Poland’s Road from Communism

European Diary: Warsaw, November 2021

Probably no major European city illustrates as well the ravages of recent European history as Warsaw, the capital of Poland. Originally a small fishing town on the Vistula River, it was the capital of the vast Polish-Lithuanian Commonwealth from the late sixteenth century until 1795 when Poland ceased to exist as an independent country, infamously having been partitioned thrice by her neighbours, Prussia, Russia, and Austria. In late nineteenth century the city nevertheless prospered and became known for its fine architecture and broad boulevards: It was even called the ‘Paris of the North’. It was then the capital of the semi-autonomous Kingdom of Poland under Russian rule, and the third-largest city of the Romanov Empire, after St. Petersburg and Moscow. In 1918 Warsaw became the capital of the new Republic of Poland and continued to flourish. However, in the battles following the Nazi invasion of Poland on 1 September 1939, large parts of the city were destroyed. Responding to the attack, the United Kingdom and France declared war on Nazi Germany, as they were obliged to do under treatises with Poland, but they did not declare war on the Soviet Union which invaded Poland from the east on 17 September, completing the fourth partition of Poland. In 1944, it was clear that Nazi Germany was losing the war. In July, Stalin’s Red Army was approaching the Vistula River. The Polish resistance movement decided to rise up. But then Stalin ordered his army to halt on the eastern bank of Vistula, giving the Nazis opportunity brutally to suppress the uprising. The Poles fought valiantly, retreating into any hidden nook and cranny of the city and even hiding in its sewage system. Enraged, Hitler ordered the city to be razed to the ground. Only about 15 per cent of Warsaw survived.

The 1944 Rising Museum

As Polish soldiers desperately fought for their lives, from house to house, the Red Army passively looked on from the eastern bank of the Vistula River. This was, according to Anglo-Hungarian novelist Arthur Koestler ‘one of the major infamies of this war’. Stalin did not want any potential challenges to the communist puppet government he intended to install in Poland after the war. He encouraged Hitler to destroy all such challenges. There is in Warsaw a magnificent museum devoted to the tragic 1944 Rising, very moving, even haunting. Its deputy director, Dr. Pawel Ukielski, is a friend of mine: He has lectured in Iceland on my invitation, and I have had the pleasure to visit him and his lovely family at their home in Warsaw. We are both active in the Platform of European Memory and Conscience which seeks justice for the many victims of totalitarianism in Europe.

Perhaps it is at least poetic justice that the enormous headquarters of the Polish Communist Party in the city centre were after the collapse of communism taken over by the Warsaw Stock Exchange which used it until 2000. Now the building complex (depicted above) is a commercial centre, and one of the businesses located there is the Freedom Lounge, run by the free-market Warsaw Enterprise Institute, a bar, a restaurant and a meeting venue. The cocktails served at the Lounge are named after leading classical liberal thinkers and leaders such as Ludwig von Mises, Ayn Rand and Margaret Thatcher.

Inspired by Friedman and Hayek

It was at the Freedom Lounge on 2 November 2021 that I presented my book in two volumes on Twenty-Four Conservative-Liberal Thinkers, in a panel with Marek TataÅ‚a from the Economic Freedom Foundation and Sebastian Stodolak from the Warsaw Enterprise Institute. Stodolak also interviewed me for the Polish newspaper Dziennik Gazeta Prawna and recorded a podcast with me. In my introductory talk, I pointed out that in the chapter on Milton Friedman in the second volume of my book there is a brief account of the rapid and successful process in which the Poles and other Central and Eastern European nations, inspired not least by Friedman and Friedrich von Hayek, returned to normalcy in the 1990s, after having had socialism forcibly imposed on them for more than forty years.

The Free-Market Solution of Environmental Problems

In the lively discussion at the Freedom Lounge following my introductory talk I emphasised that environmental problems usually were caused not by capitalism but by the absence of private property rights. Elephants in Africa were endangered because there were no owners to care for them, whereas privately-owned sheep in Iceland were plentiful. In just one stroke of the pen African poachers could be turned into gamekeepers if their communities would be given property rights to the elephant stocks. The same applied to polluted lakes and overfished rivers: Environmental protection required protectors who had a private and personal interest in the maximum long-term profitability of natural resources, be they land, fish stocks, oil wells, rivers, lakes or forests. In the case of the environment, as elsewhere, the best remedy for freedom was more freedom.

Why Iceland Crashed in 2008

Asked about the 2008 bank collapse in Iceland, I pointed out that at the time the assets of the Icelandic banks were probably as good (or bad) on average as the assets of banks in neighbouring countries, although the Icelandic bankers should have been more cautious in expanding their activities. The difference was that Iceland was denied the liquidity assistance from the U. S. Federal Reserve Board which the Scandinavian countries and Switzerland received, enabling those countries to rescue banks which otherwise would have gone under, such as Danske Bank in Denmark and UBS in Switzerland. Moreover, the British government, led by Prime Minister Gordon Brown and Chancellor Alistair Darling, closed down Icelandic-owned British banks at the same time as they rescued all other banks in the United Kingdom, invoking moreover an anti-terrorism law against Iceland, a longtime friend and ally with no military of her own. Their unprecedented action was, I suggested, motivated by their desire to demonstrate to their Scottish voters the perils of independence. Iceland’s rapid recovery after the collapse bore however witness to the soundness of the comprehensive liberalisation of the economy in 1991–2004.

