Image citation: Salem eine stadt in Engelländischen America, in der Grafschafft Essex, licensed under Wikimedia Commons
No matter how much we improve our circumstances, once we taste progress and its benefits, we constantly yearn for even more. As Frederich Hayek argued in the Constitution of Liberty, we are captors of progress whether we admit it or not. As crazy as it may sound, the average American lives a life of material comfort superior to the wealthiest European monarchs of the 17th century. Our access to a wide variety of foods, instant communication, access to the internet, transportation options, and healthcare all vastly exceeds that of our ancestors. Few could afford or sometimes even imagine the amenities and goods to which we all have access and which most of us now take for granted.
Many ascribe our colossal progresses of the last two centuries to technological and scientific progress. But this is only half of the story.
While there has been a wealth of technical ingenuity and innovation in the last two centuries, there were plenty of impressive scientific discoveries in earlier centuries. In the 4th century BC in Sichuan China, locals channeled natural gas through pipes made of bamboo to boil water to extract salt. In the 2nd century BC, the Greeks performed an early version of cataract surgery. The first Roman aqueduct, the Aqua Appia, was constructed in 312 BC. The ancients made all kinds of scientific discoveries; however, there was no great spike in economic growth. Most of human history is marked by stagnation and decline. Consistent progress is a new phenomenon. Perhaps just as much as technical innovation, economic liberty was and remains critical in enabling sustainable progress and innovation, and it is this, as much as any other factor, that has influenced our recent two centuries of sustained progress,
Throughout history, this idea that economic liberalism was the catalyst for innovation and growth has been argued for by many advocates throughout the world. Under feudalism, a small elite class of people dictated resources and production, but emerging liberalism and capitalism championed individual rights and markets, challenging feudal hierarchies. Instead of a hereditary clique giving orders, they believed each person could use their judgment about what to produce, buy, and sell. Everyone would be free to fashion their life according to their plans and reap the profits if their ideas worked.
While these ideas are far more commonplace today, critics of economic liberty argue the concept of economic liberty is merely the brainchild of economists such as Milton Friedman and Frederich Hayek and their followers. Economic liberty is a 20th-century idea nurtured by academics and unleashed upon the public. However, many before Friedman and Hayek argued in favor of economic liberty and its benefits.
The idea of economic liberty was indeed an alien concept to the majority of our ancestors. But this is because economic liberty challenges complacent rulers and hierarchies by showing that regular people can decide for themselves how to live best. Economic liberty is a dangerous idea for those in power. With a robust market in place, those who used to be under the thumb can gain a degree of independence, and some gain enough wealth to have little need of the king or his nobles. Monarchs, despots, and aristocrats have consistently sought to crush this vision of life. Still, there is evidence that economic liberty was contemplated far before the foundation of the Mont Perlin society.
The ancient Indian leader and writer Chanakya wrote Arthashastra, a comprehensive book for future rulers. Chanakya believed it was the ruler’s job to promote prosperity but that “A King must collect taxes like a honeybee” lightly. Chanakya discussed the importance of functioning markets and economic growth. He even dedicated time to talking about dealing with corrupt bureaucracies that hamper the market.
In the 4th century BC, Mencius criticized the government for fixing prices and observed the positive effects of the division of labor when critiquing the agriculturalist Xu Wing. When King Hsüan of Qi asked Mencius what a good government looked like, he said the King Wen of Chi kept taxes low, and there were no tariffs or levies on goods traveling over borders.
In the 14th century, the Englishman priest William of Pagula and the Andalusian intellectual Ibn Khaldun criticized rulers for infringing on their subject’s economic liberty. In his epic masterwork of history, the Muqaddimah, Ibn Khaldun wrote: “People who collect unjustified taxes commit an injustice. Those who infringe upon property (rights) commit an injustice. Those who take away property commit an injustice. Those who deny people their rights commit an injustice. Those who, in general, take property by force, commit an injustice.”
Ibn Khaldun believed that highway robbers commit crimes, but states commit injustices by infringing on people’s economic liberty through taxes, regulations, and state-supported monopolies. For Khaldun, the ruler plays a neutral role in the economy by facilitating trade but taking no active part in steering the economy. Khaldun believed rulers needed to raise taxes, but this was no excuse to squeeze his subjects dry; he explains, “When the taxes are too heavy, and the profits anticipated fail to materialize… the incentive for cultural activity is gone.” The ideas within the Muqaddimah inspired economist Arthur Laffer’s famous Laffer Curve.
Ideologically close but geographically separated from Khaldun, William of Pagula criticized King Edward in the Mirror of King Edward III for the tradition of purveyance. A practice allowing monarchs to force people to sell him provisions, food, and horses at a fixed rate or sometimes even below market price. Lamenting this practice, William writes:
“But how is it either justice or equity these days to buy something for a lesser price than the seller wishes to sell them for, and contrary to consent, when buying and selling are fixed by the law of peoples? For where there is no consent, there is no selling but extortion, no justice but seizure, no equity but falsehood and iniquity. And therefore, those from whom goods are taken cry to God.”
William even warns that if the king persists in using purveyance, it is likely that his subjects will rebel and replace him with a new monarch.
In the 16th century, Spanish Catholic theologians part of the School of Salamanca articulated arguments in favor of commerce. Francisco de Vitoria argued that the Spanish king should allow free trade between the Spaniards and the natives of the New World. Historian Bartolome de Albornoz wrote, “Buying and selling is the nerve of human life that sustains the universe.”
During the 17th century, Pieter and Johan de la Court in the Dutch Republic argued that the Dutch did not need Patents, Privileges, or Guilds and Halls to be prosperous. The de la Court Brothers believed the greatest achievement of politics was to leave people with as much of their natural liberty as possible. They wrote of natural liberty: “Everyone ought to be totally free and unrestrained in producing and dealing with his own commodity … Where everyone takes care of himself, everyone is fine, and no one gets lost. This is the natural liberty that the Rulers should never take away from their subjects.” One could easily swap natural liberty for economic liberty.
From ancient India to the Dutch Republic, the ideal of economic liberty has been advocated and promoted throughout history across the globe by a wide variety of cultures and societies, though it was rarely realized in practice. Economic liberty is not a new idea; however, it is a new practice, and while its earlier advocates could not have imagined the prosperity that it would endow upon us, they understood how central it was to liberty and prosperity.
Their contributions to where we find ourselves today should be acknowledged.