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Reaching Our Potential as a Liberal Society
Benjamin Klutsey and Peter Boettke discuss cosmopolitan liberalism, the relationship between freedom and equality, what makes a good society and more
In this thirteenth installment of a series on liberalism, Benjamin Klutsey, the director of academic outreach at the Mercatus Center at George Mason University, speaks with Peter Boettke about the promise held by the idea of liberal cosmopolitanism and the importance of considering the political economy of institutional arrangements in reaching our potential. Boettke is a University Professor of Economics and Philosophy at George Mason University, the BB&T Professor for the Study of Capitalism and the Director of the F. A. Hayek Program for Advanced Study in Philosophy, Politics and Economics at Mercatus. Boettke’s analytical framework is grounded especially in Austrian economics, the Bloomington School of institutional analysis and the Virginia school of political economy. He has authored and co-authored numerous book, including “The Struggle for a Better World” (2021), “F. A. Hayek: Economics, Political Economy and Social Philosophy” (2018) and “Living Economics: Yesterday, Today, and Tomorrow” (2012).
This series also includes interviews with Alan Charles Kors, Emily Chamlee-Wright, Ilana Redstone, Richard Ebeling, Robert Talisse, Danielle Allen, Roger Berkowitz, Virgil Storr, Kevin Vallier, Juliana Schroeder, John Inazu and Jonathan Rauch.
BENJAMIN KLUTSEY: For our conversation today, we’re joined by Professor Pete Boettke. He’s the University Professor of Economics and Philosophy at George Mason University. He’s also the director of the F. A. Hayek Program for Advanced Study in Philosophy, Politics and Economics at the Mercatus Center at George Mason University. His writings and academic work are too numerous to list here, but today we’re discussing his latest book, “The Struggle for a Better World.”
Now, Professor Boettke’s a beloved professor and colleague who has been an important part of the history of the Mercatus Center and continues to be an inspirational leader to many of us. Our discussions over the past several months have focused on liberalism and pluralism. Professor Boettke, your book, I believe, contributes very substantially to this series of conversations. Thank you for joining us here today.
PETER BOETTKE: Ben, thank you so much for having me on. I’m really looking forward to continuing our conversation. Thank you.
KLUTSEY: Great. Now, we’ll delve right in. When you speak of liberalism, there’s a type of characterization or qualifier that you apply, which is liberal cosmopolitanism. It’s not a term that you often hear, but you note that this is a deeply rooted idea in liberal thought. Underneath this idea is the recognition that we are one another’s dignified equals. Can you unpack this concept for us?
BOETTKE: Well, the issue of international or cosmopolitan liberalism is just simply the focus on two aspects. You mentioned one, which is that we are one another’s dignified equals. The other one is that we’re strangers nowhere in this world. Citizenship is understood as part of liberal internationalism as opposed to any parochial aspects. The liberal is a citizen of the world, not a citizen of, let’s say, just the United States or the citizen of France or whatever.
We may be born in those circumstances, we may speak a certain language and have an affiliation with all of that, but our aspirations are for a world of the free flow of resources, of people, of ideas and all of that. It’s that vision of liberal cosmopolitanism that stresses toleration of all the different cultures, different religions and whatnot that is at the founding, I would argue, of the quest for liberalism in the past. It began, of course, in the religious wars and desiring toleration of different attitudes towards the relationship between the individuals themselves and their God and being able to have toleration of that, but it broadens across a whole bunch of things.
As I’ve been going around talking about the book, one of the things I try to stress, which I don’t do enough of in the actual book itself, but is to stress the ongoing battles for liberalism today, and to see the battles and quests that are going on for expansions of liberty in our world today that we see. I don’t want to go too much more into this, but it’s connected up into Kant’s notions of perpetual peace and all kinds of other very important ideas that come out of the Enlightenment project. I think that that Enlightenment project, as understood in that way, still has a lot of legs today—in fact, is essential legs for today despite all of the nay-saying about it in some sense.
Creating the Good Society
KLUTSEY: It seems that there’s another related concept that you highlight as well, which is the good society. Then if we practice liberal cosmopolitanism, does that take us there to the good society and what does that look like?
BOETTKE: I guess that there’s two aspects of the good society. I should point out that, as I think about the way I wrote certain things in these chapters—so these chapters are made up over a 20-year period of time in which I was invited to give keynote addresses, basically, at learned societies. I was president of societies or was asked to give a speech here or there, or whatever. I had these opportunities about what was going on with the liberal project basically since 9/11. You think about 9/11 and the rise of a more militarized world, a closing-down world, a more parochial world, and I’m trying to defend this idea of liberal cosmopolitanism.
In the midst of all of that, you get hit with a global financial crisis. In the midst of that, you get hit with the pandemic, growing concerns about inequality, growing concerns about militarization and all of these things. I’m in the context of trying to take little bites of an apple in each one of these things. I think if I sat down and wrote the book from scratch, there would have been—I’m hoping that people find the arguments in here or the collection to be cohesive and the argument to be compelling, but it is disjointed in the sense that they’re different bites at different times and in different contexts. I think that’s important to keep in mind.