(The Conservative, 26 November 2023.)

Bretton Woods, nóvember 2023

Mont Pelerin-samtökin voru stofnuð í apríl 1947, þegar nokkrir frjálslyndir fræðimenn komu saman í Sviss, þar á meðal hagfræðingarnir Ludwig von Mises, Frank H. Knight, Friedrich A. von Hayek, Milton Friedman, George J. Stigler og Maurice Allais og heimspekingurinn Karl R. Popper. Var tilgangurinn að blása nýju lífi í menningararf Vesturlanda með frjálsri rannsókn og rökræðu. Ég hef verið félagi frá 1984 og sat í stjórn 1998–2004.

Dagana 29. október til 2. nóvember 2023 héldu samtökin ráðstefnu í Bretton Woods í Bandaríkjunum um skipulag alþjóðaviðskipta, tæpum 80 árum eftir að þar var haldinn frægur fundur, þar sem Keynes lávarður og fleiri lögðu á ráðin um stofnun Alþjóðabankans og Alþjóðagjaldeyrissjóðsins í því skyni að koma á festu í alþjóðaviðskiptum. Segja má, að Bretton Woods-samkomulagið hafi brostið, þegar Bandaríkin hættu að tryggja gjaldmiðil sinn í gulli árið 1971. Eftir það hefur heimurinn notast við pappírspeninga, sem eru ekkert annað en ávísanir á sjálfar sig.

Við Ragnar Árnason, prófessor emeritus í auðlindahagfræði, og dr. Birgir Þór Runólfsson, forseti hagfræðideildar Háskóla Íslands, sóttum þessa ráðstefnu. Erindi á ráðstefnum Mont Pelerin-samtakanna eru flutt í trúnaði, en óhætt er að segja frá því, sem birst hefur annars staðar að frumkvæði höfunda sjálfra. Þrennt stóð upp úr. Prófessor Douglas Irwin lýsti með traustum gögnum hinum stórkostlega ávinningi af frjálsum alþjóðaviðskiptum. Phil Gramm, fyrrverandi öldungardeildarþingmaður og hagfræðiprófessor, sýndi fram á, að opinber gögn um tekjudreifingu í Bandaríkjunum væru meingölluð, þar eð tekjur væru ekki reiknaðar eftir skatta og bætur, sem hvort tveggja jafna þær mjög. Tyler Goodspeed, hagfræðingur í Hoover-stofnuninni, benti á, að frjáls alþjóðaviðskipti gætu orðið sumum hópum í óhag til skamms tíma, þótt þau væru öllum í hag til langs tíma. Sjálfur lýsti ég íslenska bankahruninu 2008 í löngu máli fyrir David Malpass, bankastjóra Alþjóðabankans 1919–2023, þegar við sátum saman kvöldverð.

(Fróðleiksmoli í Morgunblaðinu 2. desember 2023.)

Öfgamúslimar

Öfgamúslimar hata vestræna menningu. Þeir telja hana spillta: hún tryggi rétt einstaklinga til eigna og viðskipta, hvetji þá til frjálsrar rannsóknar og rökræðu, veiti þeim kost á að stunda lífsnautnir í stað bænahalds og leyfi konum og meinlausum minnihlutahópum (eins og samkynhneigðum) að njóta sín.

Munurinn á kristninni, sem er ein undirstaða vestrænnar menningar, og öfgaíslam er, að kristnin skilur að veraldlegt vald og andleg áhrif. Menn gjalda keisaranum það, sem keisarans er, og Guði það, sem Guðs er (Mt 22, 21). Samkvæmt öfgaíslam er kalífinn hins vegar í senn veraldlegur og andlegur leiðtogi, og í Íran er klerkaveldi. Kristnin viðurkennir líka, að allir séu jafnir fyrir Guði, Gyðingur eða Grikki, karl eða kona, ríkur eða fátækur (Gl 3, 28). Kenningin um sameðli alls mannkyns er einn kjarni kristninnar. Öfgamúslimar skipta fólki hins vegar í rétttrúaða og vantrúaða, og urðu vantrúaðir til dæmis jafnan að greiða hærri skatta í Tyrkjaveldi soldánsins en múslimar.

Kristur var mildur boðberi kærleiks, en Múhameð þungbúinn hermaður, sem þeysti á stríðsfáki með reidda sveðju milli Medína og Mekka. Fylgismenn hans stofnuðu víðáttumikið nýlenduveldi. Eðli öfgaíslams sést ef til vill best af fyrirheitinu, ef öfgamúslimar falla í bardaga fyrir trú sína, að þeir fari þá rakleiðis inn í paradís, þar sem fagureygar þokkadísir beri þeim dýrar veigar.    

