Abandonment of Liberalism:
Repentance or Retribution
Roy Douglas
[An address delivered to the Reform Club, London, 26
May 1977; Reprinted from Land & Liberty, July-August 1977]
You invited me to speak on the theme, "Abandonment of
Liberalism: repentance or retribution". I wish the evangelical
notion that a moment of repentance could wipe out the consequences of
a lifetime of sin applied in economics! There will be retribution --
there already is retribution -- for our past sins in any
event; but that retribution will be far worse if we do not repent.
It is useful to ask what the word Liberalism* means in our
present context. It means the idea that the organs of government
should intervene to the minimum extent with the life of the people,
and particularly with their economic life. In that context, Gladstone
spoke of money "fructifying in the pockets of the people".
Government spending, and therefore the taxation which provides for
that spending, should be reduced to the lowest possible amount. Where
taxation is essential, it should be operated in a manner designed to
produce the minimum interference with the life of the citizen.
This idea of Liberalism must never be confused with anarchy. The
Liberal believes that the State has a duty to set, and to enforce,
laws through which people may regulate their behaviour to produce the
maximum prosperity, and the maximum happiness, for all. There is no
liberty if a man is not protected against violence; or if he is not
protected against cheating; or if his contracts are not enforced. All
this is bound up with the notion of the "Rule of Law". Laws,
according to this idea, should make it as clear as is humanly possible
just what kind of behaviour is required, or is forbidden; and they
should also make it clear what consequences will follow if those laws
are broken. A man knows what penalty will be exacted from him if he
commits murder, or if he runs his place of work in a way which
contravenes the Factories Acts. This penalty is set down in the law,
and is not determined by the whim of some individual who happens to
possess executive powers of one kind or another.
Liberals of all kinds accepted these principles, even where they
disagreed about their application. There was an argument for the view
that home rule for Ireland was a logical development of Liberal
principles, and an argument for the view that it ran against them; an
argument for the view that radical land reform was "true free
trade" and an argument that it represented a violation of the
rights of property, which were also essential to Liberalism. Not all
Liberals at all times returned the right answers, but at least they
asked the right questions. A Liberal asked the aspiring politician, "What
restrictions will you remove if I elect you?" At different points
in the nineteenth century, this question took various forms. Will you
remove the Corn Laws and permit the people to buy grain at the
cheapest price? Will you help to free the Bulgarians from rule by
Turkey? Will you abolish income tax? Will you reduce the tax on tea?
Will you remove the privileges of the Church of Ireland? Will you
strike at the land monopoly, and allow people free access to the
ultimate source of wealth?
Today, alas, the question which is asked is all too frequently the
very opposite of the old Liberal question. People ask the politician,
"What will you do for us?" My answer to that question, when
I was a Parliamentary candidate, was "Nothing! What I shall do is
to try to enable you to do things for yourself."
For governments can only "do" things for people by taking
away their money, or their freedom, or both. If people ask the
politician, "Will you assure me that, whatever vicissitudes of
life befall, I shall always be able to obtain money from the State?"
then the politician answers, "Certainly! " -- but he adds,
sotto voce, "It will, however, be necessary to tax you so
heavily that you won't be able to afford to make these provisions for
yourself through private insurance fitted to your own individual
requirements." The voter asks, "Will you make provisions to
keep me in comfort in my retirement?" To this question the
politician answers, "Yes -- but I can only do that at the price
of heavy taxation, or of inflation which will make it impossible for
you to provide for yourself." The voter asks, "Will you
educate my children?" To this again the politician gives an
affirmative answer -- but goes on to add -- "I shall, of course,
have to collect the money from you in taxation -- and, furthermore, I
propose to dictate the educational system which will operate. If, for
example, I decide in favour of comprehensive schools, and you think
your child would be better off in a different kind of school, then you
must either fit in with my wishes, or else pay twice!" The voter
asks, "Will you pay my medical bills through the National Health
Service?" The politician replies, "Yes, indeed, but I shall
insist on having a stranglehold on the medical system." And so on
. . . examples of this kind may be multiplied almost without limit.
