By Samuel Gregg
It’s hardly a secret that free markets have fallen out of favor among conservatives throughout the West in recent years. Whether it’s Britain’s Theresa May, Germany’s Angela Merkel, or Australia’s Malcolm Turnbull, many center-right politicians have quietly re-embraced some of the economically-interventionist polices that prevailed between the 1940s and the 1970s. Likewise, important segments of conservative intellectual opinion, such as the American journal First Things, have substantially qualified their formerly strong support for market economies.
“… this turn against markets among some conservatives is principally derived from … a widespread and perfectly reasonable yearning for stability.”
There’s many reasons for this. One is growing worries about some of the apparent social and cultural effects of free markets. Another is the undeniable spread of economic nationalism, fueled by the sense that free trade has undermined entire communities’ well-being. Nor did the 2008 financial crisis help the cause of free markets inasmuch as economic liberalization was perceived to be the prime culprit.
I use words like “apparent,” “sense,” and “perceived” because, in many of these cases, what matters is perception. The reality is often rather different. Unfortunately such realities—such as the extent to which the 2008 recession was facilitated by factors such as flawed monetary policy and government efforts to socially engineer the American housing market—don’t get anywhere near the attention they deserve among some conservative skeptics of markets.
But, I’d suggest, this turn against markets among some conservatives is principally derived from a desire for something that has grown in our era of economic globalization. And that is a widespread and perfectly reasonable yearning for stability. The immense economic growth and poverty-reductions generated by global markets requires acceptance of the constant upheaval that’s part-and-parcel of free competition and economic creativity. In the long-term, the overwhelming majority consequently become much wealthier. The downside is considerable instability, and all of us need and want a certain degree of certainty in life, including its economic dimension.
This presents particular dilemmas for conservatives. After all, conservatism emphasizes the benefits of permanency, order, tradition, and strong and rooted communities. Conservatives who believe that free markets are the most optimal of imperfect economic systems thus need to rethink about how to integrate their case for markets into the broader conservative agenda. And here, I’d argue, the man whose thought gave birth to modern conservativism has much to teach us.
Though widely considered modern conservatism’s intellectual progenitor, Edmund Burke’s economic views generally receive sparse attention. Burke’s conservatism is mainly linked to his religious orthodoxy, his defense of what he called “ancient liberties,” and his relentless criticism of the French Revolution’s destruction of many of the institutions that protected freedom and social order.
Rather fewer people know that Burke was a committed free trader, a strong defender of private property, and a skeptic of government economic intervention. He once described Adam Smith’s The Wealth of Nations as being “in its ultimate results,” “perhaps the most important book ever written.” Burke’s literary executors, French Laurence and Walker King, even claimed that Burke “was also consulted, and the greatest deference was paid to his opinions by Dr. Adam Smith, in the progress of the celebrated work on the Wealth of Nations.” When Smith’s magnum opus appeared in 1776, Burke reviewed it for the widely-read Annual Registrar. He sang the book’s praises as a text which managed to achieve that most difficult of goals: to “teach things that are by no means obvious.”
“In many ways, conservatism is all about the long-term. The conservative looks back into history to recall the wisdom of the past.”
Yet even before The Wealth of Nations’ publication, Burke was arguing the case for greater commercial liberty. In parliamentary debates during 1772, for example, he insisted that the best way for society’s poorest segments to receive enough bread was through a market free of legislative interference. Over twenty years later, in the midst of Britain’s epic struggle with Revolutionary France, Burke penned a carefully-worded memorandum entitled Thoughts and Details on Scarcity to Prime Minister William Pitt the Younger in 1795. Here he explained why the state generally shouldn’t interfere with the market-price of goods, services, and labor.
Burke’s strong belief in economic liberty and the institutions and habits which sustain it are not in doubt. The real question is why he held these views. It turns out that Burke’s support for extensive commercial freedom wasn’t chiefly based upon what we today would call libertarian premises. His main reasons for embracing free markets were those of a conservative.
Focusing on the Short-term is Irresponsible
In many ways, conservatism is all about the long-term. The conservative looks back into history to recall the wisdom of the past. Conservatives are also skeptical of responding to immediate concerns, real or otherwise, by acting in defiance of truths knowable by reason and/or historical experience. For the conservative, this outlook is a matter of prudence, perspective, and good government.
These concerns are all found in Burke’s most lengthy reflections on the importance of economic liberty, free exchange, and free prices. The context of his 1795 memorandum was one in which William Pitt’s government was confronted with a scarcity of food throughout Britain after a poor harvest. Like governments everywhere in time of crisis, Pitt’s administration was under enormous pressure to “just do something.”