I’m loose at times with some of the discussions of the things that you’re talking about there that I wish I was a little tighter about in terms of the arguments for that. At some level, I can’t be any tighter because my own intellectual position is a little goofy one, which is that I’m an economist, so I’m a big believer in consequentialism. At the same time, I believe in universal rights of mankind.
I have this position, which is trying to juxtapose utilitarianism or consequentialism, however you want to call it, with some kind of notion of universal rights, and when do they bend to the other one? Then I have this picture of a good society. A good society is the one where that balance is done right. We respect one another’s fundamental rights. We exhibit neither discrimination nor domination. Yet at the same time, we arrange the affairs such that we generate all of the wonderment of modern economic growth and development. I’m trying to make an argument that fits into that package.
I don’t want to say the good society is like the Supreme Court on pornography, a “we know it when we see it” kind of thing, but that’s a play on a Walter Lippmann essay on the good society. That essay had a big influence on people like Hayek and whatnot. I hope that that doesn’t sound too loosey-goosey.
KLUTSEY: Oh, no. This is great.
BOETTKE: Because there is a vision there about how it is a society could operate where we are able to treat one another as dignified equals to realize gains from trade, to engage in specialization, to engage in freedom of association, freedom of contract. I apologize for going on, but a lot of libertarians—which I come out of—I’m talking all this liberal language, and I am a liberal, but ultimately I’m of the radical libertarian variance of classical liberalism, is where I’m coming out of.
Libertarians tend to—they don’t all do this—but there’s an intellectual error that they make, that they emphasize the components of human behavior that are most obnoxious but yet fit within the strict letter of the libertarian code. I think that’s a mistake, because rather than the idea of us saying that we have the right to say no, which is a fundamentally important aspect, but to me, the good society is just as important about our right to say yes—our right to say yes to interactions that we otherwise never would have had, or ideas of the smorgasbord of intellectual affairs that we would never even think about if we just stayed in our own parochial way.
It’s this kind of idea of moving beyond where our circumstances were that we were born, that I think a free society promotes and develops. That is one of the great beauties of a good society. That’s something more than just the strict letter of the libertarian code, that “your freedom ends at the end of another man’s nose” kind of thing.
Classical Liberalism and Justice
KLUTSEY: I think you provide a critique of classical liberalism, which is that it failed to inspire because—among the list of concepts embedded in liberalism, which includes liberty and prosperity and peace—one important concept was left out, which is justice. The injustice of capital distribution inspired a socialist vision, and perhaps this continues to fuel the rise of keen interest in socialism and other justice-driven ideas. Now, when you speak of justice in the classical liberal sense, you’re referring to commutative justice. Can you explain that a little bit?
BOETTKE: Well, this is the difference between distributive justice and procedural idea—this basic idea that justice is in the relationships that we have between one another and in our meeting of our obligations contractually with one another. Playing on the whole theme in the book is the idea coming from Hume that the foundational institutions of society are property, contract and consent. We have to have stability of possession, the transference of those possessions by consent and the keeping of promises. This aspect of what justice is, the keeping of promises or holding people to their contractual obligations, and the security of persons and property, that’s the notion that I’m trying to get at there.
To go back to an earlier idea that’s related to these conversations that you’re talking about is, despite the fact that I want to have international, cosmopolitan liberalism and international liberalism, it’s not that I believe that we’re going to wake up one day and we’re all going to be different human beings that all of a sudden get along with everyone else. We have, in many ways, a natural suspicion of the others that may in fact be hardwired. There is a variety of explanations, maybe, for that.
The imagery that I have in the book when I discuss these ideas is the difference between sharp objects. So society is possessing of these sharp objects. Think about, basically, spears sticking up in the ground, and we are quarrelsome, and we’re prone to conflict. As our social interactions inevitably entail conflict as well as cooperation, I’m asking what ideas, what patterns of behavior might transform those situations of conflict into recognizing the opportunities for cooperation. Or the way that Hayek would put it in discussing catallaxy is how do you turn a stranger into a friend? This is the importance of trade and whatnot.
Another way to think about it is how do we end up by dulling the edges of our social conflicts with each other so that we end up by being only bruised and bumped, and not mortally wounded? In the world that we live in today, we have, in many ways, sharpened the objects. Our social discourse has, in fact, been like people taking sandpaper and sharpening the edges, so that our interactions become more and more mortally wounding rather than dulling. I want to somehow dull those edges, even though recognizing those things.
