The ancient complaint dressed in new clothes

The Washington Examiner reports that 'post-liberalism' is trending — a school of political thought that has grown impatient with the liberal settlement of open markets, limited government, and neutral institutions, and wishes to replace them with a state that deliberately shapes economic life toward national, communal, or moral ends. I confess the description strikes me less as a novelty than as a resurrection. Every generation produces its cohort of thinkers who observe that free exchange produces inequality, dislocation, and a certain coarsening of manners, and who conclude that what is needed is a wise sovereign to direct the whole. The mercantilist writers of my own century made precisely this argument — and I spent a considerable portion of The Wealth of Nations explaining why they were mistaken.

What the post-liberals rightly see

I will not be uncharitable. The critics of liberal markets are not wrong about everything. The division of labor — the great engine of productivity I described in the pin factory — has a shadow side: it narrows the worker, dulls the mind that performs the same operation ten thousand times, and can, if left entirely to itself, produce a laboring population incapable of forming a judgment on the public interest. I wrote that the sovereign has a duty to provide basic education precisely because the market, left alone, will not supply it. Nor is it mistaken to observe that merchants and manufacturers, when they combine, will use whatever political influence is available to them to restrict competition, raise prices, and entrench their own advantage. My chapter on the wages of labor is blunt on this point: the interests of the dealer are never quite the same as the interests of the public.

Where the remedy goes wrong

The error is in concluding that the cure for captured institutions is more powerful institutions — that because merchants will seek to manipulate a weak state, we should give them a strong one to manipulate instead. This is precisely the logic of the East India Company's charter, which I regarded as among the most expensive mistakes in the history of British commerce. A state empowered to direct industry in the national interest does not, in practice, direct it in the national interest; it directs it in the interest of whichever coalition of producers has most successfully captured the directing body. The consumer — always the last consideration in mercantile politics — pays the tax in the form of higher prices, narrower choices, and the quiet theft of opportunity that protectionism always represents. I would ask the post-liberals: when your strong state decides which industries to favor and which to let decline, whose voice is loudest in that decision? It will not be the voice of the workman or the consumer. It will be the voice of the established manufacturer with the resources to lobby.

The institutional question they avoid

What troubles me most about the movement, as the Washington Examiner describes it, is that it tends to diagnose the failure of institutions without asking why those institutions failed — and the answer, almost invariably, is that they were captured by the very commercial interests they were meant to discipline. The invisible hand is a metaphor for a limited claim: that under conditions of genuine competition, enforced by law, the self-interest of the merchant will tend, as if by an invisible hand, to serve the public interest. It is not a claim that any market, under any conditions, automatically serves the public. It is a conditional proposition that requires, for its fulfillment, honest courts, enforceable contracts, free entry and exit, and a public authority willing to prevent monopoly. Post-liberalism offers a stronger state, but says remarkably little about how that state is to be kept honest.

What the liberal settlement actually requires

If the post-liberals are serious, they should direct their energies not to empowering the state to pick winners but to repairing the institutions that make markets honest: independent courts, vigorous anti-monopoly law, genuinely universal education, and public investment in the infrastructure — roads, ports, and I should now add the digital infrastructure of modern communication — without which the gains of exchange cannot be widely shared. These are not concessions to statism; they are the preconditions of the market I always advocated. The liberal settlement does not require a passive sovereign. It requires a just one. That is a harder thing to build than a powerful one, but it is the only thing that actually works.