Why liberalism is withering on the vine

Source: Business Standard 


Liberal ideals of liberty, equality and fraternity cannot be optimised, except in small communities.

  • Liberalism is associated with mainly two popular theories. The first one is given by Adam Smith and focuses on economic liberalism. 
  • While the other one is drawn from the liberals of the French Revolution and focuses on social liberalism.
Assumption made by two theories:
  • The economic liberalism theory focuses on allowing an individual to work as per his/her self-interest. It calls for minimum state intervention in order to allow an individual to live his/her life as per own will. This freedom breeds liberalism.
  • The social liberalism theory focuses on inculcating the virtues of Liberty, Equality and Fraternity. 
    • These ideals were built on the assumption that all institutions of the past (family, tribe, religion, caste, and the nationalistic state) were oppressive to the individual.
    • It called for maximising individual liberties in order to allow an individual to develop to its full potential.
Why did the two theories fail to attain liberalism?
  • The first theory failed to understand that Self-interest is certainly an important driver of growth, but without the restraints imposed by a recognition of the interests of the larger community, economic freedom will be in peril.
  • The two theories supported development of a big and powerful state, which is in direct contradiction with liberalism.
  • After the 2008 global financial crash, economists from both the Left and Right sides of the ideological spectrum were supporting more state intervention.
  • After this scenario, the only hope to save liberalism was to develop strong laws and institutions against the tyranny of the state. 
  • However, no law written by anyone and anywhere is devoid of influence from vested interests. This resulted in control of few over others and undermined liberalism.
  • Liberalism has been attained only in small or unusually monocultural societies like Japan, Israel, Denmark, South Korea etc. 
    • However, their continuing success depends on their being monocultural, which seems a bleak possibility considering the influx of immigrants into these societies.
  • Hence, between individual and state, there has to be a stronger role for the community for constraining rights with community-monitored responsibility. No true free society can be built solely on the basis of individual rights.
  • Raghuram Rajan in his book, The Third Pillar, says that without the third pillar of strong community bonds and capacity for action, one cannot help the poor neighbourhoods, riddled with crime and violence.
    • The powerful state can be restricted only if we empower communities to do part of the work of the state. And by community he doesn’t mean only those based on caste, religion, gender, tribe or linguistic affinity. 
    • Any group can constitute itself into a community, and work for its common and general interests, including providing for social security. 
    • In many European countries, voluntary church taxes can be deducted from the payroll with tax benefits. The Muslim zakat is another such idea of a voluntary tax.

Getting to Denmark requires the effective community size for autonomous self-regulation and social security to be small. Liberalism and universalism are not going to get us there because their stated goal is the destruction of inherited community identities.

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