I think that’s what the liberal project, in many ways, was—is to find in ourselves our common humanity, to work with that common humanity, to be able to recognize and respect our differences, but to realize that those differences create opportunities for mutually beneficial exchange. One of the great ironies or puzzles that need to be overcome is that the greater the social distance between people, the greater the gains from trade in interaction, but the greater the costs of being able to interact because of greater social distance. Something has to come in to be able to allow us to both recognize as great gains from potential exchange, while at the same time allow us to, in fact, transact.
This is what I think liberalism did, first, as an idea. The great thing is that you should—in my explanation, ideas have priority over other things. But then, those ideas then come from people. They don’t come from the brow of a genius; they come from their experience with one another and interacting and expanding their realm of interactions. Then they begin to become codified into practices or, what I call in the book, institutions. Then those institutions enable us to expand and increase our social interactions with others, realize greater gains, and so forth and so on.
KLUTSEY: Great, great, that’s really interesting.
BOETTKE: What you’re saying about justice is critical in that because what justice is, in this sense, is the idea of the relationship between you and I and others, and then the obligations that we have to one another. Not about whether or not I have and you don’t have, and whether or not I’m going to take from you to give to me or me to take from me to give to you, because either one of us have or don’t have. It’s not about haves and have-nots. It’s about the way we interact with one another and the way we engage in mutuality and solidarity with one another.
Tensions Between Freedom and Equality
KLUTSEY: I had a conversation with Danielle Allen on this podcast, and it was really insightful. One of the challenges that she also offers to liberalism is the lack of emphasis of the concept of equality. She highlights this in the Declaration of Independence, where there is equality and liberty, but equality comes first. She says that, over time, folks who are very excited about liberalism mostly talk about the freedom part. I’m reminded of a quote by, I believe, Milton Friedman that says that those who seek equality above freedom will get less of both, but if you seek freedom above equality, you get more of both. I’m paraphrasing this, but I think it’s something to that effect.
BOETTKE: I saw Danielle Allen recently in a conversation with Emily Chamlee-Wright.
BOETTKE: She’s brilliant. I want to learn from her as much as I possibly can. I think she has real insights to a lot of these issues. I think a lot of this comes and also turns on ambiguities in language. I use the term in the book a lot, freedom. I use the word liberty. The problem with freedom is freedom is a little bit more elastic than liberty because freedom from or freedom to, which one are we talking about, and these kinds of things.
I think equality is a similar idea. If we treat one another as dignified equals, that doesn’t necessarily mean that it means resource egalitarianism, that they have the same ideas. It means that you’re treated equally before the law, that equal things must be equally treated before the law, and in the interactions of that. I think that those kinds of conversations are complicated and difficult, that we should be having as adult conversations. This is the whole point about the discourse and everything.
We need to recognize that, I think, any time that we try to fix endowments—this is the economistic way to put it: “We can fix endowments, but we can’t fix endowments in a way that is incentive-invariant to the behavior of the individuals involved.” All right, and the problem is that that forces us to realize that in public policy, we are never choosing between particular distributions. We’re always choosing between rules of the game, which are themselves going to engender patterns of exchange, production and thus distribution.
This is what Friedman was getting at. If I try to tip the scales in the favor of giving resources from one to another, I necessarily discriminate against the one that I am taking the resources from, and I’m discriminating in favor of the other one. Can we find some way in which the rules exhibit neither discrimination nor domination? That’s what the liberal project is trying to do.
Danielle Allen is fascinating because she began her career studying basically Greece, ancient societies, everything like that. A lot of these ideas about the nature of republicanism and everything follow out of those earlier ideas. The roots of a lot of the liberal ideas can be found in these various earlier intellectual histories that we have to unearth and excavate. I think that’s the right word, right? It’s like the archeology of it all and dig it and find it and put it in different places and then apply it to the context of our times.
The Elites Versus the Public
KLUTSEY: There’s an interesting paragraph in your book—this is from page 229—and you say that, “Serious thinking by true liberal radicals must emphasize the positive aspects of human sociability of cooperation with those of great social distance,” which you just talked about, “. . . and of the civilizing aspects of commerce.” This is the doux commerce thesis from Voltaire, Montesquieu and Smith.
You’re saying that it needs modern advocates and those who will address the questions of globalization, immigration, refugees and the possibility for mutually beneficial exchange. As I was reading this, I kept thinking that, beyond intellectuals, thought leaders, academics and those one might call the elites of our society, this is also about having that conversation with the general population—the plumbers, farmers, store clerk and so on. These people have lost trust with the elites. Will these modern advocates who emphasize the positive aspects of liberalism be successful in this current era?
BOETTKE: This is the big question. It’s one of the things that if you listen—my book, in many ways, is a criticism against populism, left-wing and right-wing populism. It’s my enemy that I’m taking on in the various essays. But at some level we need a liberal populism that is shared and excites the imagination of the everyday person in society. I’m reading a wonderful book right now by Emma Griffin called “Liberty’s Dawn.” It’s a social history of the 19th century during the Industrial Revolution. Its primary evidence is life histories that people wrote at the time of what it was like for them to go through these things.
