Liberty is, once again, under attack by a new collectivist counter-revolution determined to bring down the remaining ideas and institutions of the free society. The latest manifestations take the form of blaming “unbridled capitalism” for the coming destruction of the planet due to global warming and the insistence that American capitalist society is based on a systemic racism of oppression.
In my article, based on a talk that I gave at Hillsdale College not too long ago, I dissect the premises and misconceptions upon which these two indictments are made against a free market economy. And why and how the full implementation of a Green New Deal and a policy agenda based on “identity politics” would lead to the tyranny of centralized planning and the corruption of political privilege and favoritism based on race and gender and ‘class” status.
Government Planning Brings neither Freedom, Prosperity, nor Equality
by Richard Ebeling
America is in the grip of a serious counterrevolution against the ideas and ideals upon which the country was founded. Whether it concerns fears about the physical environment or frustrations with the domestic economy or charges of society-wide “systemic racism,” the presumption is that the problem stems from people having too much freedom or the wrong types of freedom.
The alternatives proposed to grapple with these problems all share a common premise: There is a need for greater government paternalism and planning over everyone’s lives. For example, it is argued that the only serious remedy to the presumed danger from global warming requires national and international governmental restrictions, commands, and controls over how we work, how we live, and the forms and contents of our standards of living.
The last two difficult years have been due to a government-created economic recession resulting from lockdowns and shutdowns on production, employment, shopping, and traveling as the political response to the coronavirus crisis. The sluggish recovery, especially in labor markets and supply-chains, have also been due to various government interventions. But proponents of government planning now insist that if more jobs are to be made available, if workers are to receive “living wages” and better work conditions, if goods and services are to be available in the face of these supply-chain disruptions, and if income inequalities are to be narrowed, there is only one answer: more government spending and more comprehensive government intrusions into how people work, on what terms, and making which products.
At the same time, America and, increasingly, various parts of Europe are facing the onslaught of a new brand of racism that rhetorically disguises what it is really about by insisting that it is an ideology of “anti-racism.” To overcome the pervasive presence of an asserted white “systemic racism” against all “people of color,” the call is made for government planning and regulation of virtually every form of human association inside and outside of the marketplace. Governments must determine the social and financial just due for every politically designated and categorized racial, ethnic, gender, and social group in the country.
Only future historians who, many decades from now, look back at the unfolding events of the first half of the 21st century will know whether these collectivist and political paternalist trends will succeed in triumphing over the social vestiges and cultural residues of the spirit of individual liberty and economic freedom in America and other parts of the Western world.
Liberal freedoms have partly survived but are fading away
But before becoming too pessimistic, it is worth remembering that the last 100 years have seen the ascendency and seemingly “inevitable” victory of earlier forms of philosophical collectivism and political paternalism as seen under Soviet communism, Italian fascism, and German National Socialism (Nazism). Friends of freedom despaired of a coming twilight of what remained of any (classical) liberal ideas and social arrangements. And while the state has grown in size and scope over the last century, for most of this time, the leading Western nations successfully avoided falling into the abyss of a fully totalitarian collectivism. They have, until now, preserved degrees of the institutional prerequisites for still relatively free societies.
But there is no doubt that with each passing year and decade, an understanding of the ideals derived from the classical liberal conception of a free society, based on a belief in the inviolable rights of the individual to his life, liberty, honestly acquired property, and free association with any and all others for peaceful mutual betterment, has faded further out of the societal memory of each new generation.
Perhaps this time the tribal collectivists will succeed in destroying the remaining philosophical, political, and cultural ramparts protecting the residues of liberty. Nothing will be left but archeological artifacts for those future historians to excavate and wonder how a civilization built on the idea of the dignity and freedom of each and every individual human could have been ruined by a philosophical and ideological barbarian horde. We may well wonder how this came about when the vanguard of that barbarian horde was comprised of many among the intellectual, social, and cultural elite of Western society.
But be that as it may, just as with the misplaced optimism of the political and economic collectivisms of the 20th century, the proponents of the Green New Deal and identity politics tribal collectivism of the 21st century possess a confident belief that a “climate-friendly” and “socially just” society of the future requires the pervasive and heavy hand of government central planning. Like the collectivisms of the last century, it is again insisted that the planning hand of paternalistic government will assure greater freedom, prosperity, and equality than anything possible or experienced under a more market-based economic system.
