Research and Policy Brief: Preparing for the battle of ideas - 17 October 2013.

Address by John Kane-Berman, chief executive of the South African Institute of Race Relations (IRR), to a "Freedom Seminar" held in conjunction with the Friedrich Naumann Foundation for Freedom, Johannesburg, 17 October 2013.

Let me congratulate the Friedrich Naumann Foundation for Freedom on the 50th anniversary of its international activities, and on all its work in South Africa and elsewhere. Friedrich Naumann died 10 years before the South African Institute of Race Relations (the IRR) was established. But the foundation named in his honour has helped us, and many others, to promote the civic education he believed in, especially with "ideas on liberty", as the foundation puts it. Back in 1906, Friedrich Naumann wrote that the idea of liberalism had lost so much of its clarity and attraction that it had to be "recreated". That is what this seminar will try to do. Armed with deeper insight into freedom, we will be better able to advance it.      

My brief is to talk about political freedom. Others*will speak about economic freedom and free trade. The distinctions are useful if one doesn't want the first speaker to hold the floor all afternoon. But they are false. Where does political freedom end, and economic freedom begin? If I may speak freely, or worship freely, why may I not trade freely, or work freely? If there can be a free market in ideas, why not in goods and services, including labour?

Why not indeed?! The point is well put by the Naumann Foundation's Liberal Institute. It rejects dividing freedom into "good", such as freedom of expression, and "bad", such as economic freedom. "Liberals," it says, "believe that freedom cannot be divided".

Well, unfortunately, this is a minority viewpoint. Many people who defend political freedom believe that economic freedom should be restricted. University campuses are full of academics who bang on about academic freedom, but are happy to see curbs on economic freedom. So are the editorial offices of newspapers. They rightly squeal when the freedom of the press is threatened. However, many of their occupants favour limitations on economic freedoms - including racial quotas, price and wage controls, local content requirements, and import tariffs, to name but some.   

Indeed, the false distinction between political and economic freedom runs right through the industrial democracies. Many of those who want to limit economic freedom proclaim themselves as liberals. In fact, if you oppose affirmative action legislation, you run the risk of being labelled as illiberal. Some liberals have got themselves into a right pickle: they opposed the National Party's racial policies but support those imposed by the African National Congress (ANC).

This is why those who regard political and economic freedom as indivisible need to define themselves as classical liberals, or libertarians, to distinguish themselves from liberals - in the US, but also in South Africa - who would curtail economic freedom.

South Africa can still claim to be an industrial democracy, though perhaps only in a Ja-Nee kind of way. "Nee" because voters who put opposition parties into power in certain provinces are rewarded by threats to make those provinces ungovernable. "Ja-Nee" probably also applies to the industrial bit as well, for at the present rate of government intrusion upon economic freedom, we may not be an industrial, or even a mining, economy for very much longer.

The title of today's seminar is "freedom and the arguments that support it". There is a vast literature on this. However, it seems obvious that freedom is a right, or property, that the individual is born with. Adam and Eve were created - or born - with free will. They made a wrong choice and were banished. Freedom, in other words, is in the nature of man as a sentient being with free will and the ability to imagine, reason, and create. These are God-given faculties. So other men are not entitled to take them away. Also, God created individuals, not collectives, so freedom attaches to the individual. Collectives are created by man, who can then surrender some of his freedoms to the collective. If he is wise, he will do so via a democratic process that will enable him to change those to whom he has surrendered control. And he will remember this: while the purpose of government is to protect rights and provide public goods, governments top the rankings of practitioners of organised crime.   

The idea of freedom as a God-given right attaching to the individual is critically important. It means that rights and freedoms predate governments. They also predate the law. God gave the law to Moses, to enable him to control the unruly Jews en route from tyranny in Egypt to the Promised Land. With the God-given, or innate, rights of the individual comes something else: the equality of man. The humble and meek are exalted, and the mighty are put down from their seats. Jesus says the first shall be last, and the last shall be first.  All are equal in the eyes of God. Western legal systems incorporate the same idea: whether you are an infant born in the humblest shack, or a rich Nobel prize-winning scientist, you are equal before the law. When South Africans express outrage at the failure of the prosecuting authorities to arraign the president before the courts, they are proclaiming the idea that no man should be above the law.  