Their life was miserable in many ways, but their life was getting better as revealed in their life histories, the way they communicate it. I would love us to be able to communicate, in some sense, what the promise that liberalism can offer. This is where I sometimes get a little bit of trouble with the disjointedness that was mentioned earlier, because what I’m trying to do is demonstrate both the intellectual history and the historical practice that produced what Angus Deaton calls “The Great Escape,” or what Deirdre McCloskey refers to as the Great Enrichment.
I want to see the connection between that Great Escape from that Malthusian world and this Great Enrichment that has improved the lives and the lot of the least advantaged in society, multifaceted improvement in our livelihoods, and be able to communicate that to people that are, in fact, in the process of going through various difficult transitions. If I’m a water carrier in the 19th century and indoor plumbing is invented, I’m losing out at some level, but at another level, my life is opening up.
This is one of the things that Emma Griffin talks about in these life histories is how—people leaving the farm and what it was like to leave the farm and then what it was like for them to work in apprenticeships. Then when the apprenticeships start to decline, what’s it like for them to now have more freedom in their job options. Of course, as they’re going through their life, their life is filled with all kinds of difficulties and tough turns and tragedies and everything like that. But they’re getting increasing scope of autonomy in their lives throughout the century because economic progress is giving them more and more options for them to do things.
I think this is what we need to talk to people about, about what globalization can yield for them, what free, open borders would yield for them. What kind of society we want to live in that doesn’t turn away people that are escaping oppressive regimes, but instead welcomes them into your society, absorbs them into your—rather than keeping them hidden off in a corner or something, and instead absorb them into the society.
The great benefits that we have from that, that you see in trivial things like, for example, your choice of restaurants and the kind of foods that you can experience. The kind of music that you can listen to, the kind of art that you can experience. All of these things are from this various smorgasbord of cultures that are moving in and out and freely adapting and adjusting. To me, this is—again, the everyday person has good reasons to distrust elites. But I think that’s because elites have tried, ever since the rise of the progressive era, to rule, to govern over rather than to govern with.
If you think about what a self-governing democratic society is like, so the kind of thing Tocqueville was talking about in “Democracy in America,” that is a kind of democracy in which we are governing with one another. It was incomplete. It had all kinds of troublesome aspects to it. I’m not trying to deny any of that, but the general mindset was one of trying to govern with, as opposed to being governed over. Whereas what’s happened with the progressives was the idea that we could have trained elites who could be put in charge, immune from democratic pressures, and could, in fact, solve our social ills for us.
The giant problems of poverty, ignorance, squalor, disease, all of these things could be overcome if only the experts were in charge. The way I like to think about this—and I say it a few times in the book—is that, the one vision that I’m trying to suggest is that ordinary people can do extraordinary things if only given the freedom to act. Whereas the alternative perspective is extraordinary people can do extraordinary things for you if only given power.
The extraordinary people doing extraordinary things is a warrior’s mentality. It’s part of the virtues of the warrior. The military chief, or chiefdom, could run the thing and be able to pull off these great victories against great adversaries or whatever. I want to see the vibrancy of our society come not from great leaders but from people, ordinary people who do great things, because necessity is the mother of invention and they discover new and fascinating ways.
This is where it lines up to a lot of the research that’s going on in Mercatus having to do with permissionless innovation. That’s our source of our salvation, is in the everyday people discovering new and better ways to do things that the experts miss. The experts miss because they’re only looking at it over here. I think you see that, for example, if you look at the number of immigrants that become major entrepreneurs, or the number of immigrants that change the way we think about doing science. They see the world differently, and because they precisely see the world differently, they’re able to do all these other things with it. That’s kind of who I want to champion in that.
KLUTSEY: Great. Now, going back to something you mentioned earlier, this book is about 20 years in the making, based on a number of speeches and comments that you’ve made post 9/11. What have been your observations about trends in thinking, how people are receiving these ideas as a modern advocate for liberalism? I know that you shared earlier in the book that you are pessimistically optimistic, but what are your general thoughts on how people are taking these ideas?
BOETTKE: I begin the book with a passage from Hayek highlighting this notion of what’s called the tacit presuppositions of political economy. These are the taken-for-granted, the unquestioned attitudes that people have. The best way I can communicate this is to try to relay a story. In 2004, I think it was, Chris Coyne and I went to Princeton to a conference that was honoring P. T. Bauer, the great development economist. The people speaking were Israel Kirzner, Doug North, James Buchanan and Amartya Sen. Now, Sen was there because Sen works in the field of development economics, but it’s also the case that Bauer was one of his tutors when he was an undergraduate.
