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Transforming Toward A Free Society

English Pages, 12. 9. 1996

Ladies and gentlemen, dear friends,

This is my fourth consecutive participation in the General Meeting of our society and we are talking again and again about „Transforming Toward a Free Society“. I hope we will continue talking about it because such a goal can never be fully achieved and, especially, cannot be achieved forever. We all know that it is a permanent task for all of us to fight for a free society regardless of whether we live in a country which is more or less free now or which is not, or in a country which experienced a non-free epizode in the past or which did not. I am convinced that marginal productivity of our efforts will be positive wherever we live. I am sure we all know this.

Speaking from the perspective of a former communist country it seems to me that - paradoxically - our task may be somewhat easier or, to put it differently, that our task may be more rewarding. The reason is that the marginal improvement in our case is bigger.

I wish to start today’s remarks by reminding you of my address given at our General Meeting in Cannes (published in CATO Journal, Vol. 14, No. 2, Fall 1994). After having re-read it recently, I am afraid I have nothing important or revolutionary to add to it. It may demonstrate either my lack of inspiration or my feeling that at least for practical purposes everything worth-saying has been already said.

Two years ago, I tried to call your attention to the fact that the transformation - or in another terminology the systemic change - is an evolutionary process which is composed of a very complicated mixture of planned and unplanned movements, of intended and unintended events, a process which is based on a rather delicate mixture of intentions and spontaneity - to use the famous Hayekian term. This interpretation of events - however simple and trivial - proved to be very useful for both the theoretical discussions and the practical policy-making. It was an approach disliked only by those who had immodest ambitions of social engineering and who - after the collapse of communism - tried to take use of a unique opportunity to construct such a complex phenomenon as a new social system, and to fine-tune its emergence. The members of the Mont-Pelerin Society have been - for five decades already - warning against all kinds of left-wing social constructivism (which was, after all, one of our strongest messages), but I am afraid that a few years ago, even some of us tended to make a similar mistake. We should know that capitalism - defined as a market economy based on private property and minimal government intervention and a constitutional democracy based on the rule of law and an unconstrained competition of political parties - cannot be „introduced“. We should know that it must evolve, grow, gain strength and mature in the way described by some of our distinguished members, notably Hayek, not to speak about our grand-grandfathers like Adam Smith.

When discussing transformation from communism (not from an interventionist welfare state), I suggest to start with a non-trivial idea that the communist system collapsed, that it was not defeated. It collapsed because it was in an advanced stage of decomposition, because it gradually lost its two strongest constitutive elements - the fear on one hand and the faith on the other. In its final days, the communist system became both soft and unconvincing and such state of affairs was not sufficient for safeguarding its further continuation. It is an irony of history that communism - sort of - melted down which is something what some of our brave colleagues in the post-communist world do not like to be reminded of. Part of their aura would be lost and that is the reason why they try to contest such an interpretation of events. But I am convinced that it is correct.

We are being confronted with an idea that the collapse of communism created a vacuum. At first sight this seems plausible, but it is not. What remained was not a vacuum. We inherited weak and, therefore, not efficient markets and a weak and not efficient democracy. Both the economic and political mechanisms were shallow, the political and economic agents (players of the game) were not properly defined and established, they were new, weak and fragile and the outcomes of their interplay were, therefore, less efficient than in a full-grown free society as you know it from the countries which have never experienced communism and where the spontaneous, evolutionary (Hayekian) process of institution-building and agent-formation has never been interrupted. In spite of that there was no need (not to speak about the possibility) to fill it with a ready made, imported, from outside delivered system. We had to move at the margin and to make incremental changes. No master-minding of the evolution of a free society was possible.

On the other hand, I agree with those who make a point that it was not possible to wait for a sufficient degree of market efficiency. The quick abolition of old institutions was a sine qua non for success because it was the only way how to minimize the non-negligible transition costs. At the beginning the weak markets were not more efficient than the command economy which existed before but this should not become an argument against early liberalization and deregulation measures. The consistency in pursuing a free market course was crucial and the government had to help by introducing some pro-market, pro-competition measures, but strictly in the Euckenien, ordo-liberal way. The absence of such positive policy would be costly and therefore counter-productive. We had to privatize (instead of passively waiting for the emergence of new private ventures), to liberalize and to deregulate as fast as possible.

The relative weakness or strength of institutions of a newly formed free society is only one aspect of the whole issue. What about the people? Are they ready for such rapid change? Does free society presuppose - in addition to the creation of its basic institutions - some set of values or moral standards that would properly anchor the society? Do the people need an interim period of „schooling“? Is such schooling realizable? Are there teachers for such procedure? Are the people willing to be educated? My answer to these and similar questions is simple. The people are always ready and, therefore, they do not need a special education. What they need is a free space for their voluntary activities, the elimination of unnecessary controls and prohibitions of all kinds.

The title of this morning’s session is „Transforming Toward a Free Society“. What kind of free society do we have in mind? Should we transform ourselves toward a theoretical model of free society or toward a real free society as we see it in many forms in Western Europe and Northern America? Theoretically, the answer is very simple and straightforward. The closer we get to the ideal case, the better. In reality, it is more complicated. Whenever I try at home to avoid introducing an illiberal legislation or to repeal the existing one, I am reminded of the same law in one Western country or another, or - recently more and more often - I am being told that what I do not want to accept is the recent recommendation or instruction of the European Commission. Our „submissiveness“ in this respect (and now I do not pretend to deny that my country is still in a rudimentary stage of its evolution as compared to some „old“ democracies) can become - paradoxically - a constraint on our spontaneous evolution toward a „free society“.

After the collapse of „hard“ communism, we rejected reformed communism, we avoided romantic nationalism (with its very negative systemic consequences), we overcame utopian attempts to forget everything and to start building a brave new world based on aprioristic moralistic and elitist ambitions (of those who are better than the rest of us), but we should not lose with statist, interventionist, paternalistic social-democratism which we see in so many free societies to the west of us.

We know that it is our task to attack the expanding state which was - and still is - a dominant tendency of the 20th century, of the century of socialisms with the variety of confusing adjectives. The majority of intellectuals and social scientists of this century considered this tendency to be almost an iron law of history. We have to demonstrate that it is possible to make a return to the liberal social order.

The further east one travels, the more problematic may be the prospects for a rapid transition. But travelling to the West is not without problems either. The best direction is towards the Mont-Pelerin world but geographically to find the way is not easy.

Václav Klaus, General Meeting of Mont-Pelerin Society, Vienna, 12 September 1996


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