What I think played a greater part than anything else in making
people ask the wrong question is the curious myth that all those
controls in some way benefit people of limited means at the expense of
wealthier people. The fact is that rich and poor both lose; but the
poor man loses the more. As a general rule, the rich man can escape
the system by paying twice -- which the poor man cannot afford to do.
The rich man who does not like the educational system offered by the
State may pay to have his children educated privately. If he does not
think that the State insurance scheme fits his needs, he may take out
other insurance. If he does not like the National Health Service, he
may become a private patient, either in this country or abroad. The
poor man cannot afford any of these things.
There is another myth -- latent and generally unstated -- in the
existing system of State interference. This is the idea that in some
way the organs of government know better than any individual man what
is in the interest of that particular man. I recall vividly the words
of that great Liberal, Sir Rhys Hopkin Morris: "There is no man
alive who is sufficiently good to rule the life of the man next door
to him!" To that I should add, "No -- nor sufficiently wise
or altruistic!" My hero here is Diogenes: the fellow who lived in
a barrel. When Alexander the Great asked what he could do for him, the
philosopher's answer was, "You can get out of my sunlight."
That is a pretty good reply to the over-mighty executive.
Who, I feel disposed to ask, are these people -- so wise, so good, so
altruistic, so well-informed about everybody's requirements -- that
they are able to rule our lives for us? I have the highest respect for
the audience in this room; but there is not one amongst you to whom I
should willingly give control of my life, or of my economic destiny,
even though several of you know me well and would, I believe, treat me
with kindness. How much less am I willing to entrust that economic
destiny to Mr. Callaghan -- or Mrs. Thatcher -- or, for that matter,
Mr. Steel! How much less willing still am I to entrust my destiny to
some bureaucrat about whom I know nothing!
Let us examine the degree of power which these people now possess
over the citizen's life. Professor Milton Friedman tells us that 60
per cent of the Gross National Product in this country is now spent
not by the citizen as he chooses, but by the organs of government as
they choose. Some people, I understand, have taken Professor Friedman
to task and suggested that the true figure is not much over 50 per
cent. Let us give them their point. Who indeed is qualified to spend,
ostensibly on my behalf, half the money that I earn?
The truth is really far worse than the crude figures suggest. The
organs of government not merely take more than half the money we earn.
If my wife buys Canadian cheese she pays tax; if she buys French
cheese she does not. When I came to this Club, our Chairman kindly
bought me dinner. For that he was compelled to pay value added tax. I
believe that if he had given me raw meat and uncooked vegetables, this
would not have been the case. Value added tax indeed! Surely we want
people to add value to products? And surely by taxing them when they
do so, we are discouraging them from adding value? Taxes of these
kinds-indirect taxes, we call them -- not merely collect revenue --
they also dictate consumption.
Nor is this the end of the enormities committed by the organs of
government. Our money is dropping in value all the time because the
Government is creating so-called "money" which is not backed
by reserves. If I do the same sort of thing: if I issue dud cheques --
I am rightly put in prison for it. Only today I saw an advertisement
for what are called "Index-Linked Savings Certificates". The
advertisement ran, "The money you put away now can buy as much in
seven years as it does now." The impertinence is almost
unbelievable. What the Government is saying when it issues these
certificates is, "Give us a loan of your money for seven years,
and then we promise we shan't cheat you as we shall with all the rest
of your money. We shan't give you any interest for forgoing the use of
that money for seven years, but at least you won't be any worse off!"
What an invitation for thrift! The plain fact is that successive
Governments in this country have been gradually robbing everybody of
his savings. Again we find the poorest people are robbed the most.