He gets up there and he was asked the question, Sen was asked the question, “What is the biggest difference between 1964 and 2004, with respect to Bauer?” Sen was amazing because what he said was, “Well, in 1964 everyone would have discounted everything Bauer said because they believed that politics was a positive-sum game and markets were a negative-sum game. But in 2004, we’re here at Princeton celebrating Bauer precisely because now the world thinks that markets are positive-sum games and politics is a zero-sum game.” I think Sen was off a decade, and that’s part of the whole reason for the book. What happened was after 1989, the tacit presuppositions did shift.
Now those presuppositions, I think, were fought hard. The stuff that Sen’s talking about was incremental battles that were fought by people like Milton Friedman and Hayek and Buchanan and Nutter, and just name all the market-oriented people from 1950 to 1980. By 1980, you start to see the elite opinion has switched over. In the 1980s you’re starting to see this even more. Then at the end of the 1980s, communism collapses, Eastern Europe has to go through reforms. The former Soviet Union eventually, in the early 1990s, ceased to exist, and it has to go through reforms.
It’s also vital to remember that the Scandinavian countries all went through fiscal reforms in the early 1990s because they had to also become more liberalized. You can look at a country even today, like say, for example, the Netherlands, and the Netherlands is going to score, or Norway is going to score, higher on economic freedom in 2019 than the United States. All that was going on, the tacit presupposition shifted, as Sen talked about. But by the time we get to the early 2000s, the tacit presuppositions already flipped back. The reason, I think, is because liberals made a huge mistake.
After 1989, they became complacent and lacked creativity, because they thought they had won the battle of ideas, and all they thought it was was a battle of implementation. Instead, they needed to think more creatively about how to enact liberal reforms in the post-communist era, in the development areas, the failure—I should have mentioned the third aspect of the 1990s was the failure of development planning, Bill Easterly coming along and pointing out the elusive quest for growth. We had had 50 years of foreign aid programs, all of which had crashed and burned. Now the question is what are we doing? We didn’t think creatively enough about what liberalism means for the 21st century.
As a result, our energies were devoted to politics. To me, I think when we ceded culture to other people, other perspectives—and to me, we always have to remember is that politics is downstream from culture. What really matters is the intellectual, cultural discourse that’s going on in society, both at a deep level and at a surface cultural level. What I mean by surface culture is things like popular music. Look at the lyrics and the popular music and what people think about what’s going on in popular music. There’s a reason why Rage Against the Machine did very well in terms of the ideas.
The ideas were in fact wrested control again. Then think about—I have a chapter in the book which goes through and tries to talk about the attitudes of college kids. You think about it: A kid that’s in college today, they were born after communism had already collapsed. All they know is that the United States has been in perpetual war. All they know is that there was a global financial crisis.
All they know is that there’s increasing concerns with people straddled with debt, increasing concerns with people dealing with disproportionate criminal justice issues, that there’s a slowing down of the mobility between the quintiles because of various gumming up of labor markets and whatnot. Then you get a global pandemic on top of that. That’s this kid’s lived experience.
What’s their tacit presupposition? Their tacit presupposition, going back to Sen, isn’t that, hey, markets are a positive-sum game, politics is a zero-sum game. Now it’s politics and leaders. I think this is one of the issues that’s going on, is that people attribute too much—now, this is me being normative—people attribute too much meaning to politics. Their identities are wrapped up in politics rather than wrapped up in their communities or wrapped up in their friendships and wrapped up in their aspirations for a better life. It’s all tied to like politics and “with me or against me” kind of thinking.
As a result, we don’t have the kind of civility that we need in our political discourse to be able to actually have an adult conversation about very serious problems that plague our world, which are layovers from militarization, that are layovers from crony capitalism, that are layovers from rent-seeking and special interests, that have in fact gummed up the ability of individuals to move between the quintiles.
We have structural inequality in America. Why do we have structural inequality? To me, I think the key issue there is structural. The structural inequality is precisely because we have various policies and institutions and whatnot, which in fact don’t allow for a free contestation of ideas and this kind of stuff. Yes. Let me just—I’ll sum up by this last thing, which is, we definitely need to have a public reevaluation of the doux commerce thesis—the role that civilizing aspect of commerce, free commerce, sweet commerce, allows us to have—and have a conversation about that with individuals.
And the person that’s doing that the most at the moment is Deirdre McCloskey. She’s the one who’s making the most progress on thinking about those issues, but you can also look at works like Chandran Kukathas’ most recent book on “Immigration and Freedom,” or [Alex Nowrasteh and] Ben Powell’s new book on immigration as well. Bryan Caplan, my colleague, on open borders in cartoon version or whatever. Think about that: There’s innovations in the way we’re communicating ideas now across to people. We’ve got to move the conversation from the elites talking with elites, to reaching down into deeper aspects of our society. How to do that, I don’t know because I’m a college professor, that’s it.
Prosperity, Equality and Justice
KLUTSEY: [chuckles] That’s great. Now, when you were discussing why you’re pessimistically optimistic, you said that “the worthiness of economic policy measures can be determined on the basis of only one criterion. Do the economic policies proposed result in wealth and prosperity or not?” As I was reading this, my suspicion is that that criterion for economic policy is losing some traction with our society because criteria such as equality, equity, justice, some of the things we’ve talked about already, are gaining attention as the basis for policymaking.
