Table of Contents
“What is needed is a new attempt to formulate a radical liberal vision that recovers not the details but the original essence of classical liberalism: democracy and markets.”
– Don Lavoie, Democracy, markets and the rule of law: observations on the nature of politics in a radical liberal society
Liberalism is democratic
Writing in 1993the academic libertarian Don Lavoie made a suggestion that few classical liberals have adopted: reconsider our skepticism about democracy in light of the insights of those who had lived without political and economic freedom.
The newly liberated Eastern Europeans were not enthusiastic about democratic political rights because they were naive about liberal democracy. On the contrary, the experience of Eastern Europeans without political rights helped them understand something essential about liberalism that classical liberals have too often overlooked.
Lavoie suggested that the misconception that markets and democracy are fundamentally in conflict stems from an incomplete liberalism that takes political rights for granted. Lavoie instead proposed the idea of “democracy as openness,” or liberalism as a “political culture” that uses the distributed knowledge and concerns of all citizens in deciding what goals to pursue and how to pursue them.
According to Lavoie, openness is required, both in politics and in the markets. “If we redefine markets and democracy in terms of the more fundamental value of openness, we may find that the radicalization of these principles challenges the traditional interpretation of liberalism.”
Democracy produces the political peace necessary to support pluralism and liberal institutions, and inclusive democracy is the political system most likely to protect diverse individuals.
Classical liberals tend to question the value of democratic participation. Skeptics argue that voters are irrational, ignorantor in general can’t vote properly. (And besides, they will say: voting is not effective.) These concerns reflect the concerns of market skeptics and should be dismissed for similar reasons.
The benefits of democracy
To assess how well democracy works and how much enthusiasm it requires, we need to know what democracy is for.
A popular criticism of democracy is that it fails to produce good laws and policies, or that it fails to achieve specific goals. But criticizing democracies for what they produce is like criticizing markets for what they produce and how they produce it. What counts as good laws and policies is a fundamental question for politics, and not one we can take away to judge a political system.
Liberals can broadly agree on what counts as good political objectives: legal protection of freedom and political equality, the rule of law, legal limits on the power and actions of the executive branch and the police, protection of freedom of expression and religion, and institutions supporting an open commercial society– but not everyone in a democracy is liberal. Even the most basic political values are contested and cannot be taken for granted in democratic systems (although they may be institutionally protected by constitutions and norms rather than by common law). We cannot declare democracy a failure because it does not automatically implement our preferred policies.
The main benefit of democracy is this: it facilitates peaceful transfers of power and resolution of social disagreements, even in diverse population groups.
Liberals must be committed to democracy because the peace it produces is a prerequisite for other liberal goals. With this in mind, liberals should consider who should be involved politically and what citizens should do to participate usefully.
People will accept losing elections if they believe the democratic system is legitimate. Functional democracy depends on political buy-in. Securing this buy-in is a social problem that democracy is uniquely suited to solve – as long as that democracy is open and inclusive.
Perceived legitimacy is subjective and diffused in the minds of citizens. Because we do not know – and cannot know – how each person perceives a legitimate political system, openness is the best way to participate.
Lavoie presented a positive case for “openness and publicness,” noting that democratic institutions, such as markets, can leverage distributed knowledge.
Distributed knowledge made useful through market prices can coordinate the economic plans of people competing for resources. Distributed knowledge made useful by democratic institutions balances the interests, concerns, and demands of voters to provide governance structures that people will use to peacefully resolve political disagreements. This is true even if voters are “irrational” or “ignorant,” just as it is true that markets can coordinate their activities when market actors are not fully rational actors with perfect information.
Political culture
Lavoie also worried about citizens’ faith in the political system and its legitimacy, because political beliefs limit what is politically possible. Democratic peace can prevail if people are committed to democracy. It will be undermined if people don’t believe in the system.
Everything here depends on what is considered acceptable social behavior, that is, on the restrictions imposed by a particular individual political culture. Where slavery is considered offensive, those who try to practice it are easily overwhelmed by the public’s disgust. If it is considered justified by the general public, no constitutional design can prevent it. Where taxes are accepted as morally defensible, they will be used; where they are equated with slavery, they will be impossible to collect. The feasibility of slavery or taxation does not depend fundamentally on the (concentrated) opinion of the designated representatives of the public, but on the (divided) opinions of the public itself. (Lavoie, pp.116–117, emphasis mine)
Lavoie believed that radical liberal anarchism is possible because a sufficiently open political system could convince people that radical self-government is possible – and convincing them successfully would make this possible.
Lavoie envisioned a democracy in which people continuously contest their rights and responsibilities every day, both politically and through market forces. He did not prescribe specific political institutions. Institutions emerge from political culture. They cannot be designed a prioriabstracted from the individuals who form them.
Lavoie offered a welcome corrective to classical liberal skepticism about democracy and to the belief that democracy can and should be divorced from market activity. In every market exchange – whether we buy, sell or boycott – we communicate what we value. If we were to strip market transactions of their political content, we would lose important insight into what people care about and believe in. People in markets are people too. They do not become apolitical when they act in a market, any more than they become altruistic when they act through government.
In liberal democracies, political information is also expressed through voting. Lavoie worried that elections reduce politics to a belief in one “democratic will” that ignores or suppresses dissenting views and disseminated knowledge. But the meaning of an election victory is also a product of political culture. A political loss does not necessarily mean that someone is on the wrong side of the democratic will. It can mean only that one has lost.
Put bluntly, democratic change, that is, a change in public opinion and political culture, is the only game in town each liberal who wants to change the size or scope of government.
When liberals understand democracy in terms of its ability to balance individual interests as required to achieve political peace, the importance of Lavoie’s “openness” becomes clearer. Concerns cannot be balanced if they are not integrated.
It is the integration of as many concerns as possible that I address in part 2.
Read more:
Don Lavoie on the continued relevance of the knowledge problem by Cory Massimino
The Great Antidote Podcast: Peter Boettke on Don Lavoie and Central Planning
Even more great antidotes: David Boaz on Liberalism and the Continuing Progress of the Enlightenment