Home' Policy Magazine : Policy Vol 33 - No 4 Contents 30 POLICY • Vol. 33 No. 4 • Summer 2017-2018
REBUILDING THE LIBERAL PROJECT
claim to, expert rule resulted in an argument for the
Escape from Democracy (2017).
as Hayek identified in his Nobel address and
discussed earlier in this essay, were significant for
the self-understanding of political economy, and
the practical affairs of public policy and economic
Unfortunately, the critique of the liberal order
that the progressives peddled to justify the shift
from democratic administration to bureaucratic
administration was treated by intellectuals as
separate and as such to be acceptable even if the
proposed solution of expert rule was disappointing.
The capitalist system was responsible for instability
through industrial fluctuations, inefficiency through
monopoly and other market failures, and injustice
through income inequality and unfair advantages
due to the accumulation of wealth.
So today we find ourselves in a strange position
where the populists are critiquing expert rule,
but believe what the experts told them were the
problems that plagued society and resulted in their
disillusionment with the promise of progress.
The populist rhetoric argues that industrial
workers are displaced by machines and lower cost
foreign labour whether through firms relocating
overseas or immigrants competing with them
in the domestic labour market. And not only do
these immigrants cut into their standard of living;
a subset of them, we are told, are criminals and
terrorists who threaten their very safety and the
safety of those they love.
The populist rhetoric argues that the middle
class and working class population have been
made to suffer through the irrational speculation
of the investment bankers, which destroyed the
livelihood, homes and communities of ordinary
citizens. The world as we know it, they are told from
various corners, is one of a privileged few, where
monopoly power dictates the prices they have to
pay and monopsony power limits the wages they
can reasonably expect from the market.
In populist economic nationalism—of both
left and right—only government intervention can
serve as the necessary corrective. We must restrict
the free flow of capital and labour, we must counter
monopoly power, and forcibly raise wages. Yet the
populist criticises the establishment elite in public
policy while advocating an increased role of the
government and its agencies to counter the social
ills of instability, inefficiency and inequality.
There is a fundamental contradiction in the
populist critique of the establishment, both left and
right, which is that government is failing them, but
it is failing as it grows larger in scale and scope of
activities. Yet precisely because it is failing, it must
grow in scale and scope to address the failure.
Governments everywhere in the democratic West
have grown bloated, and have deviated significantly
from any constitutional principles of restraint.
The progressive elite’s critique of capitalism was
grounded in a fear of the unhampered predatory
capability of powerful private actors, but to curb
private predation they enlisted a powerful centralised
public authority. In doing so, they enabled the
possibility of wide-scale public predation. But while
it may be acknowledged at different times that the
social ills that plague society manifest in public debt
and inflation, they are tied less to over-regulation,
over-criminalisation, over-militarisation and so on,
which are other manifestations of an ever-expanding
scale and scope of governmental authority in the
lives of citizens throughout the democratic world.
The truth is that the social ills that are faced
throughout the world can be traced to this growth of
government, which leads to the erosion of a contract-
based society and to the rise of a connection-based
society, entailing the entanglement of government,
business and society.
We have policies that don’t promote competition,
but instead protect privileged individuals and
groups from the pressures of competition. We
have financial institutions that have been able to
privatise their profits while socialising their losses.
We have governments (and their service agents)
at the local to the federal level that face extremely
soft budget constraints in fiscal decisions precisely
because the monetary system imposes weak to non-
This growth of government leads to the
erosion of a contract-based society and to
the rise of a connection-based society,
entailing the entanglement of government,
business and society.
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