Now, is it the case that when we have prosperity, we experience the other benefits, justice, equality, as well as liberty? Because you also mentioned this in one of the chapters, that the wealth and poverty of nations turn on the adoption of institutions, but so do the questions of equality, liberty and justice. They’re not mutually exclusive, but really a matter of emphasis.
BOETTKE: Again, this relates back earlier to my discussion about the balancing between rights-speak and consequentialist-speak thing. Look, the bottom line is we don’t eat growth rates. What really matters is what these growth rates purchase for us. What it purchased for us is something more than just our caloric intake or whether or not we have a nice car or whatever like that. What matters is the effective things that we can have at our disposal because of modern economic growth, that women have greater access to educational opportunities.
It’s very difficult to make sure, in a rigorous way, that you’re always not confusing, one, correlations and causation and, two, causes with consequences. Okay? What is the ultimate cause of this great cornucopia of human progress? It’s ideas. That’s ultimately the idea. You have to have the ideas that respect individual freedom, to respect trade with others, all these kinds of things like that, to recognize one another as dignified equals and to see that we’re strangers nowhere in this world. That’s an idea first.
Then it has to be somehow transformed into something that it becomes a common practice. The more the idea spreads, the easier it is for the idea to become a common practice. That common practice then gets oftentimes codified, not always, but a large number of it gets codified into these institutional patterns that we have. Those are the things. The idea has to become instantiated in the institution.
The institution then gives us the performance. But that performance is valuable not because we have more stuff, but because of what that more stuff allows us to do with respect to our ideas about the expansion of our liberty, of our well-being and all of these other things. If we look at like—now, I’m going to talk correlations. If you look at things like the Human Development Index, they’re positively correlated with levels of economic growth and development.
I recommend everyone to just go look at some of the data in the Economic Freedom Index, where they try to look at these other kinds of indices to see about human well-being and what they’re correlated with. In my book “Calculation and Coordination,” which I published 20 years ago now, I have an appendix in it which actually goes through—that data is old now—but it goes through and does all those ideas.
When I teach my course in development economics, at the end of the semester, I ask the question, “Is development good for the poor? Is globalization good for the poor?” Then I try to look at all these different indices having to do with life expectancy and educational attainment, democratic freedoms, all these issues like that. It’s not a one-to-one. I’m not trying to say that. But it is a pattern that fits that these things are correlated with one another.
I think we need to stress that to people so that they understand it. Because I think a lot of people think that economic growth is at odds with the achievement of these things, and it’s not. If you want to help the least advantaged in society, you have to have modern economic growth. That’s how the least advantaged in society get lifted up. You want to have the least advantaged in society suffer in misery, then what you do is you do growth-deterring strategies.
There’s a reason why Tyler Cowen, in his book “Stubborn Attachments,” makes the argument that growth is a moral imperative and that economic growth is a moral imperative. We’re going to do better off. Why am I optimistic despite the pessimism? Because I think there’s a lot of headwinds pushing against progress. We have to engage that conversation in a serious way, treating those criticisms with the utmost of care, not with dismissal but the utmost of empathy and understanding of where they come from. Conversations begin where the other people are, not where you would like them to be. You have to listen to people and learn from them and then go from there.
The basic idea is, as long as the tailwinds of progress, the entrepreneurial spirit, the idea of greater gains from trade and greater gains from innovation, as long as they’re pushing forward, they’re pushing faster than the headwinds against it, we’ll be better off tomorrow than we would be today. But we might not be as better off tomorrow as we could be if we just got rid of those headwinds.
I’m very, very optimistic about the future because I believe the ultimate resource is the human imagination and that individuals are going to keep pushing for realizing greater social benefits from the exchange with one another, and social distance—overcoming those things. But also, technological innovations were at the beginning of various technological revolutions. That’s going to push those tailwinds. They’re going to push us forward despite our best efforts to hurt us.
What I would really get nervous about is if we started having a lot of policies which curtailed globalization and moved us more and more towards isolationism—which is one of the reasons why the pandemic was so problematic, because the concern was that the supply chain is now disrupted, so maybe we should get away from international trades. One of the reasons why Trump was a horror to me—besides a variety of other things—was because he spoke almost all the time about protectionism and all these things like that. His economic advisers I thought were advisers, not economists, kind of ideas on that front.
We want to have more open trade and more immigration, all these things like that, rather than raising those costs. The other thing is a challenge just to innovation, to make everything be a precautionary principle rather than—so if we made everything in innovation a precautionary principle, we’d still be running around in like horse and buggy rather than having a car, let alone an airplane, let alone anything else.