Kristnir menn bundu enda á þrælahald að eigin frumkvæði, og undan ströndum Afríku stöðvaði breski flotinn þrælaflutninga. Múslimar í Arabaríkjum hófu þrælahald hins vegar fyrr og hættu því seinna en Vesturlandamenn.

Kristnin á sér rætur í gyðingdómi. Framlag Gyðinga til vestrænnar menningar hefur verið stórkostlegt. Um tvö hundruð Nóbelsverðlaunahafar hafa komið úr röðum þeirra, en þrír Arabar fengið Nóbelsverðlaun í vísindum. Ekki munar síður um Gyðinga í fögrum listum. Öfgamúslimar fara ekki leynt með, að þeir vilja ljúka því verki, sem nasistar hófu, og útrýma Gyðingaþjóðinni.

(Fróðleiksmoli í Morgunblaðinu 25. nóvember 2019.)

Hugtökin nýlendustefna og þjóðarmorð

315 starfsmenn Háskólans, innan við þriðjungur þeirra, hafa sent frá sér yfirlýsingu „gegn ísraelskri nýlendustefnu og þjóðarmorði“. Á meðal þeirra eru Vilhjálmur Árnason heimspekingur og Pia Hansson, forstöðumaður Alþjóðamálastofnunar Háskólans. Ekki er í yfirlýsingunni minnst á hina villimannslegu árás Hamas-liða á Ísrael 7. október 2023, þar sem þeir myrtu alla óbreytta borgara, sem fyrir urðu, brenndu börn lifandi og nauðguðu konum á almannafæri. Þessum ódæðum var fagnað ákaft í Gaza. Ekki er heldur minnst á, að Hamas-liðar tóku fjölda ístaelskra gísla og nota þá og eigið fólk sem lifandi skildi gegn varnarviðbrögðum Ísraelshers.

Þau Vilhjálmur og Pia og félagar þeirra misnota alþekkt hugtök. Nýlendustefna er, þegar ríki leggur með hervaldi veikari lönd undir sig og stjórnar, og hún einskorðast ekki við Vesturveldin. Kína og Japan hafa til dæmis verið nýlenduveldi. Saga Gyðinga í Ísrael er allt önnur. Þetta eru þeirra fornu heimkynni, og alltaf hefur búið þar eitthvað af Gyðingum, en innflutningur þeirra færðist í auka upp úr 1882 vegna Gyðingaofsókna í Rússlandi og víðar. Þá réðu Ottomanar Ísrael. Keyptu Gyðingar sér land og voru orðnir þriðjungur íbúa í landinu um 1940. Sameinuðu þjóðirnar lögðu til, að landinu yrði skipt milli þeirra og Araba. Ísraelsmenn samþykktu það, en Arabaríkin höfnuðu tillögunni og hófu stríð gegn Ísrael, en biðu herfilegan ósigur, og varð Ísrael talsvert stærra en gert hafði verið ráð fyrir. Þetta getur ekki talist nýlendustefna.

Hugtakið þjóðarmorð er notað um skipulagða útrýmingu fólks fyrir þá sök eina, hvað það er, og er skýrasta dæmið helför Gyðinga. Nasistar ákváðu beinlínis að útrýma Gyðingum. Engin sambærileg herferð hefur verið rekin gegn Palestínumönnum, og hefur þeim raunar fjölgað úr tveimur í fimm milljónir árin 1990 til 2022.

(Fróðleiksmoli í Morgunblaðinu 18. nóvember 2023.)

The City of His Dreams

European Diary: Vienna, November 2021

In the spring of 1985, a few of us who had formed the Hayek Society at Oxford for discussing classical liberal and conservative ideas invited Friedrich von Hayek to dinner at the Ritz in London. At the close of the event, a group of musicians approached our table and asked if we wanted any special tunes to be played. I whispered to them that they should play ‘Vienna, the City of My Dreams’ by Rudolf SieczyÅ„ski. When our guest heard the tune, he beamed and burst out singing the song in German. He was of course only 86 years old at the time. Hayek had been born and brought up in Vienna, the magnificent city in Central Europe which had in 1683 bravely withstood an Ottoman attack and thus probably saved European civilisation. It is one of the great historical cities of Europe, and in the twilight of the Habsburg Empire it must have been a fascinating place in which to live. As Karl Kraus remarked, ‘The streets of Vienna are paved with culture, the streets of other cities with asphalt.’

Coffee in Vienna

Indeed, it is always a pleasure to come to Vienna, as I did in November 2021, going to the opera (depicted above) where the ballet ‘Peer Gynt’ by Edvard Grieg was being performed, dining in the Rote Bar at the Hotel Sacher, and spending an afternoon at Café Landtmann where Carl Menger, Ludwig von Mises and other economists of the renowned Austrian School of Economics used to have heated discussions on economic problems and political challenges. Vienna is justly famous for its coffeehouses. It was once observed that if you walked into one of them in 1903, you might have found Gustav Klimt, Sigmund Freud, Leon Trotsky, and Adolf Hitler sitting there at the same time, sipping coffee and reading newspapers, presumably at different tables.