The old and new central planners on civil liberties
Many of the advocates of the socialist theme in the 20th century insisted that government central planning was compatible with existing conceptions of personal freedom and civil liberties. There was no reason why government control and direction of the economy was inconsistent with preservation of freedom of speech, the press, religion, assembly, and free association. Adding to these under socialism would bring newer and different freedoms, including a guaranteed job, a reasonable “living wage,” government provision of health care and retirement, a decent place to live, and equal access to the everyday amenities of life previously reserved for the privileged capitalist rich.
A significant difference with our modern collectivists who identify with identity politics, critical race theory, and cancel culture, however, is the wide absence of any references to or calls for personal freedom or civil liberties in the Western traditional sense. Indeed, there is frequently a conscious rejection of the premises behind them. For many aligned with this modern collectivism, there is an implicit and even explicit rejection of personal freedom and civil liberties. It is insisted that they have been and are a ruse to use language and justify actions inherently and inescapably “racist.”
The new planners blend Marxism with a neo-Nazism
These people are a peculiar and perverse blend of Marxism and Nazism. They see society as divided into conflicting groups of oppressors and oppressed, capitalist exploiters versus all others in society. But replacing the traditional Marxist “class analysis” based on ownership or non-ownership of the means of production, per se, is a Nazi-like idea that what identifies and unifies people are their positions in different categories of social awareness and social status based on race and gender.
The more radical versions of critical race theory insist that no one can escape from their racial identity; it is who and what you are. White people are definitionally racists and oppressors of all “people of color,” whether they are aware of it or not. Being white gives you “privilege” by the biological necessity of the color of your skin. Just as the same applies to all non-whites; being non-white means you have been and are an oppressed people, regardless of how an individual so classified thinks about himself and any actions he may attempt to undertake as a distinct and separate person.
This means that the version of a socialist planned society called for by identity politics and critical race theory is inconsistent with freedom in two senses. First, if government is to plan the social and economic affairs of the society, this necessarily abridges or abolishes those traditional notions of personal freedom and civil liberty. Both 19th- and 20th-century critics of all brands of socialism argued that by transferring control over the means of production from the private hands of individual owners, who compete in the marketplace for consumer business and the hiring of employees, to the single hand of government central planners, people’s freedom of choice as consumers and producers was done away with.
Government planning abrogates consumer and producer choice
The government central planners would now determine and dictate what was produced in terms of quantities manufactured, along with the qualities and characteristics of what they considered to be socially necessary, desirable, and important. Consumers would be supplied with what the political paternalists in charge of the ultimate planning decisions decided the people “really” needed, not what those consumers might actually want to buy as reflected in their demands for and purchases of competitively supplied goods and services in a free marketplace.
Also, as the monopoly controller and planner of all production activities, a socialist government becomes the single employer for all those looking for work in the society. Education, job opportunities and locations of employment, along with the salary to be paid and any fringe benefits accompanying it would be determined by the political authority. The loss of or exit from one job left the individual still confronting the same employer anywhere he tried to turn — the state.
But the twist with identity politics and critical race theory is that they deny even the illusion of desiring personal freedom. The 20th-century socialists said they accepted and believed in civil liberties, even as they often, de facto, abolished them, especially in the communist regimes like the Soviet Union through the government’s control over the means of production. But our new race-based, tribal, collectivist would-be planners reject any rationale for personal freedom and civil liberties. All forms of racist and sexist thought and action becomes unacceptable, as these tribal paternalist planners define them. There will be an officially approved system of language and action. Any verbal and physical expressions of forbidden speech and actions are to be expunged, with the accused banished from employment, without any ability to defend himself, or to participate in autonomous networks of human association. Hence, the accompanying role of “cancel culture.”
Individuals disappear in planned categories of race and gender
Placing control and planning over the means of production in the hands of those in political authority in the government means the end to individual liberty, freedom of choice, and voluntary association as these ideas have been understood for more than 300 years, first in the West and then in other parts of the world. Defined by the new political paternalists in power by collective and tribal categories of race, gender, and social status, individuals are no longer thinking, deciding, and choosing human beings. The individual’s fate and fortune — from cradle to grave — is determined and dictated by those possessing and wielding the coercive planning powers of government.
Our society has seen increasing instances of private organizations specifying, imposing, and policing rules of “politically correct” speech and action under the pressures of this new tribal collectivism, but it needs to be appreciated that it would be universalized to the extent that even greater degrees of governmental social and economic planning are introduced. The private-sector alternatives still free from this ideology of neo-Nazism in the name of “anti-racism” would be limited or closed off completely. Each person would find himself a slave to this race- and gender-based “anti-racist” totalitarianism.