We need to move to this position of permissionless innovation and basically embrace the free flow of labor and capital throughout the world. When you get those two things going, then all of a sudden, those tailwinds kick up real big speed, and then you can have these bursts of tremendous improvements in mankind.
Can We Have Prosperity Without Liberalism?
KLUTSEY: One thing I’ve been musing about—and I’d appreciate you weighing in on this, especially since you’ve done a lot of work about the Soviet Union going decades back—the prosperity of a country like China, and the existence of a country that is not liberal, I think, seems attractive to others who might practice a different kind of a system and say, “Hey, we can have prosperity without the liberalism,” even though they did some market liberalization to get to where they are now. I think that perspective is somewhat challenging to the advancing of liberal cosmopolitanism, if you will.
BOETTKE: I agree with you 100%. I was probably a little too—in the essays in here, to the extent that I talk about development issues, which would have been in the earlier essays, let’s say that the essay that I gave in New Zealand in the early 2000s, in the first decade of 2000s, and where I might mention China and whatnot—I was more influenced at that time by work on like how the farmers free China or change China, or the notion of fiscal decentralization that existed in China. They did change the system.
I think it’s really important in history to understand the difference between the original reforms, post-Mao reforms in 1978 to 1985, and in 1985 afterward. Those are the Deng Xiaoping reforms in 1978 to ’85, versus ’85 and after. What they did in 1985, that’s where the “don’t matter what color the cat as long as it catches the mouse” idea came about. Deng Xiaoping’s reforms were one of fiscal decentralization. That changes the nature of the relationship, as opposed to in Russia, which had more fiscal centralization in Yeltsin and then in Putin.
I used to contrast the de facto and the de jure. De facto reforms in China are far greater than the de jure reforms. The de jure reforms in Russia were greater than the de facto reforms, and so in Russia, the more things change, the more they stayed the same. Whereas in China, the more it looks like they’re staying the same, radically changing. However, that has all changed in the last several years, and in fact, now what you have is an aggressive centralized authority that, in fact, is engaged in very odious behavior towards segments of its own citizens: the persecution of the Muslim minorities in certain parts of China and crackdown on artistic freedom, on intellectual freedom and all these things like that.
The question is whether or not China can continue to be centralized and yet, at the same time, experience the kind of economic growth it has in the period from 1990 to today. It’s still something we have to watch very closely. I need to be a lot more critical of that earlier period as well because it sowed the seeds for this period. Since I wrote the book, I’ve been asked this question a couple of times, and I’m thinking more about it.
I teach a class that discusses these things all the time, so the answer from how the farmers changed China or how China became a market economy, those kind of books, were in a different era now than we were a decade ago when we were thinking about those kinds of issues. I think people that are comparative political economists are going to have to rewrite their examinations of what’s going on in China.
It’s a great question. Singapore might be a bigger challenge to liberals, and so these microstates, and whether or not in microstates they’re able to have an absence of private property, let’s say, and yet be able to manage—those are bigger challenges to people like myself because I think China is just—in many ways, what China’s doing is reverting back to an earlier form, and therefore the expectation should be that it will revert back to its earlier economic performance as well. I don’t think the jury is done yet, that the increasing centralization, increasing oppression is going to end up by still generating tremendous levels of economic growth and development.
The other question is—again, now, this gets really hairy, but there’s a discussion of the difference between what development is and what industrialization is. And China might have actually had industrialization but not development. What I mean by that is that, if you put more and more—if you’re building—if you’re making a sausage, and you stuff more and more meat into the sausage, you can get a bigger sausage, but you don’t necessarily get a more tasty sausage. Well, we judge our sausages on whether or not they taste good, and whether or not we enjoy eating them. If I keep on shoving stuff in it . . .
This is a kind of the white elephant’s view of what’s strewn throughout China, and we’re going to learn a lot over the next 5 years, 10 years about China. Maybe I’m wrong. I have to hold out that possibility that I’m wrong about it, but it seems to me that, if China becomes more and more centralized, that its economic dynamism is going to become less and less. Singapore, on the other hand, seems to be very economically dynamic, but it might be the case that Singapore is just like a microstate, so it’s managed differently than what a large-landmass country would be.
Restating the Case for Cosmopolitan Liberalism
KLUTSEY: Right. Now, as we bring this conversation to a close, I wanted you to reflect on this quote by Hayek, which is in your book, and it says, “If old truths are to retain their hold on men’s minds, they must be restated in the language and concepts of successive generations.” Basically, how would you restate the case for liberal cosmopolitanism for this generation? Also, speaking to our listeners and readers, what are some of the key takeaways from this? Is there a call to action that you’d like them to take from this?
BOETTKE: Yes, thank you for that. I probably use that quote too many times in the book; it’s repeated a couple of different times. Hayek, of course, plays a major, central role in the book. Intellectually, I described in the introduction, my discourse community is I’m constantly interacting with the ideas of Hayek and Mises and Buchanan. Those are my main people that I’m trying to wrestle with to think about what the conversation is today.