This time I could also catch up with my Austrian friends, first and foremost Dr. Barbara Kolm, who runs the Austrian Economics Centre and the Hayek Institute as well as being Vice-Chairman of the Board in the Austrian Central Bank. She is certainly one of the world’s most effective and active intellectual entrepreneurs. It was also encouraging to see how Vienna was, like other European cities, recovering from the Covid Epidemic, as if suddenly waking up after a nightmare.

Menger’s Seminal Contribution: Marginal Analysis

In 2021, it was 100 years since Menger, the father of the Austrian School of Economics, passed away, and on that occasion I was a keynote speaker at a conference the Austrian Economics Centre held at the Central Bank. I had devoted a chapter to Menger in my two-volume book on Twenty-Four Conservative-Liberal Thinkers, and in my lecture I pointed out that his contribution to economic analysis was in many ways as seminal as that of Adam Smith. What Menger did was to break economic goods up into units, and then to find how many units of each good could equally satisfy human wants: this was the crucial concept of marginal utility. He treated all goods according to their potentiality for satisfying human wants, not according to their history, for example cost of production.

Georgism and Marxism Irrelevant

This had important political implications because it meant that two political ideas, or rather dogmas, of late nineteenth century became theoretically irrelevant, Georgism and Marxism. Georgism ascribed special significance to land because its supply was more or less fixed, but for Menger it was just another good, to be valued and priced according to its marginal utility. Marxism ascribed special significance to labour because it was supposed to have created all value, whereas Menger regarded it as a good to be priced according to its marginal utility. It was not labour that created value: it was the potentiality of labour inputs or units to satisfy human wants which created the value of those inputs. Menger’s great insight not only disqualified Marxism, but also government redistribution of income such as John Rawls and Thomas Piketty demanded on various grounds. Such redistribution distorted the information provided in an effective labour market on how different units of labour—individual skills, talents, and abilities—could best be employed to satisfy human wants.

Spectres Still Haunting Europe

I observed that nevertheless the spectres of Georgism and Marxism were still haunting Europe. For example, in Iceland there was widespread agitation for a special tax on fish stocks, a resource rent tax, based solely on the false premises of Georgism. More generally, both radical feminism and ecofundamentalism, vocally promoted in universities and the media, had much in common with Marxism. Radical feminists believed that women were exploited by the ‘Patriarchy’, paid wages below their real value (marginal price). But if true, in a competitive economy this would provide profit opportunities for those who wanted to run companies solely staffed by women. Why was this not done? Ecofundamentalists believed that nature was exploited far beyond what was reasonable. But over-exploitation of natural resources could only occur if they were not correctly priced, at the margin, and this was usually because private property rights to them had not been developed. For example, whales and rhinos were endangered and lakes and rivers were polluted if nobody owned those goods. In most cases it was quite feasible to define private property rights to such goods, take them into stewardship, appoint their protectors.

(Column in the online journal The Conservative 12 November 2023.)

Balzac Refutes Piketty

European Diary: Paris, October 2021

In Paris, intellectuals are taken much more seriously than elsewehere. On French television, frequently there are long and animated debates about ideas. Books sometimes become sensations. The French would not say flippantly like the English: What is mind? No matter. What is matter? Never mind. When I was growing up in the 1950s and 1960s, the most famous Parisian intellectuals were the writer couple Jean-Paul Sartre and Simone de Beauvoir. They frequented the Café de Flore on the left bank of the Seine and were deeply hostile to the West, although they both, as existentialists, promoted the self-expression denied to individuals in communist countries. With their passing, the best-known intellectual celebrity of Paris became Michel Foucault who taught at the prestigious Collège de France, denouncing all hierarchies, however useful they might be, and adopting various left-wing causes.  

Why Were They Not Cancelled?

Those three Parisian luminaries were however guided less by reason than passion, or even lust. Sartre and Beauvoir, who were themselves in an open relationship, used their exalted position in intellectual circles to exploit impressionable youngsters. Bianca Bienenfeld was a seventeen-year-old student at a French lycée (grammar school, senior high school) when she was seduced by her teacher Beauvoir who then passed her on to Sartre, while finally they abandoned her, as she describes in a memoir, A Disgraceful Affair. Natalie Sorokin was also seventeen years when she was Beauvoir’s student and seduced by her. Her mother complained to the authorities, and Beauvoir lost her job and had her teaching licence suspended. The young actress Olga Kosakiewicz had affairs with both Sartre and Beauvoir and later said, like Bienenfeld and Sorokin, that the couple left deep emotional scars. When Foucault briefly taught philosophy in Tunisia, he was reputed to have abused very young Arab boys, desperately poor and ready to accept his gifts. His defenders retort angrily that his sexual partners in Tunisia may have been older than alleged, seventeen or eighteen years. In their eyes, that seems to make all the difference. 

