Alvise Sembenico

The principle was Liberalism

Economic January 03, 2020

The reasons why the liberalism as we intended it now cannot work for the future.

The general statement of the majority of the liberalism and free market in general is that it allowed us to reach the point we, as developed countries, are. The claim it is the main force drove us to a better condition is the free market and the competitive market. The competition between companies and business, according to them, pushed us to research better production solutions, increasing the availability of primary resources such as food.

This is where we have to give a better overview of the history, what happened, why and what allowed us to be in the current situation. We must be aware the it is impossible to find just one cause, but multiple ones, generally related to each other.

The economy throughout all the middle age and later during modern age was based on the soil and the food production, generally grain. Let’s think about what happened during the French crisis, namely the new asset release by the French crown what based, instead of the pure value of the gold, on the soils. Basically, people used to exchange official papers, each of them related to a portion of the soil. Furthermore, one of the causes of the French revolution was the low availability of the food, consequently an arises of the prices of the bread.

Even coming more to recent events, not before the late 20th century, big part of the population was farmers.

Why are you talking about farmers while you talking about liberalism. Here it comes, don’t worry, just try to follow me.

The biggest breakthrough in science that allowed us to not to worry about the food, to allocate more resources to the secondary and lately to the third sector did not come from a liberalism policy but simply from the pure inventive of the people, in the attempt to improve their own situation.

You can think about the fertilizer which where invented by Fritz Haber at the beginning of the 20th century during his academic career. Or simply think about computer and internet which were fostered by the army and the researchers group, not a company at all.

Therefore, we are not in this situation thanks to free market, but we are here thanks to inventions and science. In the end all the modern science is based on Newton thinking, that wasn’t for sure hired by Microsoft or Google. Moreover, the internet revolution was due to the army and university research, not due to a private company. And it could not be otherwise, because research is damn expensive and generally does not pay off in the short term.

So why does liberalism acknowledge for this? Well, in this case the answer is trivial, because it was implemented in the most important countries when the scientific revolution hit.

So why is no liberalism a good solution for modern problems? Because in the liberal model, simply nobody gives a shit about anything that is just not revenue. One could argue that, in the climate crisis, people will tend to buy electric car in order to help to solve the problem, therefore, ultimately the driver of the liberal model is the people will. Another time wrong. First of all, the education is too low, even in the developed countries to make people really understand what is best or not to do in a specific situation. Looking at the Brexit, there is no consensus among economists if it better to leave or stay in the Europe, how can you give the decision power to people who are not even aware of what Europe is.

And second, we are in a point where creating something new that brings new values, such as a new green technology, is damn hard (if still possible), but most important is extremely expensive, costs that will be turned toward the final consumer, that in most of the cases, especially in economic crisis such as in the last 10 years, will not be willing to pay more for the same service just because it is “green”.

To conclude, we have seen why, according to me, the liberalism is not the magic tale we keep telling ourselves that brought us to the good living condition we are now, not even considering the mental conditions. Of course it is way more complex than this and not even a book could cover all the information. I want to point out thought that although I believe liberalism is not the main cause of the modern society, it does not mean that it couldn't be a viable model for the future, even thought with some deep rephrasing. The main issue with it is the scalability and the world start realizing only in the last few years, maybe too late. Just image if all the emerging countries would run the same system of us, simply not doable for the limited resources, as simple as that.

“Spend 90% of your time posing the right questions and the remaining 10% giving the answers.”
Alvise Sembenico