Some were proposing that the government address the problem by granting subsidies to bolster laborers’ wages. Others wanted Pitt to establish an effective government monopoly of the grain-market in order to set fixed-prices for this commodity. These schemes were accompanied by a rhetoric which decried wealth-differentials and emphasized growing antagonism between the poor and the rich. The implication was that if Pitt didn’t act, Britain could witness the type of extreme social disorder which had manifested itself in France.
Part of Burke’s advice to Pitt involved explaining the economic difficulties with the proposals under consideration. Burke repeated, for example, his 1772 argument that a free market in grain was more likely to meet the needs of the poor than other economic arrangements. State efforts to manipulate the market price of commodities, he noted, were bound to make it harder and harder for consumers and producers to “mutually discover each other’s wants.” Attempts to fix the distorting effects of such interventions upon the price-mechanism via more interventions would, Burke said, just make it even more difficult for people to know the real market-price of any given commodity. The result would be misallocated resources and growing shortages.
Burke’s memorandum also argued against demonizing the large wealth-disparities associated with the accumulation of capital. Capital-accumulation was, he claimed, essential for the type of investment that facilitates the growth which helps those whom Burke called the “laboring people” to find work and escape poverty. In his own lifetime, Burke said, he had noticed how the spread of commercial freedom and the growth of accumulated capital had helped increasing numbers of once-poor people become wealthier, to the point whereby they were developing their own capital-reserves.
These observations were not simply those of someone who grasped the often-counterintuitive insights of modern economics as expounded by Smith. They were also conservative inasmuch as they cautioned governments against acting rashly to appease those who don’t know — or don’t care — about the likely negative impacts of particular policy-choices upon the nation’s well-being.
It wasn’t a question of being elitist. To Burke’s mind, it was a matter of helping policy-makers and electorates understand that certain economic truths (what Burke called “laws of commerce”) don’t change in the face of what he called “idle tales”, “foolish good-intention,” and “the malignant credulity of mankind.” In such conditions, the government’s first responsibility to the people “is information” — i.e., the truth — “to guide our judgment.”
A focused, but limited State
There is, however, another aspect of Burke’s free market beliefs which are rooted firmly in his conservatism: his view of the state’s role vis-à-vis the economy.
In his Thoughts on Scarcity, Burke articulated the principle that he had developed as a way of determining which particular functions were legitimately carried out by governments. As he put it:
“the State ought to confine itself to what regards the State, or the creatures of the State, namely, the exterior establishment of its religion; its magistracy; its revenue; its military force by sea and land; the corporations that owe their existence to its fiat; in a word, to every thing that is truly and properly public, to the public peace, to the public safety, to the public order, to the public prosperity.”
This was not an attitude of a priori hostility towards government. For Burke, what mattered was that the functions being performed by the state really were tasks which only governments can accomplish: national defense, the administration of justice, law and order, etc. While Burke was prepared to “admit of exceptions” to this rule, they remained exceptions.
Burke’s reference to “public prosperity” might seem to open the door to extensive state interference in economic life. Burke, however, made it clear that the state’s economic role was limited by three considerations.
The first was that governments should hesitate before embarking upon legislation which seeks to influence directly the exercise of legitimate property-rights and the workings of private contract. Excessive government involvement in these areas, he maintained, could substantially undermine (1) the security provided by property and (2) the freedom of individuals to negotiate agreements in ways which mutually benefit all parties to a given contract. Resolving any subsequent disagreements among the relevant parties, Burke commented, was the judiciary’s responsibility: not government ministers.
Second, Burke thought that the more national governments involved themselves in local and provincial affairs, the more distracted they would become from carrying out their primary responsibilities. This conviction was reinforced by Burke’s third and related consideration: that certain welfare functions were better undertaken by non-state entities.
“Without all doubt,” Burke regarded assistance to the needy as “a direct and obligatory duty upon Christians.” At the time, that designation included almost everyone in Britain. Nonetheless, he added, “the manner, mode, time, choice of objects, and proportion are left to private discretion.”
Burke’s point was that London-based officials simply couldn’t know enough about the nature of poverty in Inverness or Galway to act effectively. By contrast, private individuals and groups close to a given problem were likely to possess deeper insights into the nature of the difficulty than national governments. The latter, Burke implied, should be far more humble about their capacity to assist those in need.
All these reflections on Burke’s part add up to a classic conservative case for the free market. Far from being doctrinaire, Burke’s position underscored the importance of prudence, paid attention to crucial insights outlined in Smith’s Wealth of Nations, insisted that local communities and non-state institutions remain free to address local problems, and stressed that governments should focus on their core functions and have the humility to know their limits. Above all, Burke believed that economies needed to be grounded in certain truths about the human condition which utopians and romanticists of all stripes are inclined to ignore.
If that doesn’t amount to a distinctly conservative argument for free markets, one which compliments the rest of conservatism’s political agenda, I don’t know what does.