Of course, a serious debate with those intellectuals should focus on their ideas and arguments, not on their personal preferences and private lives. Raymond Aron has subjected French leftism to a searching critique in the Opium of the Intellectuals (1957) and History and the Dialectic of Violence (1975). Sir Roger Scruton has perceptively analysed the works of both Sartre and Foucault in his Fools, Frauds, and Firebrands (2017). It is nevertheless a relevant question why Sartre, Beauvoir and Foucault have not been much affected by the present and powerful ‘cancel culture’, despite their abuse of vulnerable teenagers. I can think of at least one answer: They were anti-Establishment intellectuals of the Left, whereas the advocates of ‘cancel culture’ are mainly looking for Establishment targets.

Antipathy Towards the Rich

Today, probably the best-known Parisian luminary is the economist Thomas Piketty, the author of the best seller Capital in the 21st Century, the title being a direct reference to The Capital by Karl Marx. Indeed, the book, a massive tome, can be regarded as an updated version of Marx’ book. Gone is the prophecy about the inevitable collapse of capitalism, but what is kept is the antipathy towards the rich. Piketty repeatedly quotes from yet another famous Parisian, Honoré de Balzac, whose celebrated novel, Père Goriot, takes place in Paris during a few months in 1819–1820. Piketty claims that the story illustrates what kind of society is being developed by 21st century capitalism, with the rich becoming ever richer and wealth clinging obstinately to some families. According to him, the French nineteenth-century novelist ‘depicted the effects of inequality with a verisimilitude and evocative power that no statistical or theoretical analysis can match’. Piketty asserts that ‘inherited wealth comes close to being as decisive at the beginning of the twenty-first century as it was in the age of Balzac’s Père Goriot’ and that this novel reveals ‘the cynicism of a society entirely corrupted by money’.

The Fragility of Wealth

When I read Piketty’s book, I found these assertions surprising: Balzac’s novel could be read quite differently. I persuaded an American foundation, Liberty Fund in Indianapolis, to hold a colloquium in Paris on Balzac and capitalism on 28–31 October 2021. It took place at the Hilton Opera, but the night before it began I went with a friend to one of the best restaurants in Paris, L’Ambroisie in Place des Vosges, a Michelin three-star restaurant. The food was exquisite, very French indeed, and to my quiet amusement the waiters were just as arrogant as the intellectuals on the Left Bank.

In the lively discussion at the colloquium in the next few days, other participants and I pointed out that the chief protagonists of Balzac’s novel are all in thrall to their passions, not to money except as a means. Old Goriot has transferred almost all his wealth to his two ungrateful daughters and lives modestly in a boarding house. One of his daughters desperately needs money to pay the gambling debts of her lover. The other daughter has seen her husband use her dowry on speculation, with no certainty that its value will be maintained or increased. Another resident in the boarding house, Vautrin, turns out to be a runaway prisoner who had assumed responsibility for a crime he had not committed, because he had passionately loved the real perpetrator. Thus, the novel is really about the fragility of capital and the frailty of human beings. They are not corrupted by money but rather by passions which they cannot completely control. Indeed, Balzac refutes Piketty.

(Column in The Conservative, 27 October 2023.)

Vices, Not Crimes

European Diary: Akureyri, October 2021

Most of Iceland’s population live in the southwestern corner of the country, in the capital Reykjavik, and in towns nearby. The only sizeable town elsewhere is Akureyri in the north of the island, a busy port, the site of flourishing fishing firms and a service centre for the adjacent rural regions. It is a nice little place, peaceful and pleasant, although an unkind (and unfair) joke about it is that it is a wonderful place until the locals wake up. The region has been inhabited since the settlement of Iceland in late ninth century. Its first settler was Helgi the Skinny Eyvindsson who was of Swedish and Irish origin. He got his nickname because his parents had for two years left him in the Hebrides with people who so starved him that when the parents picked him up they could hardly recognise him. Helgi the Skinny was a nominal Christian unlike most other Icelandic settlers, but he prayed to the heathen god Thor when at sea or in battle.

Aquinas’ Politics of Imperfection

On 6 October 2021, Akureyri was the venue of an international conference on policing and crime where I gave a paper. My topic was so-called victimless crimes which I argued should not be illegal, although some of them might be vices. In my support I quoted one of the eminent philosophers I discussed in my recent two-volume work, Twenty-Four Conservative-Liberal Thinkers, St. Thomas Aquinas (Summa Theologiae, I, ii, Question 96, Article 2): ‘Now human law is made for the multitude of men, and the greater part of this multitude consists of men who are not perfected in virtue. And so not all the vices from which virtuous men abstain are prohibited by human law. Instead, the only vices prohibited are the more serious ones, which it is possible for the greater part of the multitude to abstain from—especially those vices which are harmful to others and without the prohibition of which human society could not be conserved. For instance, homicide and theft and other vices of this sort are prohibited by human law.’

