively neutral facts about the world but they are normatively negative facts about the world and that what we then need to do institutionally is correct for those differences right in nature Rawls Ian approaches rr1 yes or a variation on that now that's one we do speak of natural given differences the other issue is social differences so your parents say we're very wealthy and my last name is Hicks so I come from a long line of farmers right so my parents right right didn't you know have the wealth to give me all sorts of things say that your parents right give me now that's not a natural fact right about the world instead that's a social fact right about the world and how do we evaluate that and again one side of the divide will say that is a deep on fairness right socially that needs to be corrected and the other side of the divide the one that I'm on will say well what we should then do is say good job to your parents for having done whatever they did to create the values that they could pass on to you as the children and that's to be admired that's what parents should do right or one of the things that parents right should do and if my parents were less successful right at doing so well actually they did a good job right but it's not unfair to me right that your parents did a better job for you than my parents did for me right in that particular respect

  1. Unfortunate that he went with Hayek's weak knowledge argument over Mises' stronger, more fundamental calculation argument.

  2. I'm from the UK and I've never considered myself a Conservative or Liberal, A Capitalist or Socialist or any other 'Ist' or 'Ism'. In fact I do my best to get rid of ny assumptions or predjudices about the world, especially History and Politics, that may leave me thinking in an ideological way. It's ALL B.S. Ideology is just a lack of understanding, it's conclusions and answers without the questions or any reality. It's Abstract formulas based on axioms that are not understood or axioms based on forms invented by humans anyway. Likesaying music didn't exist beforeJ. p. Rameau wrote the 'Treaties in Harmony'. . There's no coincidence that Ideology was born the exact same time Fundamentalism came into existence. [What S. Hicks says abut the Post Modernists, 'that they double down or they give up on reason', is what was happening from day one with the Romantics] There's no coincidence that in1848 all of a sudden everyone is writing abut the abolishion of Property Law and using the name/word Socialism to describe themselves. None of the 'Socilaists' were workers, serfs, peasants by the way, they were all very wealthy aristocrats from pre-Capitalist societies. Capitaism had not yet happened so how were they radicals? Marx talks about putting Radicals in jail and taking their property from them, also for just wanting to leave the country. What the Communists did in the 20th century is the exact same as Napolean I did including the Nationalisationof Industry and cntralplanning. What the Fascists did is no different to what Napolean III did after the revolution of 1848. These people saw 'The Bourgousie' as their enemy and competition not as the 'opressors' or 'exploiters'. I'm a working class fella who has been working fulltime since aged 14, I have no education at all and it shames me that no one, not even Conservaties who claim to hate Marx, understand the real history. Of course if you take a bunch of political pamphlets written in two days out of their historical moorings, out of their political pantheon and attach your own emotions and sentiments like you're reading a poem that was written in a vaccum of course you can turn it into a real simple narrative of good vs evil. It is embarrassing because Marxistsare no less sophisticated than people who want to burn you for being a werewolf. No, Ido not beleive I a xaggerating here either. Don't take my word for it you can find out in 20mins flat if you read about te history insteadof the romantic ideals of people who weren't even involved, theywere safe at home writing while everyone else gottheir heads cut off!

  3. we need more vidz by this fella. As a stupid uneducated fool, I find he articulates his points pretty well, well enough for me to get it anyway. Which is saying something … Doh!! Philosophy is somewhat of a habit and hobby of mine, not because I don't like it much because I really do but, because I'm far too obsessed with economics, history. Politics and world affairs in general, Industry and technology, Music, Movies, repairing music equipment and on so matters of academia and more abstract ways of thinking is not my forte. Not a problem in the internet age though, Jordon Peterson, Stephen Hicks Hayek, Friedman and Rand who have old interviews which came under attack at the time for false reasons 'Fake News' Much? Why do the self proclaimed 'Leftist's', Liberals to Marxists insist they are radical but, there has never been such a collective anymore conformists, The first people to prove Marx completely wrong were late 19th century Marxists themselves, so why still call yourself a Marxist? It's because it is a dogmatic religion. The rules of the game have to be maintained even when the conclusions and outcomes are pretty far from the promises of peace, Bread and Equality. Socialists, I don't acknowledge there's a Left or Right, it's all the same, need to acknowledge the problems of 'Capitalism' are problems of human corruptions and fallibility. It is Socialism that will always produce the result it does. If you create an economic model that claims the only way to extract wealth is through theft, fraud or the exploitation Of labor and then you abolish property law, the very thing that saved us from slavery, serfdom and theft then guess what system you'll create? But it's OK, It's only Capitalism that's a bad system. Every other system is perfect we just had the wrong people in charge? LOL.

  4. At the end of the day, these are all complex societies, and most complex societies collapse. Having Joseph Tainter will be vigorous debate.

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