Democracy, markets, and liberalism

The case for openness and freedom supports all three

Author

Janet Bufton
January 03, 2025

I'm excited to share a new piece at Econlog for weekend reading. It’s the first part of a two-part argument for inclusive democracy. The argument comes from and is aimed at the values held by market/classical/libertarian liberals but is hopefully useful to anyone arguing for democracy.

tl;dr: The arguments for democracy mirror the arguments for markets, and the arguments against democracy can undermine support for markets. The real argument is for openness/liberalism. But I hope you’ll check out the whole piece:

Democracy for Liberal People: Part 1 - Econlib

“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 […]

www.econlib.org/democracy-for-liberal-people-part-1

(Part 2 is coming soon. But if you haven’t read my review of Democracy for Busy People (also at Econlog), it provides some background.)

A few thoughts on market liberalism and democracy

Market liberals aren't necessarily opposed to democracy, but it’s hard to complain about our reputation as democratic skeptics. Classical liberal and libertarian branded critiques of democracy have gotten a lot of attention. While there have been high-profile defenders of democracy within the classical liberal and libertarian world, their defence of democracy is not usually their most well-known work, nor as high-profile as others’ critiques.

In my piece, I directly address the most prominent classical liberal and libertarian critiques of democracy, starting with and working from Don Lavoie’s observation in 1993 that markets and democracy both depend on the liberal political value of openness1.

In addition to direct critiques of democracy, the conservative-libertarian-fusionist intellectual world maintained an overarching posture that takes political rights for granted—treating them as good but a product of economic freedom, if not irrelevant. Illustrative of this was for how long Hong Kong was considered the freest country in the world because of its economic freedom2, despite its lack of secure political rights.

The Fraser/Cato freedom indexes started tracking “human freedom” separately from economic freedom in 2013 (with a first report in 2015). Despite the implied acknowledgement of the relevance of non-economic political values, I remember the assumption that economic freedom leads to human freedom persisting. (Fraser still features the Economic Freedom of the World Index most prominently on its homepage.)

I remember what felt like a tipping point in 2019 when Tyler Cowen pointed to Hong Kong as an example of the limits of what economic freedom can achieve. Also in 2019, Jacob Levy (who has been arguing for the importance of political freedom for as long as I’ve known him) argued in his first appearance on The Curious Task podcast that market liberals who insist on the robust connection between the rise in individual liberty and flourishing that came with the rise of markets need to recognize that it also came with the rise of democracy:

“Start with the condition of the world as we find it. Classical liberals are opportunistically fond of appeals to this kind of thing—they’ll say, ‘Well look, it turns out that no socialist society has ever managed to deliver wealth and growth over time for various definitions of socialism’; ‘Look, it was only with the advent of markets that we got the Industrial Revolution and the takeoff in economic wellbeing’—and, for certain stipulated definitions of all those things, I think those are true statements.

“It is also a true statement that the market capitalist commercial societies where that takeoff happened were always democratic for their era and democratizing. And none of them managed it until they reached a substantial threshold of democratic government. They had to rest on a broadly participatory base, at least as among elites, and then gradually embarked on the process of spreading out that franchise base.”

It’s only become more urgent since then that those fighting for human freedom and flourishing become more skilled and committed defenders of democracy and political rights. I hope to be as loud a proponent of democracy as a market liberal as I can be.

Happy new year, everybody.

Recent recs:
notes

1 You might break down “openness” usefully into core liberal emphases on cosmopolitanism/internationalism and equality, and that might be worth expanding on later.

2 Hong Kong is still on top! Hong Kong, a fave of Uncle Milty, has always been ranked at the top of the Economic Freedom of the World index, going back to data from 1970.