There can be few hardened criminals in Dart-moor who would
unflinchingly rob old age pensioners of half or more of their life
savings; but that is exactly what has been happening through
inflation. It is stupid to blame capitalists or to blame trade
unionists for that. None of them can create money; only governments
can do that. It is governments, and governments alone who can stop
inflation; and they can stop it by not spending the money they haven't
got.
I have spoken of the quantity of money which is taken from us; of the
robbery -- concealed and unconcealed -- which is going on all the
time. May we now ask what control is exercised over its spending? If a
board of directors in a private firm behave unwisely, the firm may go
bankrupt. Alternatively, the shareholders may revolt, and either tip
out the unsatisfactory directors, or compel them to pursue wiser
policies. When a public administrator makes a mess, what sanction
exists against him? Effectively, there is no sanction. He will not be
sacked or demoted for losing millions of pounds of public money,
provided he doesn't actually embezzle that money into his own private
funds.
Not only is the custodian of public money virtually immune from any
adverse personal consequences in respect of his blunders; he is also
under no effective control. The Comptroller and Auditor-General is
only concerned to see that the money is spent lawfully, not that it is
spent wisely. The Public Accounts Committee cannot even attempt to
peruse more than a tiny fraction of money spent. Nor, indeed, can
Parliament itself. Thus we reach the alarming conclusion that the bulk
of the wealth earned by people in this country is managed by
individuals who are not controlled either by the electors or by the
operation of the economy.
It is bad enough when so many matters are in the hands of politicians
or bureaucrats in this country over whom no real surveillance is
exercised. It could be said that there is at least a theoretical
possibility that the voters might resume control over their own lives
and their own finances. Alas, even this is no longer the whole story.
By the decision to join the European Common Market, this country
undertook to impose common trade restrictions with eight other States
in Western Europe. The body which decides what those restrictions
shall be is the Commission of the European Economic Community. It is a
body whose members are nominated by the Governments of the
member-states; but they are not controlled even by the Governments,
still less by the Parliaments, of those states. We now hear a great
deal about proposals for direct elections to a thing called the
European Parliament. This thing has no real power over the
Commissioners: not even the shadowy sort of power that our Parliament
would have over its Ministers and bureaucrats, if it cared to exercise
it. It is a talking-shop of the most futile kind; and the people are
being wilfully deluded if anyone suggests that they will acquire any
control over the policies pursued by the E.E.C. through elections to
the European Parliament.
Worse; for the Common Market to which we are tied does not even
consist of nations with similar economic interests to ourselves. The
continental Common Market is practically self-sufficient -- or it
could be if it so desired. This country is not. We have to import half
our food, and vast quantities of raw materials, from abroad. For move
than a century, we have relied on being able to import food at the
cheapest world prices. Now we are no longer able to do so; we are tied
to high-cost continental food producers.
Thus we perceive something of the causes of our present distress. Do
we honestly wonder that this country is in an economic mess? I believe
the point has come when we must really look around and see where our
present course is leading, and begin, step by step, to dismantle the
whole illiberal and collectivist apparatus which has been set upon us.
Have no illusions. As I said at the beginning, the road back will not
be an easy one. Many of the measures which we shall need to apply will
be unpalatable. Many people will need to change their jobs, and to
readjust their lives. The first consequences of moving towards freedom
will be no more palatable than the consequences of breaking any other
addiction. I do not think that this is the occasion to discuss An
detail what needs to be done. Suffice to say that it will require the
most careful and detailed attention to decide which restrictions we
lift in which order; and how we may ensure that the weakest members of
society are not called upon to make the heaviest sacrifices in the
period of transition.
I return to the almost theological title of this address. Some
retribution is inevitable. The choice which this country must make is
whether it will be the retribution of a Purgatory from which, sooner
or later, we shall escape; or a Hell from which there is no escape. It
is only by real Liberalism that we may set some term to our
punishment.
*In the U.S this word has, we believe, been corrupted so that it is
now equated with socialism or more "left-wing" philosophies.
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