WHY CONSERVATIVES SHOULD SUPPORT THE FREE MARKET HANNES H. GISSURARSON www.europeanreform.org @europeanreform Established by Margaret Thatcher, New Direction is Europe’s leading free market political foundation & publisher with offices in Brussels, London, Rome & Warsaw. New Direction is registered in Belgium as a not-for-profit organisation and is partly funded by the European Parliament. REGISTERED OFFICE: Rue du Trône, 4, 1000 Brussels, Belgium. EXECUTIVE DIRECTOR: Naweed Khan. www.europeanreform.org @europeanreform The European Parliament and New Direction assume no responsibility for the opinions expressed in this publication. Sole liability rests with the author. AUTHOR TABLE OF CONTENTS 1 INTRODUCTION 6 2 THE CONSERVATIVE-LIBERAL TRADITION FROM BURKE TO MENGER 9 3 HAYEK AS A CONSERVATIVE LIBERAL 16 4 THE CONSERVATIVE CRITICS: OAKESHOTT AND SCRUTON 20 5 IS THE FREE MARKET UNINSPIRING? 26 6 DOES THE FREE MARKET ERODE MORAL VALUES? 31 Hannes Holmsteinn Gissurarson 7 DOES THE FREE MARKET CREATE EXCESSIVE EXPECTATIONS? 36 8 IS DISTRIBUTION BY CHOICE MORALLY UNACCEPTABLE? 44 Born in 1953, he holds a D.Phil. in Politics from Oxford University and is Professor of Politics at the University 9 IS THE FREE MARKET SELF-DEFEATING? 50 of Iceland. The author of more than a dozen books on 10 DOES THE FREE MARKET ENCOURAGE VULGARITY? 57 political philosophy, history and current affairs, he is the research director of RNH, the Icelandic Research Centre for 11 CONCLUSIONS 62 Innovation and Economic Growth. New Direction - The Foundation for European Reform www.europeanreform.org @europeanreform Why Conservatives Should Support the Free Market Hannes H. Gissurarson 1 INTRODUCTION here are many ways of classifying political which in the nineteenth century solidified into a positions, ideologies and parties. A common division between two parties, Conservatives under one between ‘the Right’ and ‘the Left’ Benjamin Disraeli and Liberals under William Ewert T arose during the French Revolution: In the Gladstone. A major issue of contention between the French National Assembly of 1789, supporters of two parties was free trade, supported by the Liberals the king and ‘ancien régime’ sat to the speaker’s and opposed by the Conservatives. However, as liberal right and supporters of radical change to his left. philosopher Herbert Spencer noted, in late nineteenth This was thus a division between conservatives and century British liberals slowly moved, or slid, towards radicals: conservatives were right-wing, radicals interventionism, endorsing legislation which limited left-wing. It should be noted, though, that in the economic freedom, whereas British conservatives French Legislative Assembly of 1791, supporters of a strongly supported private property rights. “So that constitutional monarchy sat on the right, moderates if the present drift of things continues, it may by and in the centre and revolutionaries, the Jacobins, on the by really happen that the Tories will be defenders of left. Some supporters of a constitutional monarchy liberties which the Liberals, in pursuit of what they and limited government who now sat on the right, in think popular welfare, trample under foot.”2 In the particular the Girondins, would previously have sat twentieth century, self-styled liberals in Great Britain on the left. Incidentally, this may resolve a paradox in moved further towards interventionism, so that Danish politics. The party which calls itself “Venstre” economic liberals tended to support, and to influence, or the Left Party, is in fact rather rightwing: It may the Conservative Party, even if some Tory leaders UK Prime Minister Margaret Thatcher and US President Ronald Reagan listen to the American national anthem at Kensington Palace in London have been formed to bring about radical change, in argued for a ‘Middle Way’.3 In late twentieth century, 4 June 1984. Both acknowledged von Hayek as a strong intellectual influence. Photo: Bryn Colton/Getty Images accordance with the ideas of 1789, but once this was a forceful leader of the Conservative Party, Margaret accomplished, it wanted to preserve it, in accordance Thatcher, successfully combined support for the free with the ideas of 1791. In other words, it was ‘Girondin’ market and ‘Victorian values’, even sometimes being of opportunity.5 No great ideological divide emerged liberals in Europe are often called conservatives, even throughout. While the French Revolution, leading called herself ‘a Gladstonian liberal’.4 between the two main political parties which came to if some of them, for example American economist and to terror and then to Napoleon’s military coup and be called Republicans and Democrats. But the term Nobel Laureate Milton Friedman, emphatically reject war in