Prostitution and Pornography

In this connection, I discussed four somewhat disreputable activities, prostitution, pornography, insider trading and tax avoidance. Radical feminists hold that prostitution and pornography are not victimless: on the contrary, they say that both these activities involve the degradation and exploitation of women and should be banned. In my talk, I agreed with them that prostitution was degrading, but not only for women but rather for all who participated in them. Aquinas would have said that they were vices from which virtuous men should abstain. But this did not necessarily mean that they should be prohibited by law, I added. Probably, the consequences of prohibiting prostitution and pornography were worse than the consequences of tolerating and quietly monitoring these activities. I also pointed out that the internet had largely removed the rogue intermediaries who had in the past oppressed prostitutes and porn actresses (and actors). Now sex workers were often in direct contact with their customers online. This at least weakened the argument from exploitation. The limited resources of the police should be spent on suppressing vices harmful to others, as Aquinas had sensibly suggested.

Insider Trading

In my talk, I observed that the widely-held idea that insider trading was harmful was not necessarily plausible. How could you lose money on stock you did not own? It was wrong, I submitted, to conceive of it as a loss for someone if he or she did not make the same profit from trading in stocks as an insider did. Of course the insider information should be obtained legally and not fraudulently, not by breach of trust. Moreover, insider trading arguably increased efficiency in that it hastened the adjustment of the market to new information. It tended to correct situations in which some companies were valued below or above their real worth. I mentioned a famous example Aquinas used about a merchant from Alexandria who arrived in Rhodos after a famine. He brought a lot of desperately needed wheat on his ship, but he knew unlike the islanders that more ships were on their way. Did he have to reveal this ‘inside’ information? Aquinas replied: No. The merchant would be generous if he did so, but he did not act unjustly by not disclosing his educated guess that the supply would soon increase. Generosity might be a moral duty, but it was not, and should not be, a legal duty.

Tax Avoidance

In my talk I emphasised the distinction between tax evasion and tax avoidance. Tax evasion was usually both immoral and illegal, and it was plausible to regard it as indirectly harmful. Thus it was not only a vice, but should also be regarded as a crime, at least according to Aquinas. On the other hand, there was nothing wrong with tax avoidance when it simply meant that you tried not to pay more in taxes than you were obliged to do. It was no more wrong than when you wanted to travel and you searched online for the best airfare. Those who criticised it seemed to assume that the given level of taxation was optimal, which was hardly ever the case. Indeed, the possibility to move from one country to another was an indispensable source of information about the preferences of taxpayers, how much they wanted government to provide of public goods. It was also a necessary constraint on government. Tax avoidance was not only about the mobile rich transferring assets to low-tax countries. It was also about ordinary people responding to a heavy tax burden by switching from work to leisure. The main reason, for example, that the Europeans worked fewer hours than the Americans was that their income was taxed much more. Excessive taxation shrunk the tax base. I concluded that tax avoidance was not only useful, but that it was also a virtue rather than a vice, because it was an instance of thriftiness. Needless to say, some in the audience gasped at my audacity.

(Column in The Conservative 27 October 2023.)

The Right Responses to the Left

European Diary: Lisbon, September 2021

During the Covid Epidemic, I spent fifteen months grounded in Iceland, almost as if under house arrest, although it must be said that the government measures there were much milder than in many other Western countries. It was therefore quite a relief when I could travel again. One of my first trips abroad after the Epidemic was to Portugal. The Brussels research institute New Direction held a ‘Think Tank Central’ in Lisbon 22–25 September 2021 where representatives from many institutes and associations in Europe and North America discussed how to meet challenges from the Left. The think tanks participating included, besides New Direction, the Austrian Economics Center in Vienna, the Danube Institute in Budapest, the Edmund Burke Foundation in the Hague, the Ayn Rand Institute in Santa Ana, California, Americans for Tax Reform in Washington DC, Centre for Policy Studies in London, CEPOS in Copenhagen, the Institute of Economic Affairs in London, Oikos in Stockholm, the Freedom Association in London, Civismo in Madrid and Disenso, also in Madrid.

Four Reasons for Leftist Gains   

In my talk at the conference, I pointed out that the Left has recently made significant gains in the West, especially among young people, despite the total failure of the socialist project. I identified four reasons for this perhaps surprising trend. 1) The common enemy that in the Cold War had united the Right (as a shorthand description of conservatives and classical liberals defending Western civilisation) had suffered an ignominous defeat. Communism had collapsed, not with a bang, but a whimper. 2) With the general acceptance of capitalism the Right has been deprived of its strongest argument against the Left, economic efficiency, brought about by private property and free trade. 3) An ever-larger proportion of voters has become dependent on government for their livelihood, either as public employees or welfare recipients. 4) The Marxists, in various guises, have taken over the media and the schools, producing a new left-wing generation susceptible to wokeism, ecofundamentalism and other delusions.

