Will Economic Freedom Thrive in the 21st Century?

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Michael Taube

As the twentieth century draws to a close, people are beginning to reflect on the issues they hold dear to their hearts. For those who favour competitive markets, the trick will be to keep economic freedom on the right track well into the twenty-first century. Our society can be fickle and easily swayed by different movements and ideologies.

Consider the massive political and economic movement known as the Third Way. It has been successful for moderate left-wing politicians such as British Prime Minister Tony Blair, German Chancellor Gerhard Schroeder, and US President Bill Clinton. As noted by Anthony Giddens, the current Director of the London School of Economics and Blair confidante, pure socialism failed because it underestimated the innovative and creative potential of capitalism. While admitting that the classic social democracy of the old left was "noble in intent," it led to destructive policies such as social engineering and the modern welfare state, which, according to Giddens, "is essentially undemocratic, depending as it does upon a top-down distribution of benefits."1

The Third Way is seen as a way of transcending both classic social democracy and neoliberalism. The theory is not new (the term was used by right-wing parties in the 1920s) but still, it is a very radical change from the past. The Third Way calls for a positive response to globalization to unite the state, the free market, and civil society; the abandonment of Soviet-style collectivist ideology; and the need to promote equality, freedom, cosmopolitan pluralism, and yes, even philosophic conservatism (in the classic sense).

Sure, the Giddens model is quite a leap from the old left rhetoric. But it is hardly a capitalist triumph, either. There are limitations to the Third Way, such as the need to preserve the welfare state, the call for "social justice," and the need to merge large amounts of compassion with moderate doses of capitalism. This is not what free marketers of any political stripe want or need.

However, if the Third Way does tell us anything, it is that the free market and capitalism are predominant in the Western world now.

Despite this, our quest to keep capitalism viable into the new millennium will not be simple. Fortunately, the number of anti-capitalist rivals has diminished considerably. Various totalitarian political and economic movements, including communism and fascism, have failed to maintain their grip on societies. A combination of the political climate, the recession in the 1930s, and the strong personalities of dictators like Adolf Hitler and Benito Mussolini led to the acceptance of "fascism’s magic solutions and communism’s Utopian ones."2 But a destructive war and a sincere look at the weaknesses of social engineering brought down these forces. While capitalism is not entirely perfect, it is still the best system our society has ever wrought.

Also important to the rise in popularity of economic freedom has been proof that private enterprise and individualism are far better policies than public interference and big government. One of the great weaknesses of socialism is an inherent desire to use collectivist ideology, a type of planned economy "in which the entrepreneur working for profit is replaced by a central planning body."3 Following this ideology, certain countries discouraged people from working hard by returning their money to the state in the form of high taxes, heavy bureaucratic controls, wasteful social programs, and fewer creative outlets for younger generations.

However, people are finally starting to grasp what fiscal management actually entails for our society. Take the example of universal health care in Canada, long touted as a sacred, untouchable social service. Canadians want the right to proper health care, but they want it delivered efficiently and cost-effectively. Until recently, the economic strategy for health care had been to throw money at it. Today, we are considering free market examples, such as two-tier health care, user fees, health care providers who offer packages to travel to the States for diagnostic procedures, and, more recently, the suggestion of tax-free medical savings accounts.4

These discussions do not mean that we have convinced the federal government, various provincial governments, and average Canadians of the need to revise our health care system. What these discussions do mean is that free market initiatives are helping to destroy the myths surrounding universal health care. People deserve to have some kind of health care, but, people also deserve to have a choice in the health care marketplace, and choice is a prime component of economic freedom.

With hard work and a careful thought, our faith in the free market and capitalism will allow it to rightly remain as a mighty force in the new millennium.

Notes

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Last Modified: Wednesday June 9, 1999.