The new planning scheme is economic fascism
Centralized government planning has long been identified with the name “socialism.” But many defenders of greater government control and command over social and economic affairs often insist that they are not advocating “socialism” because most of them do not call for outright government nationalization and ownership of the means of production. They, too, recognize and support the institution of private enterprise, they say, but in the current global environment, the laissez-faire of the past must be superseded by government oversight, rules, restrictions, commands, and controls guiding and directing how and for what purposes private enterprises go about their business.
There is, of course, another name for government command, control, and planning of social life and economic activity without direct government ownership of the means of production. It is called economic fascism. What is proposed in the name of fighting global warming, or for establishing race and gender “diversity” and “inclusiveness,” or greater racial and gender salary and status “equity,” is
not strictly the Italian corporativist model of government-mandated and directed cartels for all sectors of the market for pricing and production planning, but it comes closest to what is being proposed by many of the new proponents of economic planning
The Davos model for a fascist-type economy
For example, the World Economic Forum that meets every year at Davos, Switzerland, sponsored a detailed “white paper” in September of 2020 on how private businesses and corporations need to be reorganized and refocused in their structures and activities to meet the challenges of global warming and the need for greater race and gender “equity.” Corporations should set aside their archaic notion that their primary duty is to their shareholders and the making and maximizing of profits for these owners. They must view their essential duty to be to serve their “stakeholders” — those directly and indirectly impacted by anything and everything the private enterprise does, including the quality and sustainably of “the planet.”
Shareholders of the enterprise are to be viewed as merely one sub-group of claimants deserving of recognition and reward from the activities of the private enterprise. Profitability, cost-efficiency, and consumer satisfaction are all to be made secondary considerations to assuring pay and promotion and decision-making “equity” within the firm. “Socially aware” wages and racial and gender employment balance will replace market-based hiring and remuneration for those employed and their place and role within the company.
Corporations and other private enterprises that sign up to “voluntarily” follow the goals and targets of this new vision are to commit to introducing technologies and methods of production geared to reducing any and all carbon footprints. Quantitative goals are to be introduced to replace fossil fuel use with “renewable” energy sources by specified dates.
Corporate duties are to serve society, not shareholders
As the Davos white paper expressed it: “Corporate global citizenship requires a company to harness its core competencies, its entrepreneurship, skills and relevant resources in collaborative efforts with other companies and stakeholders to improve the state of the world…. ‘Stakeholder capitalism’ … positions private corporations as trustees of society.”
Every participating enterprise submits itself to follow a centralized plan of changing what and how they produce and sell to be consistent with the target goals of the Paris Agreement on Climate Change. Each participating member is to be obligated to issue an annual report summarizing what they have done to fulfill “the Plan” of zero-net fossil fuels emissions by 2050. This includes explaining how they have brought their company closer into “harmony with nature” to receive their “sustainability certification” from the association formed to represent, guide, and oversee the activities of all the participants.
Welfare fascism and Soviet-style planning targets
Besides the environment, all member enterprises are to directly take responsibility for the “mental, physical and social well-being of all people in their operations and value chains.” Thus, every private enterprise is to be a provider of comprehensive welfare-state services for all those within the firm as well as any others in some way related to or affected by the company. Wages and other employment benefits must place priority on paying a “living wage” and “a wage sufficient to meet the basic standards of life,” and to “lift households and communities out of poverty.”
Prices, costs, consumer satisfaction, and market-based balances between supplies and demands for inputs and outputs lose all meaning. Like under Soviet socialist central planning, the Davos model for economic fascism is simply to meet quantitative targets of input use and output amounts to reflect the climate change goals and social justice benchmarks set by the United Nations and the umbrella organizations monitoring and judging everything done by the private enterprise members.
But beyond the “voluntary” membership and participation by corporations and other private enterprises, the authors of the white paper see it as the basis of binding benchmarks, standards, targets, and goals that might result in legal penalties if not successfully met and fulfilled. Thus, it becomes a short step from the voluntary to the politically compulsory. Certainly, this is what President Joe Biden is insisting on when he commands that automotive companies meet production targets of so many new electric-powered motor vehicles to be sold and on the road by 2030. Or for regulatory plans to restrict other fossil fuel uses, with their replacement by mandated wind and solar sources of energy.
The relevance of the “Austrian” criticisms of central planning
Once these steps are more fully introduced and the economy is on a de facto economic fascist footing, all the “Austrian” criticisms of socialist central planning come into more applicable play. By preempting or prohibiting market-based pricing and autonomous entrepreneurial decision-making about what and how to produce, and, instead, imposing direct commands of output goals and production methods, the government central planners will undermine and then eliminate all remaining market rationality.