I insisted however that the Leftist triumph was not inevitable. The Right need not retreat, and some trends may serve to build up anew or strengthen a common cause. 1) China has started a new cold war which might induce the West to unite. 2) Many of the more fanciful spending programmes of the Left will utterly fail, and be seen to fail. 3) In countries where the Right comes into power, it should try to reduce the number of government employees and welfare recipients, not least because the need for welfare benefits has greatly diminished with increased prosperity. 4) Even if the Right should not try to limit the Left’s freedom of speech, it need not spend taxpayers’ money on its propaganda in the media and schools. 5) First and foremost, I said, the Right has to meet the intellectual challenge from the Left with arguments and evidence for the four principles which defines it: private property, free trade, limited government and respect for tradition. In particular, I mentioned the huge global network of active and effective free-market think tanks which have demonstrated time and again that government was more often the problem than the solution.

Thatcher’s Historical Role

I used the opportunity in Lisbon to meet with old friends, including Dr. Barbara Kolm from Austria, Dr. Yaron Brook from the United States, and Robert Tyler from the United Kingdom (now working in Brussels). Some of us had a memorable dinner at the Michelin one-star restaurant Eleven in Lisbon. It serves Mediterranean cuisine, with excellent Portuguese wines, and can be unreservedly recommended. The food is delicious, and it is not as pretentious as many other Michelin restaurants. No less memorable was the insightful speech at the Margaret Thatcher Dinner by John O’Sullivan, one of Thatcher’s assistants as Prime Minister and now Director of the Danube Institute. He emphasised that when she formed her first government in 1979 the triumph of Thatcherism was by no means a foregone conclusion. It took determination and courage to accomplish what she did which was to put the Great back into Britain and to defeat both the Argentinian junta and the extremists in the National Union of Miners. O’Sullivan concluded however that Thatcher’s greatest contribution was that she not only supported ‘vigorous virtues’ like hard work, thriftiness, prudence, diligence, sobriety and self-control, but that she herself incarnated them.

Lisbon in the 11th Century

For me, the trip to Lisbon had a special relevance for an additional reason. In 2005, I had organised in Iceland a meeting of the Mont Pelerin Society, an international academy of scholars and men of affairs trying to define, defend and extend individual freedom. Two of the participants, John Nugeé from England and Gabriel Stein from Sweden, both working as financial analysts in the City of London, became interested in the Icelandic Commonwealth. It had been formed in 930, mainly by Norwegian refugees who did not want to pay taxes to the newly-formed monarchy. The Commonwealth lasted to 1262 and it had no king but the law, as a German chronicler once put it. Nugeé and Stein decided to write a novel about the Icelanders’ yearning for freedom. It was finally published in late 2021, Sailing Free, a lively and well-written work. It is about the two Icelandic brothers Gudmundr and Kari. Gudmundr stays at the family farm and gets entangled in various local affairs, whereas Kari trades abroad and goes all the way to Lisbon where he has some exciting adventures. When Kari returns home, he has to argue for Iceland’s ancient liberties against threats from the Norwegian king, the Roman Church and their Icelandic accomplices. The novel takes place in the 11th century, and here I was in Lisbon, in the 21st century, a thousand years later, still exploring the same questions as Kari the trader—justice, order, and sovereignty. 

(Column in The Conservative 23 October 2023.)

Conservatives and Classical Liberals: Natural Allies

European Diary: The Escorial, June 2021

Finally the Plague was over. My first trip abroad after the Covid Epidemic was in June 2021 to Madrid where I lectured at the Summer University organised jointly by the Brussels research institute New Direction and the Spanish think tank Fundación Civismo. It was held at the Escorial, the palace built near Madrid in 1563–1584 by King Philip II of Spain.

On 14 June two eminent Spanish scholars, Pedro Schwartz, Research Professor of Economics at the CEU San Pablo University in Madrid, and Francisco José Contreras, Professor of Jurisprudence at the University of Sevilla and Member of the Spanish Parliament for Vox, gave interesting presentations on liberalism and conservatism, to which I subsequently responded. I have known Professor Schwartz for more than forty years as a fellow member of the international academy of classical liberal and conservative scholars, the Mont Pelerin Society, founded by Anglo-Austrian economist and philosopher Friedrich von Hayek in 1947. Schwartz, a disciple of Anglo-Austrian philosopher Karl R. Popper at the London School of Economics, was President of the Mont Pelerin Society in 2014–2016. Although in 2021 he was already 86 years, he was as lively and eloquent a speaker as ever. Almost thirty years younger than Schwartz, Contreras also contributed many insights at the Summer School. He belongs to a group of Spanish scholars who are trying to counter attempts by left-wing intellectuals to distort history, not least Spanish history.

The Common Ground

In my first talk, I agreed with Schwartz and Contreras that there is today much common ground between conservatives and classical liberals although some kinds of conservatisms are illiberal whereas some kinds of liberalisms are anti-conservative (for example romantic individualism which replaces the principle of liberty under the law with the demand for unrestricted self-expression). I described the long tradition of what could be called conservative liberalism, tracing it all way back to the thirteenth century, to Icelandic chronicler Snorri Sturluson and Italian philosopher St. Thomas Aquinas. In both thinkers, the twin ideas of government by consent and the right to rebel against tyrants were present, although the conservative-liberal tradition was later more systematically articulated by John Locke, David Hume, and Adam Smith, the recognised authors of classical and conservative liberalism.