Just to start, I think that one of the things I want to emphasize to listeners is that ideas matter; morality matters; kindness, compassion, humility matter. And we need to present liberalism in a way—the ideas of liberalism and the moral attitudes that make up a liberal society—with kindness, compassion and humility, and we need to make sure that we stress those aspects of it.
This summer, I read a wonderful book by Sam Fleischacker called “Being Me Being You,” and it’s about the issues of empathy and the difference between empathy as being, “Can I project myself into the position of the other, or do I feel sympathy because I’m standing next to somebody?” and the differences between Hume and Smith. What Smith was able to do was project himself into the shoes of another person, far distant from them, actually, but be able to live through that in their shoes, to be able to see what that’s like.
I think liberalism is in that light. It’s about that kindness, that compassion, that humility, that empathy that one would have with the other in these circumstances and trying to figure out how we find those patterns of human interaction which minimize human suffering and maximize the possibilities of human flourishing. In that light, I don’t think there’s necessarily a call to action, as opposed to—again, I’m an academic—but it’s really a call to study and critically think about our world.
The term struggle in the book is chosen to have a double meaning. It has a meaning that these essays are all my efforts as a scholar to struggle to figure out what actually is the good society. How does it operate? What would it look like? How would we instantiate it? What are the ideas that bolster it? What are the ideas that cut against it? That’s what I try to do as a scholar, and I’m still—I find it intellectually fascinating, and I’m totally engrossed in that project, and I’m struggling.
I’ve been doing this for 30 years or more, and I don’t have any definitive answers. I have some answers I’m willing to put to print and say, “Hey, here, try this out.” But I don’t think that they’re definitive or done. They’re ongoing; they’re subject to revision.
That brings me to the second point, which is that struggle also is as a citizen. I’m struggling as a citizen to live in a better world, to be a better citizen myself, to improve my family, my community, my environment that I find myself in. How do I act in that environment? How do I act democratically with regard to one another? Democracy to me means more than “one person, one vote” majority rule. Democracy is a way of relating to one another. It’s a radical leveling out, no hierarchies. No one has a special stature in which they stand. We’re all there together, and we govern with each other, and we interact with each other, and what does that mean?
It means that we have to actually listen to one another and to learn from one another, and in the process, move towards a better mutual understanding. It’s in that mutual understanding that we’ll find the modern restatement—what you just mentioned, about the old truths—the modern restatement of Adam Smith’s liberal plan for liberty, equality and justice for our times.
That’s a function of our discourse. That’s a function of our listening. That’s a function of our learning from one another about how to do that. We can’t just passively recruit Adam Smith or recruit F. A. Hayek or recruit Robert Nozick. What we have to do is we have to actively take those ideas, discard the ones that are no longer relevant, learn from them with kindness and compassion and hope, and try to communicate with our fellow citizens today. To me, that’s what the adult conversation requires us to do.
I pinch myself every day because I work in an environment with fresh young minds every year that come into our program that are eager to have these conversations. We’re unique as an economics program, because we attract people that have these kinds of philosophical and political interests. Our programs are designed for us to test out against elite students from top schools in political science and sociology and history.
We’re learning all the time. When we first started our programs, our Adam Smith Fellowship program—as a funny note—is that I’m an economist. I’m a pretty cocky economist. I’ve had a lot of graduate students that wrote their dissertations with me, and I think that I know what a research program is in the social sciences, and I want to get that across. I started listening to the conversation with people and recognizing, again, that a conversation is a two-way thing. You have to begin where people are, not where you are. You have to find that common ground to be able to start talking to them.
I realized and I wrote in my little notebook that I was engaged in the conversation with people, I wrote in big bold letters. It just said, “Listen, Pete.” That was it, “Listen,” because they didn’t need to hear me lecture them. I needed to listen to them so that I could have a conversation with them and try to bring what I might’ve thought I should have lectured them about, to be able to talk to them about just what you mentioned with the old truths.
The last thing I ever wanted to be was sound like the “Peanuts” parents in the old “Peanuts” cartoon: “Wa, wa, wa, wa, wa.” And I think too many liberals do that. We forget to listen and learn from the perspective of the people that we’re trying to communicate with, and that’s across the board. That’s what I think a true attitude towards liberality would be. A liberal has to be liberal, and they have to exhibit liberality. To me, that liberality gets translated into compassion and humility, and that’s what we need to work with.
BOETTKE: I hope my book suggests that.
KLUTSEY: Yes, I think that’s a good place to end this. Thank you so much, Professor Pete Boettke, for joining us for this conversation. It’s been an enjoyable discussion. Thank you.
BOETTKE: Well, thank you very much, Ben. It’s a great opportunity for me to be here with you, and I want to applaud you for all the work you’re doing in promoting the discourse that’s necessary for us to have serious conversations about the liberal society.
KLUTSEY: Thanks, Pete. Appreciate it.