“What is needed is a fresh attempt to articulate a radical liberal vision that recovers not the details but the original essence of classical liberalism: democracy and markets.”
– Don Lavoie, Democracy, Markets, and the Legal Order: Notes on the Nature of Politics in a Radically Liberal Society
Liberalism is democratic
Writing in 1993, the academic libertarian Don Lavoie made a suggestion few classical liberals have taken up: reconsider our skepticism about democracy in light of the insight provided by those who had lived without political and economic liberty.
Newly liberated Eastern Europeans weren’t excited about democratic political rights because they were naïve about liberal democracy. Rather, Eastern Europeans’ experience without political rights helped them grasp something essential about liberalism that classical liberals have too often overlooked.
Lavoie suggested that the misconception that markets and democracy are in fundamental conflict stems from an incomplete liberalism that takes political rights for granted. Instead, Lavoie proposed the idea of “democracy as openness”, or liberalism as a “political culture” that uses the dispersed knowledge and concerns of all citizens when deciding what ends to pursue and how to pursue them.
Openness is required, said Lavoie, in politics as well as markets. “If we redefine markets and democracy in terms of the more fundamental value of openness, we may find that the radicalization of these principles poses a challenge to the traditional interpretation of liberalism.“
Democracy produces the political peace needed to support pluralism and liberal institutions, and inclusive democracy is the political system most likely to protect diverse individuals.
Classical liberals tend to cast doubt on the value of democratic participation. Skeptics argue that voters are irrational, ignorant, or generally incapable of voting well. (And besides, they’ll say, voting isn’t effective.) These concerns mirror the concerns of market skeptics, and they should be rejected for similar reasons.
The benefits of democracy
To assess how well democracy works and how much enthusiasm it warrants, we have to know what democracy is for.
A popular critique of democracy is that it fails to produce good laws and policies, or that it fails to achieve specific goals. But criticizing democracies because of what they yield is like criticizing markets for what they produce and how they produce it. What counts as good laws and policies is a fundamental question for politics, not one we can assume away to judge a political system.
Liberals may broadly agree about what counts as good political goals—legal protection of liberty and political equality, the rule of law, legal limits on the power and action of the executive and police, protection of freedom of speech and religion, and institutions to support an open commercial society—but not everyone in a democracy is a liberal. Even the most basic political values are contested and cannot be taken for granted under democratic systems (though they may be protected institutionally by constitutions and norms rather than common legislation). We can’t declare democracy a failure because it doesn’t automatically implement our preferred policies.
The main benefit of democracy is this: it facilitates peaceful transfers of power and resolutions to social disagreements, even in diverse populations.
Liberals should be committed to democracy because the peace it produces is a prerequisite for other liberal goals. With this in mind, liberals should consider who should be included politically and what citizens must do to participate usefully.
People will accept losing elections when they believe the democratic system is legitimate. Functional democracy depends on political buy-in. Securing this buy-in is a social problem that democracy is uniquely suited to solve—so long as that democracy is open and inclusive.
Perceived legitimacy is subjective and dispersed in the minds of citizens. Because we don’t know—and can’t know—how each person perceives a legitimate political system, the best road to buy-in is openness.
Lavoie presented a positive case for “openness and publicness”, observing that democratic institutions, like markets, can make use of distributed knowledge.
Distributed knowledge made useful through market prices can coordinate the economic plans of people competing for resources. Distributed knowledge made useful through democratic institutions balances voters’ interests, concerns, and demands to provide governance structures that people will use to resolve political disagreements peacefully. This is true even when voters are “irrational” or “ignorant”, just as it is true that markets can coordinate activity when market actors are not fully rational agents with perfect information.
Political culture
Lavoie was also concerned about citizens’ belief in the political system and its legitimacy because political beliefs limit what is politically possible. Democratic peace can prevail if people are committed to democracy. It will be undermined if people don’t buy into the system.
Everything depends here on what is considered acceptable social behavior, that is, on the constraints imposed by a particular political culture. Where slavery is considered offensive, those who attempt to practice it are easily overwhelmed by the horror of the public. Where it is thought by the general public to be justifiable, no amount of constitutional design will prevent it. Where taxes are accepted as morally defensible, they will be deployed; where they are equated with slavery, they will be impossible to collect. The feasibility of slavery or taxation does not fundamentally depend on the (concentrated) opinion of the designated representatives of the public, but on the (distributed) opinions of the public itself. (Lavoie, pp.116–117, emphasis mine)
Lavoie believed that radically liberal anarchism is possible because a sufficiently open political system could persuade people that radical self-governance is possible—and successfully persuading them would make it so.
Lavoie imagined a democracy of people contesting their rights and responsibilities, both politically and through market action, every day on an ongoing basis. He did not prescribe particular political institutions. Institutions emerge from the political culture. They can’t be designed a priori, abstracted from the individuals who form them.
Lavoie offered a welcome corrective to classical liberal skepticism of democracy and to the belief that democracy can, and ought to be, segregated from market activity. In every market exchange—whether we buy, sell, or boycott—we communicate what we value. If we could strip market transactions of their political content, we would lose important insight into what people care about and believe in. People in markets are people, too. They do not become apolitical when acting in a market any more than they become selfless when acting through government.
In liberal democracies, political information is also expressed through votes. Lavoie worried that elections reduce politics to a belief in a single “democratic will” that ignores or suppresses dissenting points of view and dispersed knowledge. But the meaning of an electoral victory is also a product of the political culture. A political loss does not have to mean someone is on the wrong side of the democratic will. It can mean merely that one has lost.
Put bluntly: democratic change, that is, a change in public opinion and political culture, is the only game in town for any liberal who wants to change the size or scope of government.
When liberals conceive of democracy in terms of its ability to balance individual concerns as required to yield political peace, the importance of Lavoie’s “openness” becomes more obvious. Concerns can’t be balanced if they’re not incorporated.
It’s to the incorporation of as many concerns as possible that I turn in Part 2.
Read more:
Don Lavoie on the Continuing Relevance of the Knowledge Problem by Cory Massimino
The Great Antidote Podcast: Peter Boettke on Don Lavoie and Central Planning
More Great Antidote: David Boaz on Liberalism and the Continuing Progress of the Enlightenment