Much of all this was captured on 4th July 1776 in the American Declaration of Independence in words no doubt familiar to you. "We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights,… [and] that, to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed…" Nor were these sentiments thought up in a vacuum: they came from a long line of political philosophers whose ideas were carried across the Atlantic.  

About 170 years before the Americans issued their declaration, Shakespeare put these fine words into Hamlet's mouth: "What a piece of work is a man! How noble in reason! How infinite in faculty! In form, in moving, how express and admirable! In action, how like an angel! In apprehension, how like a god! The beauty of the world! The paragon of animals!"

Why do I belabour all this? Simply to stress that, for liberals, the presumption is the liberty of the individual: he should be free to do as he pleases, provided he does not undermine the ability of others to enjoy the same rights and freedoms. There is a further presumption: a man is innocent until proved guilty. In the classic formulation of AV Dicey back in 1885, "No man is punishable, or can lawfully be made to suffer in body or goods, except for a distinct breach of the law, established in the ordinary courts of the land".

But there is another reason for my quote of Hamlet. He describes the properties of the individual. Usually when one thinks of property today one thinks of physical possessions. Thanks partly to the influence of Marxism, fixed property is sometimes seen as theft.  But property has a much wider meaning. One of the prayers still used in some churches refers to God as, the "same Lord whose property is always to have mercy". And if you look in Chambers dictionary, "property" is defined as that which is proper to any person or thing; a quality that is always present; a characteristic; that which is one's own; the condition of being one's own; the right of possessing; and - lastly - a piece of land owned by somebody. Some of you no doubt remember from school chemistry lessons that you were supposed to memorise the properties of various gases, or elements, or acids.

One of the challenges liberals face is to liberate the notion of property from the often narrow concept that prevails today. In the first place, physical property is an attribute of the poor as well as of the rich. Let us not forget Mohamed Bouazizi, who sparked off the revolutions in Tunisia and elsewhere early in 2011. He did so by setting himself alight in desperation on 17th December the previous year, when police seized the apples, and other fruit and vegetables, he was selling from his barrow. Evidently he had no permit, perhaps he didn't pay the necessary bribe to get one. 

When the property rights of mining companies or other large businesses are violated, they can go to court. But unless they can persuade a non-governmental organisation (NGO) or public- interest law firm to help them, small people cannot do this. I suspect that hundreds of hawkers and shack dwellers suffer daily from violations of their property rights.  

But property also goes beyond the physical, as the Chambers definition testifies.

In the same year as the Americans adopted their declaration of independence, Adam Smith wrote the following in The Wealth of Nations: "The property which every man has is his own labour, as it is the original foundation of all other property, so it is the most sacred and inviolable.

"The patrimony of a poor man lies in the strengths and dexterity of his hands; and to hinder him from employing this strength and dexterity in what manner he thinks proper without injury to his neighbour, is a plain violation of this most sacred property. It is a manifest encroachment upon the just liberty both of the workman, and of those who might be disposed to employ him."

Someone else will be focusing on economic freedom this afternoon, and I do not wish to trespass on his terrain. But what flows logically from Adam Smith is that without money or education, the poor have no asset or property to exploit other than their own willingness to work. The denial to any man of the opportunity to earn a living, and to better himself by his own efforts, is one of the worst violations of human rights in the world. That this violation is widely practised by governments of both Left and Right does not alter this. Fortunately, more and more countries are being put under pressure by their own financial crises to liberalise their labour markets, and so unlock their own human, and productive, potential.

South Africa is one of the biggest violators, thanks to our restrictive labour law and in particular our collective bargaining system. This testifies to the truth of something else Adam Smith warned about: "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." This is an accurate description of how cartels work in various industries. Our competition authorities, however, relentlessly pursue price-fixing business cartels, while ignoring union-employer wage-fixing cartels. Moreover, though our government is opposed to price-fixing by business, it is assuming more and more price-fixing powers for itself.