Perhaps the main difference between conservative liberalism and other kinds of liberalism can be brought out by contrasting interpretations of four revolutions in Western history. Conservative liberals supported the 1688 British Revolution and the 1776 American Revolution because they were made in order to preserve and extend existing liberties, whereas they opposed the 1789 French Revolution (as it evolved after a promising beginning) and the 1917 Russian Revolution because they were made in order to reconstruct the whole of society by a small political sect and to impose the values held by this sect on the rest. The four leading principles of conservative liberalism, I said, were private property, free trade, limited government, and respect for traditions. I added that in my opinion von Hayek had offered a profound synthesis of conservative insights and classical liberal principles with his theory of inevitable individual ignorance which could only be overcome by the discovery process of a free society. In my second talk, I discussed my recent book in two volumes, Twenty-Four Conservative-Liberal Thinkers.

Reflections in the Escorial

In the Escorial there is a monastery, and the monks kindly took us on a special tour of the immense palace, the world’s largest Renaissance building. We saw the surprisingly modest offices of King Philip II from which he tried, with scant success, to rule the Spanish Empire. He strove hard to keep the rebellious Netherlands under his control, and there is little doubt that Spanish novelist Miguel Cervantes was alluding to him when describing the battle of Don Quixote against what turned out to be windmills, by no coincidence an almost integral part of Dutch landscape. Indeed, Cervantes’ celebrated novel can be read as a parody of the futile and ultimately absurd project of trying to conquer foreign and distant countries, the quixotic battle against windmills.

Walking around in the Escorial, I could not resist reflecting on Spanish history. One lesson from it is the tragic mistake committed by the grandparents of Philip II, Ferdinand and Isabel, when they drove the Jews out of Spain, thereby losing some of their most enterprising subjects. Russian-American thinker Ayn Rand posed a challenging question in her novel Atlas Shrugged: What happens if the most productive elements of society must leave? Spain provides one answer: Stagnation (and then, of course, we are ignoring all the personal tragedies). Another and more uplifting lesson of Spanish history is the relatively smooth transition from dictatorship to democracy in the 1970s, where the monarchy played a crucial role, ensuring continuity and stability. It facilitated this transition that under Francisco Franco Spain was never a completely totalitarian country. It had many more foci or centres of authority than government, besides the royal family perhaps most importantly the Church and the business community. Liberty can sometimes be an unintended consequence of authority being dispersed.

(Column in The Conservative 20 October 2023.)

Madrid, september 2023

Evrópska hugveitan New Direction hélt 20.–22. september 2023 fjölmennt þing í Madrid, þar sem hægri menn báru saman bækur sínar og sóttu hinn árlega kvöldverð í minningu Margrétar Thatchers. Ræðumaður var Robin Harris, sem var ræðuskrifari Thatchers og ævisöguritari.

Ég mælti á þessari ráðstefnu með samstarfi frjálshyggjumanna og íhaldsmanna. Ég leiddi rök að því, að til væri frjálslynd íhaldsstefna, sem sameinaði óvéfengjanleg rök frjálshyggjumanna fyrir viðskiptafrelsi, einkaeignarrétti og valddreifingu og sterka tilfinningu íhaldsmanna fyrir því, að menn yrðu að eiga einhvers staðar heima, vera hluti af stærri heild, öðlast samkennd.

Einn íhaldsmaðurinn á ráðstefnunni minntist á samnýtingarbölið (tragedy of commons), þegar ótakmarkaður aðgangur að takmarkaðri auðlind veldur ofnýtingu hennar. Ég svaraði því til, að hagfræðingar hefðu bent á sjálfsprottna samvinnu til að takmarka slíkan aðgang og útrýma bölinu. Íslenska kvótakerfið væri gott dæmi. Ég benti á, að í Afríku, þar sem sumir stofnar fíla og nashyrninga væru í útrýmingarhættu, mætti með einu pennastriki breyta veiðiþjófum í veiðiverði: með því að skilgreina eignarrétt afrískra þorpsbúa á þessum stofnum og leyfa eðlilega nýtingu þeirra í stað þess að reyna að friða þá.

Ég tók undir það með íhaldsmönnum, að mannlífið væri ekki samsafn óháðra einstaklinga. Allir yrðu að eiga sér einhverjar rætur, bindast öðrum einhverjum böndum, virða arfhelgar venjur og hefðir. Hins vegar hafnaði ég þeirri skoðun, sem heyrðist á þinginu, að siðferðilegar skuldbindingar okkar næðu aðeins að þjóðinni. Þær ná líka til alls mannkyns, þótt slíkar skuldbindingar séu eðli málsins samkvæmt mjög takmarkaðar og felist aðallega í að láta aðra í friði.

(Fróðleiksmoli í Morgunblaðinu 11. nóvember 2023.)