Liberty Alone

Tim Worstall at the ASI on John Lewis and markets in ownership models.

He points out that free markets are not capitalism, capitalism is a system of ownership. John Lewis is an example of a cooperative, a different form of ownership and this example is doing very well.

He echos my sentiments, people should be free to live as they like. If you want to work for a capitalist corporation then fine, if you’d prefer to own your own business, best of luck to you. If you want to be part of a cooperative, great, go ahead. If you want to live in a yurt in Wales, good for you if that’s what you want.
We should let people try all this, lets see what works best. I’m sure for different people the answer will be different and in different markets the most successful will probably vary.

Of course, the problem is that we don’t have much of a free market in this. The government, through law and regulation, biases the system towards large corporations. Through legal instruments such as limited liability and through regulation with prohibitively high compliance costs for small businesses, the market is skewed towards big corporations. Perhaps the natural market position would be the same, but we cannot know for sure until we try.
So regulation must be removed, subsidy and tariffs repealed and the legal landscape must be made level. Then we can have competition and even more choice.

In the meantime, well done to John Lewis. They have obviously developed a successful business model. In this instance cooperative ownership is obviously successful, long may it continue to be so.

Very few people have been able to explain the principles of liberalism and free market economics as clearly as the late Milton Friedman. Here he explains how the world works and why (free market) capitalism’s mechanisms harness greed and produce better outcomes than any alternative:

I’m no fan of Al Gore. He exemplifies much of what I dislike about the so-called liberals in the US. He’s an arrogant, wealthy, statist who wants to expand state power and remove power from individuals.
He’s promoted the real threat of global warming with gross exaggeration and alarmism, in a manner which does not help the debate surrounding the issue and possible solutions.

However, he has said one thing which I fully agree with:

For whatever reason, the business world rewards a long-term perspective more than the political world does.

Of course, being a politician, he fails to identify the reasons - politics is about short term results, its about doing well in the polls, keeping your constituents happy and about winning that next election. Even for the Liberal Democrats who have little prospect of winning a majority in the Commons, the goals are very short term.
Business however is concerned less with public opinion (although brand protection leads to some short term efforts) and more with creating returns for investors. That means creating a stable company and looking for new ways to make profit in the long term.
That is why business is more likely to come up with methods to reduce oil consumption and to make money from recycling than government. Its why private holdings preserve resources much better than the state or public ownership.

So, full marks to Al Gore for recognising a simple fact which is beyond the grasp of most statists, but he needs to follow the reasoning through.

I remember an Oxfam advert which went along the lines of ‘Give a man a fish and he can feed himself for a day. Teach a man to fish and he can feed himself for life’.

That obviously makes sense, so long as fish stocks hold up of course.

But lets take it a bit further. Why should we be teaching everyone to fish? Why not let a man work in a Nike (or whoever) ’sweat shop’. Then he can earn money which he can use to buy fish, or meat, or vegetables, or clothing, all produced by people far more skilled than he in producing such things.
Of course, as the man works, he learns more skills, he becomes more valuable, he will get paid more, or a competing ’sweat shop’ hires him for a better paid job. He will have disposable income, he won’t need his children to work to make a living, instead they can go to school, they can then in turn earn even higher wages.

For women, the situation is even better. They can be hired to work now, they can earn their own wages. This gives them more financial freedom and makes them less dependent upon a husband or family. If they’re abused they can more easily leave and survive, they will become more educated over time, through work and school, leading to greater demand for equality - and that equality being given.

Higher income means even more diversification, mobile phones can become common, the Internet may arrive. More knowledge about the rest of the world and more ideas. Its a virtuous circle.

Of course, none of this will happen without property rights and the rule of law. Why risk investing in a country if the government might turn around and confiscate your assets on a whim? How are ordinary people expected to make investments in their own life if those investments may be confiscated or take years of paperwork and bribes to secure?

So lets not teach a man to fish, lets let a man choose where to work and give him opportunities. Self sufficiency means poverty, its through trade and the division of labour that we get rich.

The Guardian reports that Israel’s oldest kibbutz, Degania, has voted, 85% in favour, to abolish the traditional method of contributing all your earnings into a community fund and to replace it with a capitalist model whereby you keep your earnings but pay for services and pay taxes to contribute to those who are in need.

I don’t see this as a tragedy, or a victory. That is because of the almost unique nature of the kibbutz movement. They are purely voluntary. You don’t have to live there, you can opt to leave. That is the fundamental difference between the collectivist state and the kibbutz, the latter is voluntary for all concerned. So long as the kibbutz was founded legally (ie not on stolen land), which I believe is the case for most, if not all, and there’s no coercion involved in the decision to live there then liberals should celebrate them as people choosing to live as they wish, harming no one else.

The decision to abandon the common fund was taken democratically, but was part of a trend, electricity was already privately purchased (to cut costs- when you pay directly you use a resource more carefully) and communal meals had declined. This change however need not remove the sense of community which is central to the kibbutz, that can and probably will remain.