Freedom of association is a political right, enshrined in section 18 of our Constitution. What if this right is exercised in such a way that it hurts others? This is what our labour law does, highlighting my argument that we shouldn't draw distinctions between political and economic rights and freedoms.

Another attribute of man identified by Adam Smith, is that he is a natural trader. Most of us started this in prep school, trading marbles for Dinky toys, or comic books for spinning tops, or the peanut butter sandwich your mother made you for a couple of smokes behind the bicycle shed. Whereas animals do not trade with one another, as Smith points out, people do. Trading flows from the division of labour. A makes something that B wants and they trade. Swapping actual goods may be cumbersome. Enter money. A sells something to B for money and then uses that money to buy something else from C. They agree on a price.

Free trade, also a topic of a later paper this afternoon, means that I'm entitled to buy whatever I want, from whomsoever I want, wherever he may be, at an agreed price. When governments interfere with this right, they take the side of producers against that of consumers. Often this is because producers have more resources, and can capture control of the relevant regulatory body. Like bargaining councils, some of our local chicken producers fit Adam Smith's definition of people who conspire against the public to raise prices. The government rewards them by slapping tariffs on chicken imports. Income is thereby redistributed, from millions of chicken consumers to a handful of chicken producers. It's a pity South Africa does not have a consumer movement as a counterweight to trade unions and producer lobbies. Perhaps all those who have been campaigning against e-tolling can now also turn their attention to the poultry protectionists. Presumably, in any event, we will now see an increase in chicken smuggled in from Brazil. Who can blame anyone that buys it?   

Producer and other lobbies use the political right of freedom of association, and they exercise the right of free speech. But the results, as we have seen, can be problematic. Washington DC is not only the seat of the federal government, but also where thousands of lobbies are located. Because American senators and congressmen are not subject to strict party discipline, they are vulnerable to capture by special-interest groups. A handful of rich cotton farmers in Texas and a few other states are able year in and year out to gain subsidies and tariff protection. According to an entertaining book entitled The Travels of a T-shirt in the Global Economy, the cost of each American job thus saved is $175 000. 

PJ O'Rourke wrote a hilarious book about all this entitled Parliament of Whores. This was, he said - I quote him - "an effort by a lone humourist to explain the entire US government, what the fuck it does all day, and why it costs so godammed much money". 

We should not interfere with the freedoms of professional lobbyists, even though their influence may result in a kind of minority rule: laws and practices that favour a few at the expense of the many. A vigilant press, and transparency in campaign financing, may help limit the impact of lobbies. But there is only one way to really cut them down to size, and that is to cut government down to size. If three quarters of the regulatory agencies in Washington were shut down, three quarters of the lobbyists could go home. The decisions previously made by regulators could then be left to markets - which are more objective, free of bias, possessed of more information than any bureaucrat, and able quickly to reverse wrong decisions. Moreover, unlike regulators, markets cannot be bribed. Nor can they be subordinated to the requirements of cadres deployed to capture all centres of power in the name of the National Democratic Revolution.

Free markets are also a way to reduce the influence of capitalists. Don't get me wrong. Capitalism -  the system whereby people take the risk of investing their own property, in the expectation of generating profits for themselves - is the logical outcome of political and economic freedom. It's the source of prosperity, growth, and wealth. But, just as trade unions are prone to eliminating competition, so are capitalists. They set up local cartels against local competition, and demand trade barriers against foreign competitors. Remember my quote from Adam Smith about people who get together to raise prices. The sparkling American economist Thomas Sowell wrote that, when he taught economics, he used to offer an A to every student who could find a favourable reference to businessmen in The Wealth of Nations, a book which runs to 1 000 pages. None ever did.