Is production directed to what actual income-earning consumers desire? Are the scarce resources of the society employed and utilized based on their market-determined opportunity costs? Do owners of the means of production have market-guided incentives to creatively devise new and better ways and means of producing more and improved goods at lower costs to the benefit of the consuming public? The answers to these and similar questions under such a system of fascist-like economic planning is basically — No!
Resource use, production decisions, and price and cost relationships will be increasingly, then finally, completely dictated by the central planning political paternalists based on ideology and special interest politicking in the corrupt give-and-take of “democratic” decision-making. It becomes a “political” economy in the most pejorative sense. It will gravitate toward what Ludwig von Mises called “planned chaos.”
Classical-liberal ideal of equality before the law
The classical-liberal and free-market ideal concerning “equality” has been the idea of every human being possessing the same individual equal rights before the law. Equal individual rights to life, liberty, and honestly acquired property in arenas of voluntary human association. However, an equality of rights carries with it an inevitable inequality of outcomes in terms of relative income shares and social status in society.
But this inequality is not based on political privilege or favoritism arising from government protections, subsidies, or other regulatory or redistributive benefits. Market-based inequalities result from the value judgments of others in society about what they, as consumers and employers, consider to be our monetary worth in assisting in producing and supplying goods and services that our fellow human beings desire and are willing to pay for.
The services of a brain surgeon usually carry a higher market value in the eyes of those needing a delicate neurosurgery than those same people or others see as the market worth of a gardener, or salesman in a shoe store, or an economics professor teaching at a college or university. As American economist Frank A. Fetter once expressed it, in the free marketplace, every penny spent by a consumer is a “vote” reflecting the buyers’ valuation of the product bought and, therefore, the worth of the services of those whose efforts have brought it to the market.
The dollar “votes” that each earns tells every income earner what others directly or indirectly think of the services they can render in satisfying the wants and improving the lives of others. Therefore, some of those income earners have more dollar votes of income than others, which enable them as consumers to purchase more of what their fellow economic neighbors bring to market. But every one of those dollars has been earned through a voluntary and mutually beneficial exchange.
Collectivist “equity” means politically determined group shares
While relative incomes in the marketplace are simply the outcome of a series of mutually-agreed-upon terms of trade in the free, competitive process, once this process is politicized through government-planned pricing and redistribution, it no longer possesses the rationality or the justice of a free society. With government determining what people earn and their access to various goods and services, the production and supply of which has increasingly been decided on by paternalist planners, there is reintroduced a society of privilege and favoritism.
Power and pull, ideological pressures, and voting-bloc influences will now determine and decide what any individual may or may not earn. It would not be the individual’s relative market worth that will be evaluated in the new world of identity politics and critical race theory. Instead, any person’s absolute and relative income share will be politically determined for him as a member of a racial, gender, or some other collectivist group to which he has been assigned based on the result of the rough and tumble of “democratic” real politick.
One consequence will be that individual initiative and effort is thwarted or redirected by government command or politicized incentives. This will have little or nothing to do with use of talent, creativity, or entrepreneurial expertise in ways that actually serve the properly understood “common good,” meeting consumer demand with constantly improving, least costly ways of supplying things.
If fully or even partially implemented, such a new political paternalist planning scheme would lead to the same social and economic consequences as the central planning experiences of the 20th century. The only question is whether it would be accompanied by the same reigns of terror and mass murders that were experienced under the Soviet, fascist, and Nazi versions of socialism. Let us hope that future historians do not have to record consequences similar those earlier ones.
(Based on a talk given for the Praxis Club at Hillsdale College in Hillsdale, Michigan, on October 28, 2021.)
This article was published in the January 2022 edition of Future of Freedom.
Dr. Richard Ebeling is the BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel, in Charleston, South Carolina.
Dr. Ebeling is the author of Austrian Economics and Public Policy: Restoring Freedom and Prosperity (2016); Monetary Central Planning and the State (2015) as well as the author of Political Economy, Public Policy, and Monetary Economics: Ludwig von Mises and the Austrian Tradition (2010) and Austrian Economics and the Political Economy of Freedom (2003). And the editor of the three-volume, Selected Writing of Ludwig von Mises, published by Liberty Fund.
He is also the co-editor of When We Are Free (Northwood University Press, 2014), an anthology of essays devoted to the moral, political and economic principles of the free society, and co-author of the seven-volume, In Defense of Capitalism (Northwood University Press, 2010-2016).