Europe, scarcely can be considered a success,1 In the twentieth century, socialism became the third ‘liberalism’ underwent an even more radical change that label. in France herself there is still a discernible divide force in British politics, largely replacing the moderate of meaning there than in Great Britain. The so-called between right and left, although it is sometimes interventionism which called itself liberalism. Socialism progressives of early twentieth century who were Yet another way of classifying political positions difficult to identify and understand the cleavage was represented by the Labour Party which, although really interventionists called themselves liberals and emerged in the twentieth century with the attempt, factors. dominated by intellectuals, claimed to fight for the so did Franklin D. Roosevelt and his New Dealers. both in Nazi Germany and Soviet Russia, to create a interests of workers. In the United States, on the other On this Austrian economist Joseph Schumpeter totalitarian state which would control not only the Another way of classifying political positions was hand, socialism never became a serious alternative acidly commented: “As a supreme, if unintended body, but also the soul of its subjects, a goal which developed in British politics over centuries. This to the ideals of the 1776 American Revolution. Most compliment, the enemies of the system of private seemed, through new technology, to be within reach. was the loose division between ‘Tories’ and ‘Whigs’ workers, experiencing upward mobility, did not turn enterprise have thought it wise to appropriate its If this classification is adopted, political positions in Parliament after the 1688 Bloodless Revolution against capitalism: They saw their country as a land label.”6 Consequently, in the United States nowadays would be placed on a scale from thoroughgoing those who call themselves ‘liberals’ are really libertarianism on one end, envisaging little or no leftwingers, whereas those who would be called role for the state,7 to full-blooded totalitarianism 1 Hippolyte Taine, Le Révolution, Vol. I–III (Paris: Libraire Hachette, 1878–83), The French Revolution (Indianapolis IN: Liberty Fund, 2002). 2 Herbert Spencer, The New Toryism, The Man Versus the State (New York: D. Appleton & Company, 1884), p. 17. 5 Werner Sombart, Warum gibt es in den Vereinigten Staaten keinen Sozialismus (Tübingen: J. C. B. Mohr, 1906). Why is There no Socialism in the United 3 Harold Macmillan, The Middle Way (London: Macmillan, 1938). States? (White Plains NY: M. E. Sharpe, 1976), p. 20: “I believe that emotionally the American worker has a share in capitalism.” 4 In an address to the Conservative Party Conference in 1983, Thatcher said: “For it is our party which is dedicated to good housekeeping—indeed, I would 6 Joseph Schumpeter, History of Economic Analysis (New York: Oxford University Press, 1954), p. 394. not mind betting that if Mr. Gladstone were alive today he would apply to join the Conservative Party.” 7 Murray Rothbard, Power and Market (Menlo Park CA: Institute for Humane Studies, 1970); David Friedman, The Machinery of Freedom: Guide to a Radical Capitalism (La Salle IL: Open Court Publishing, 1973). 6 New Direction - The Foundation for European Reform www.europeanreform.org @europeanreform 7 Why Conservatives Should Support the Free Market Hannes H. Gissurarson on the other end, grippingly described in dystopian continues and develops a long and venerable tradition works by Russian authors Yevgeny Zamyatin and Ayn in which Edmund Burke, David Hume, Adam Smith, Rand and, of course, in the famous novel Nineteen Alexis de Tocqueville and Carl Menger all stand, 2 Eighty Four by George Orwell,8 and to some extent alongside other eminent thinkers. Political leaders realised in Hitler’s Germany, Stalin’s Russia and even sympathetic to this tradition include Prime Minister to this day in North Korea. Thus, national socialists Thatcher, President Ronald Reagan of the United would be regarded as totalitarian rather than right- States and, in alliance with and influenced by liberal THE CONSERVATIVE-LIBERAL wing and as being almost as far away on the political economists, Konrad Adenauer in Germany and Alcide spectrum from traditionalists and classical liberals de Gasperi in Italy.11 TRADITION FROM BURKE TO as are communists. One theorist of totalitarianism was English-Austrian economist and Nobel Laureate In the report, I first briefly discuss the ideas of Friedrich August von Hayek who in The Road to Burke, Hume and Menger, moving on to Hayek and MENGER Serfdom explored the many common features of his ambivalent attitude towards conservatism and Hitler’s national socialism and Stalin’s communism. then turning to the ideas and arguments of two Alarmed