Most Americans are familiar with the political and civil aspects of liberty. They include such rights as freedom of speech and expression, freedom of religion, freedom of assembly, the right to vote, and the right to petition public officials for redress of grievances. They also include important procedural protections in criminal prosecutions, such as the right to trial by jury, right of habeas corpus, the right to confront adverse witnesses, and the right not to be tried twice for the same offense. Also included would be the right to own guns.
However, an aspect of liberty which is equally important is economic liberty, a part of liberty that all too many modern-day Americans unfortunately fail to understand or appreciate. In fact, it is that lack of understanding and appreciation that has been a major factor in the abandonment of economic liberty by the American people.
As the Declaration of Independence points out, we have all been endowed with certain fundamental rights and among these are life, liberty, and the pursuit of happiness. But what really do those words mean, especially in an economic sense?
At a minimum, they mean that no one has the right to kill you or enslave you. You have the right to live your life in your own way, as long as you don’t use it to interfere in a coercive way with anyone else’s right to do the same thing.
Thus, you have a right to sustain your life, which one ordinarily does through labor. However, it could also mean that you inherit lots of money, thereby alleviating the need to work. Or it could mean that you discover a treasure, which accomplishes the same result.
The point is that no one has the right to stop you from sustaining your own life, thereby forcing you to starve to death. And no one has the right to force you to work for him.
Let’s assume that a person needs to work in order to sustain his life. How does he do that? Well, he can decide that he is going to be totally self-sufficient. That is, he decides that he’s going to raise his own crops and livestock, build his own home, and manufacture his own means of transportation.
However, many people, especially in economically advanced societies, soon discover that they have certain talents which they would prefer to utilize in their life’s work. A person with farming ability would prefer to spend his efforts planting and harvesting crops. A doctor would prefer to treat people’s illnesses. A lawyer would like to help people with legal problems.
Economic liberty dictates that every one of them has the right to engage freely in any occupation or business he wishes, and that no one can legitimately interfere with his decisions. That’s why 19th-century Americans, for example, would have been horrified by the modern-day requirement that people secure licenses or permits from the political authorities as a condition of sustaining their life through their preferred form of labor. The mindset of our ancestors was that since life, liberty, and the pursuit of happiness are God-given rights that preexist government, it would be immoral and foolish for people to have to seek such permission from government officials.
Freedom of trade
If doctors and lawyers, however, are not going to grow their own food, then how can they sustain their lives? Through trade! They can enter into mutually beneficial exchanges with others through which they provide medical or legal services and, in the process, acquire the food they need to live.
In the most basic societies, the trades are conducted through barter. In exchange for medical treatment or legal representation, the farmer gives the physician a few chickens and some vegetables.
Over time, however, as trades become more advanced and complex, a particular commodity, such as tobacco, gold, or silver, increasingly becomes relied on as a means to facilitate trade.
Are trades between people equal? Absolutely not! In each and every trade, both traders are winners. There are no losers — both sides gain!
The reason for this is that in every trade a person is giving up something he values less for something he values more. Otherwise, he obviously wouldn’t enter into the trade.
Consider, for example, someone with 10 apples and someone else with 10 oranges. They trade 2 apples for 5 oranges. At the moment of the trade, both of them have improved their respective positions, from their own individual perspectives. Both of them have made a profit.
What do people do with the fruits of their earnings and exchanges? Under the principles of economic liberty, they’re free to do whatever they want with them. They might choose to spend them on lavish consumer goods or services. Or they might choose to save them. Or lend them to someone else at a mutually agreeable rate of interest. Or donate them to the poor. Or build a school or museum. The freedom to dispose of one’s wealth as one sees fit is an essential part of economic liberty.
Thus, economic liberty consists of (1) freely engaging in any occupation, business, or trade or, to use a more popular term, “free enterprise”; (2) freely entering into mutually beneficial transactions with others; (3) freely accumulating unlimited amounts of wealth in that process; and (4) freely deciding how to dispose of that wealth.