Adam Smith, incidentally, studied at the University of Glasgow and at Oxford. The former institution enjoyed vigorous debate. However, the lassitude of Oxford academics, who didn't spend much time debating or teaching, prompted Smith to suggest that university professors should be paid according to the number of students they attracted. Now you know why there are probably more Marxists than free marketeers at Oxford!        

So far I've argued that the distinction between economic and political freedom is artificial. Also, that freedoms are natural rights attaching to individuals that the state, as a general rule, should neither limit, nor take away. The same applies to the fruits of my labours. My labour is my property and the fruits thereof are also my property.

Some years ago Nigel Lawson, one of Margaret Thatcher's chancellors of the exchequer, had the following to say: "Much writing on social choice and welfare economics assumes that all income belongs in the first instance to the state, and is then allocated by the state to individuals. Hence the Labour [Party's] fury at the tax cuts rates in my 1988 budget… The Tory belief should be the opposite one: that income or property belongs to the people who earn it, or who legitimately acquired it; and that a case has to be made for taking it away. This is the abiding rift that still remains between Left and Right." 

Lawson was spot on. Judging by Ed Miliband's remarks at the most recent conference of the British Labour Party, he will, if he wins the next election, try to roll back parts of the Thatcher revolution. This is a reminder that the battle for economic freedom is never finally won. In South Africa, it has to be fought all over again. The retreat from apartheid, which began in the late 1960s, involved both economic and political liberalisation. Those who believed that the collapse of the Berlin Wall in 1989 meant the end of socialist control need to think again. Many people around the world think that the recent Great Recession has done for the Western free-market capitalist model. But the crisis now confronting Europe and the US is a crisis of the welfare state. This crisis is only just beginning. According to the Cato Institute, the unfunded liabilities of the welfare systems in the Eurozone and the US amount respectively to €100 trillion and $100 trillion.

This poses various problems for the liberal democratic system.  We have already seen the rise of populist and xenophobic parties in Europe. These may prosper as governments try to reduce their deficits by cutting back on welfare commitments and public spending. Is it actually possible for governments to do this and still win elections? Said the Greek prime minister a couple of years ago: "We all know what has to be done to reduce our deficit, but we don't know how to be re-elected when we have done it."

There may be a longer term threat to the democratic systems in Euroland. This arises from the surrender of more and more powers by sovereign states to supranational institutions in Brussels that are more remote and much less accountable.    

As more powers are handed up to regulatory bodies, including supranational regulatory bodies, so the powers of accountable parliaments are undermined. Bureaucracy replaces democracy. The effectiveness with which one can wield one's political freedoms - and even the franchise - is eroded. The British prime minister, David Cameron, complained last year that a quarter of his time was spent ensuring compliance with directives from Brussels.     

How safe are political freedoms and democracy in South Africa? Thanks to our government's attempts to curtail press freedom, many previously complacent constituencies, among them journalists, foreign embassies, and NGOs, have woken up. We can be reasonably confident  that attempts to violate democratic rights will run into resistance. But vigilance will still be required. If the ruling party finds itself losing power over more provinces next year, it will no doubt launch "ungovernability" and destabilisation campaigns there too.    

If vigilance to protect political freedom and democracy is needed, a greater challenge confronts us in advancing economic freedom. There are only a handful of think tanks in this country that favour economic liberalisation, and, as far as I'm aware, only one business organisation, AfriSake. There is not much of a constituency for economic freedom in Parliament, or the media, or among NGOs either. The National Democratic Revolution, to which the ANC and its communist and trade union allies are committed, is opposed to it. The National Development Plan betrays little sign of even being aware of it.

So, ladies and gentlemen, a great and exciting battle of ideas lies ahead of us. It is, of course, a global battle. The Institute will be in its very forefront in South Africa. What makes it particularly challenging - and potentially more rewarding - is that it has to be waged not only against the insatiable appetites of governments, but also against political parties, international organisations, newspapers, lobbies of various kinds, and all the others who want government to act get even more power than it has taken from us already.   


* The other speakers on these topics were Russell Lamberti, Neil Emerick, and Ivo Vegter. Anthea Jeffery spoke on the rule of law.