Defending Liberalism

This week the Room for Discussion interviewed professor Deirdre McCloskey

Roberta Depuis-Devlin

What is liberalism and how does one defend liberalism when faced with modern-day problems? That was the theme of the latest Room for Discussion interview with professor Deirdre McCloskey. When professor McCloskey stepped on stage, she jokingly remarked that the audience would have to wait a little longer than usual because she is getting a little older. But once seated she showed that her mind was as quick and sharp as ever.

The first question professor McCloskey was asked was what political conviction she holds. She explained that she is a liberal but that this in its true definition could also be seen as libertarian or classical liberal. It does not matter to Deirdre McCloskey what you label her as long as it follows her philosophy. She believes that we, humans, do best, both spiritually and mentally, as long as none of us are slaves in any sense of the word. She goes on to explain how liberalism is under attack from both the political left and the right. Deirdre demonstrates this by saying: “My right-wing friends go nuts whenever I say that Marx was the greatest social scientist in the 19th century, without compare. But then I say that he got everything wrong, and then my friends on the left start protesting. This is why I don’t have any friends.”

The interviewers continue the conversation by asking her how she came to hold these values. Professor McClosky explained that she was an anarchist at first due to a book she read in a government library. Next she became a Marxist, then during her studies in economics she became a Keynesian. After that she became a believer in the Chicago School. Nowadays, professor Deirdre McCloskey practices Humanomics. This is the practice of economics while including humanity as a part of the study.

The interviewers’ first attack on liberalism was the curious case of China. China is experiencing a massive growth of the economy. Millions of people are being raised out of poverty at an immense rate. So why is it that this Chinese system of pseudo-communism is equal or even better than liberalism? In her reply, professor McClosky first compares what China is doing to the human spirit to a quote said by O’Brien in George Orwell’s 1984: “If you want a vision of the future imagine a human face with a boot stamping on it, forever.” The Chinese model, according to Deirdre, is a silly idea. The only part of the Chinese system that work are the liberal parts: people are allowed to decide for the most part where they work, or whether they want to start an enterprise or not. The centralized economic and political supervision only worked in China under Mao. Professor McCloskey explained that in 1978 the Chinese government officials read Milton Friedman and changed their model: they gave power to the counties. The counties in this new system had to compete with one another for economic well-being.

Next up Deirdre McClosky also explains that the greatest story about raising people out of poverty is that of North-Western Europe, not China. This was due to liberalization and free trade policies, which started in The Netherlands and then spread to England, France etc. Unlike what most people believe – that European countries got rich from colonialism – Deirdre claims that if you look at quantitative data from this time this becomes implausible. What she meant by this is that a lot of the wealth that was made from the colonies was invested back in the colonies themselves.

How worried is professor McCloskey about the growing wealth inequality in the world? The answer: not at all. Deirdre McCloskey believes that the claims of increases in equality are false. Besides, inequality is not necessarily negative. It all depends according to McCloskey on how this inequality originated. Modern society is not unequal, in both opportunity and in wealth, if you were to compare it to for example France during the 17th century. What we should be focusing on is the fact that the income of the poorest people in the world has increased by 3000%. Also, the claim of stagnant wages is false. This is, according to Deirdre, due to a mismeasurement in income. The increase in the quality of modern-day goods is not correctly accounted for when measuring real wages.

Next came the question whether the government should intervene in the economy due to the creation of AI? Deirdre McCloskey does not see any reason for this: “Machines won’t rule the world.” Professor McCloskey does not believe that there will be technological unemployment. She gives as an example video stores in the United States. These stores were closed due to technological innovation. Which meant that the 130,000 employees who were working in these stores suddenly became unemployed. However, that does not mean that all these people are now on the street. People adapt to technological changes.

The last subject of the interview was that of climate change – does an external threat such as climate change warrant government intervention. According to professor McCloskey this depends. She has been in favor of the government imposing a carbon tax for over thirty years. Deirdre explains that in her eyes, and in the eyes of most of her colleagues this would be the most effective way to deal with the problem. She’s not in favor of government subsidies for alternative energies. In her eyes, nuclear is the most effective, and clean power source. However, she wants it to compete naturally with other energy sources.

Professor McCloskey is convicted that liberalism is the best way to help everyone. According to her the freer the individual, the market, and the society, the better off humanity will be.