Rights and majority rule
It’s important to recognize that economic liberty, like intellectual or religious liberty, is so inherent and fundamental that it cannot legitimately be taken away, not even if most people in society wish to do so.
Consider freedom of speech. Suppose 90 percent of the American people wish to ban all books advocating socialism from the United States.
We would assert that they cannot legitimately do that. But why not? One answer, of course, is that the Constitution prohibits them from doing that.
But that begs the question: Why should the Constitution prevent the majority from doing what they want — isn’t majority rule what democracy is all about? The answer is: No, because there are certain inherent and fundamental rights that cannot legitimately be taken away, not even by the majority. That’s why majority rule cannot legitimately prevent someone from reading Das Kapital. It’s also why majority rule cannot legitimately force someone to attend church.
The same principle applies with respect to economic liberty. If someone wishes to become a farmer, physician, lawyer, or whatever, it is his right to do so, and majority rule cannot legitimately be used to suppress that desire. Rights that are endowed in individuals by God do not rightfully need the permission of Caesar to exercise them.
Does that mean that anyone could perform open-heart surgery, as the old statist bromide asks? Theoretically, yes, but with one great big qualifier: In the marketplace, the consumer is ultimately sovereign. He decides what he wants to buy. Through their spending decisions, consumers ultimately decide whether someone is going to remain in the line of work he has chosen. To succeed in the marketplace, suppliers must satisfy consumers by producing and selling what they wish to have.
Moreover, the marketplace itself generates a process that tends toward improving the quality of goods and services. For example, word of mouth and personal recommendations often lead people to the places selling the best cars, the restaurants selling the best food, and the physicians providing the best health care. Moreover, as it becomes more advanced and complex, the market process generates private certifying agencies whose reputation is based on the quality of their recommendations to the buying public.
Now, we can debate all day long about whether money can buy happiness, but the point of economic liberty is not that money will bring happiness to a person. It is instead that people have a God-given right to pursue happiness in their own way and sometimes that involves exercising their talents in the workplace, entering into economic exchanges with others, accumulating wealth, and disposing of it.
That’s what economic liberty is all about.
Interventionism and socialism
Thus, it should be obvious that if a person is required to seek permission of the state before he can freely engage in an enterprise, he lacks economic liberty. Or if the state has the power to interfere with or prohibit a peaceful trade between two people, they lack economic liberty. Or if the state has the unfettered power to make people work for the benefit of the state, they lack economic liberty. Or if the state has the power to coerce or induce people to use their money in certain ways, they lack economic liberty.
That’s in fact why occupational-licensure laws and other economic regulations violate the principles of economic liberty and why our 19th-century ancestors rejected them. The power to regulate and interfere with economic activity is what is commonly termed “interventionism,” the philosophy that holds that the state can legitimately interfere with mutually beneficial transactions between two or more people.
Among the greatest infringements on economic liberty, however, is majority rule over how much wealth a person can accumulate and what he can do with that wealth. That’s the essence of socialism, the philosophy that holds that the majority should have the power to equalize wealth in society or redistribute it by taking it from those who have it in order to give it to others.
Think about the moral implications of that philosophy. Nearly everyone would agree that if Person A accosts Person B in an alley and forces him to give him all his money in order to help Person C with his medical bills or educational expenses, such an action is immoral, constituting stealing. Is it any different in principle when the majority in a society uses the force of the state to accomplish the same end? Is there any difference in principle between Person A’s forcing Person B to attend church and the majority doing the same thing?
Our Founders and our 19th-century ancestors understood that moral principles are immutable and that freedom is inherent and fundamental. That’s why they brought into existence the freest society in history.
It’s also why they rejected such interventionist and socialist devices as occupational-licensure laws, economic regulations, Social Security, Medicare, Medicaid, subsidies, and welfare.
It’s why they would immediately recognize that there is no freedom in Iraq today.
