Cato Online Forum

Between Authoritarianism and Human Capital

“What are the biggest challenges that free societies face in the coming years? What is the most important reason for optimism about the free society? What is the most important but still unappreciated idea that lies just ahead?”

That was the prompt given to me, so let me try my best guesses at each of these questions.

The biggest challenge facing free societies today is our lack of belief in them. I am seeing too many self-inflicted wounds, most of all the recent democratically derived decisions in the United Kingdom and the United States. To make this more troubling yet, many other societies seem to be evolving in a less free direction, autocracies included. A list of societies moving in the wrong, less-free direction would include Russia, China, Turkey, much of the Middle East, and much of eastern Europe, in addition to some key countries in the West.

After the collapse of the Iron Curtain in the early 1990s, the West seemed to lose much of its interest in the ideas of liberty. The notion of individual liberty as a kind of personal self-fulfillment is robust, but liberty as an inspiring political project seems to be on the wane. It’s interesting to see that the countries that are doing fine, such as Canada, are those which in their cultural DNA never pushed that hard on libertarian ideals in the first place (though I would argue that Canada is implicitly fairly libertarian).

What about Europe, the traditional heartland of Western civilization? I see stagnation and frustration. The main struggle at the moment is to keep the institutions of the European Union in place. I see the EU, with its program of free trade and free migration, as more pro-liberty than not. Right now the main question is a defensive one of whether these gains can be kept in place. That is quite different from the attitudes of ten or so years ago, when the thrust was on how far and wide these liberties might be expanded.

Here’s another way to put my concern. The percentage of global GDP which is held in relatively non-free countries, such as China, has been rising relative to the share of global GDP held in the freer countries. I suspect we are underrating the noxious effects of that development.

Just think back to the 1930s, and some other decades, and consider how many Westerners and Western intellectuals were infatuated with communism and also Stalinism, even at times with fascism, at least before WWII. I would say that if a big idea is around, and supported by some major governments, some number of people will be attracted to that idea, even if we don’t understand the mechanisms here very well. Nonetheless that seems to be an unfortunate sociological truth. Today that big idea isn’t so much communism as it is various forms of authoritarianism. Authoritarians have more presence on the global stage today than has been the case for a while. Furthermore, a lot of the authoritarian states are still in their “rising” forms, rather than their decadent forms, as was the case for Soviet communism in say the 1980s. For instance, while predictions about the future of China are difficult to make, the Chinese Communist Party hardly seems to be on the verge of collapse, and thus its authoritarianism may not be discredited by current events anytime soon. On the global stage, Putin’s Russia has won some recent successes as of late, including in Crimea and also by interfering with democratic elections in the West, apparently with impunity.

To put it simply, global authoritarianism is probably poisoning our political climate more than many people realize.

OK, so what is the most important reason for optimism about a free society?

I think it is talent and human capital. Today there is more mobilized talent than ever before, by a wide order of magnitude. More people are protected from the ravages of malnutrition and severe childhood diseases, more people get educated, and more learn from the internet. Furthermore, there is more opportunity for that talent. Say it is 1970 and you are a potential math or science genius born in India. What is the chance you can bring your talents to fruition? It’s actually fairly problematic, if only because you might die of malaria or diarrhea, or maybe you never come into contact with a teacher who appreciates your abilities and sets you on the right path. These days, your chance is much better.

Since most societal wealth is held in the form of human beings and their talents, this is truly a significant factor. And even in the authoritarian societies mentioned above, human talent is being mobilized like never before, most of all in China, but in most other countries too. The most notable exception to this truth is probably North Korea, but that is a small country, and few if any people think it represents the wave of the global future.

Given all that, what is the important but underappreciated idea that lies before us?

Here I would cite the notion, as I outline in my recent book The Complacent Class, that history is often cyclical rather than linear. We cannot take progress for granted, and very often earlier ideas come back to haunt us, as is indeed now the case with authoritarianism. So right now we are seeing some waves of reversal of earlier gains.

I fear that libertarians have their own version of the Progressive myth. Progressives often believe that ever-growing tolerance and health insurance coverage are the future, if only bad Republicans could be defeated in political battle. It turns out that the “default settings” on complex societies are much tougher to manage than that, and now around the world left-wing and progressive political forces are in retreat, perhaps permanently so. Libertarians, in turn, toyed with the idea that competition from trade and globalization would make liberty-based gains increasingly hard to reverse. A libertarian society might not be guaranteed, but we could push and claw in that direction, knowing that a certain base standard of liberty was pretty sure to command public loyalty and institutional support. That framework also has been looking worse since about 2000; the year here can be debated, but today’s political problems are obvious.

The world has done a big reset lately on the proper presumptions and expectations for our future. A lot more is up for grabs than we had thought, and many of the dangers come from a very different direction than many people had expected, namely from a kind of old-style authoritarianism, souped up by the clever use of social media.

So we’re going to see a kind of intellectual war, and possibly war in other, more violent forms too. That war, using that word in the broadest sense possible, will be between today’s amazing accumulated stock of human capital — and the emotional momentum behind authoritarianism, which is encouraged by the political fraying that stems from underlying fears of disruption.

Right now, I’d still put my money on the positive side of talent and human capital. But in recent times, I can’t say I’ve seen the odds moving in my favor.

In closing, let me say I am delighted to have had significant contact with the Cato Institute over the years. I first attended a Cato seminar — the very first such seminar in fact — in Wake Forest, when I was fifteen years old. It opened a great number of intellectual doors for me.

In honor of the fortieth anniversary of our founding, the Cato Institute has organized a special online forum on the future of the free society. Join the conversation on Twitter with #Cato40, and follow the hashtag for updates.

Tyler Cowen holds the Holbert C. Harris chair of economics at George Mason University and is the general director of the Mercatus Center. His most recent book is The Complacent Class: The Self-Defeating Quest for the American Dream. Cowen writes with Alex Tabarrok at the popular libertarian economics blog Marginal Revolution. He is also the co-creator, with Tabarrok, of the online educational platform Marginal Revolution University.