Will you be in Washington, D.C. on Wednesday July 15? I will be interviewing Francis Fukuyama about how liberalism should respond to the postliberal threat. Find out more and get your free ticket here! —Yascha
Deirdre Nansen McCloskey, sometimes described as “the conscience of economics,” holds the Isaiah Berlin Chair in Liberal Thought at the Cato Institute in Washington, D.C.
In this week’s conversation, Yascha Mounk and Deirdre McCloskey discuss why liberalism drives economic growth, how the gradual erosion of inherited hierarchy unleashed centuries of innovation, and what liberals should think about the trans debate.
We’re delighted to feature this conversation as part of our series on Liberal Virtues and Values.
That liberalism is under threat is now a cliché—yet this has done nothing to stem the global resurgence of illiberalism. Part of the problem is that liberalism is often considered too “thin” to win over the allegiance of citizens, and that liberals are too afraid of speaking in moral terms. Liberalism’s opponents, by contrast, speak to people’s passions and deepest moral sentiments.
This series, made possible with the generous support of the John Templeton Foundation, aims to change that narrative. In podcast conversations and long-form pieces, we feature content making the case that liberalism has its own distinctive set of virtues and values that are capable not only of responding to the dissatisfaction that drives authoritarianism, but also of restoring faith in liberalism as an ideology worth believing in—and defending—on its own terms.
This transcript has been condensed and lightly edited for clarity.
Yascha Mounk: I’m really excited to talk to you in part just because of the span of your work, and I really want to discuss your case for liberalism, but in a way that starts with The Industrial Revolution and the enormous economic progress that we’ve made over the last centuries. There is a big debate in history, in economics, about what actually caused that unprecedented economic liftoff that started some 250 years ago. You have a slightly surprising point of view on this, that ideas are actually more central to the origin of economic growth than most economists think. Tell us perhaps what the conventional story is and why you disagree with it.
Deirdre McCloskey: Well, there are two conventional stories, from the left and the right. From the left, the story is exploitation—the exploitation of the English working class, and then the exploitation of imperialism and slavery and so forth. Exploitation is supposed to result in surplus value, which then is used to invest, and investment then makes for the modern world, makes for increasing income. That’s on the left. On the right, it ends up being the same story without the exploitation. Virtuous capitalists save more, according to the conventional story, and that results in capital accumulation, just as they say on the left, and that leads to the modern world. So it’s essentially capital investment accumulation that’s supposed to have caused our enrichment.
But that doesn’t make a lot of sense. From a historical point of view, we’ve always invested. Humans always invest. We invest in paddy fields going up mountainsides, and irrigation works, and Roman roads, and then indeed even in the Middle Ages, the peasants had to save a quite high percentage of their crop for seed. So they were investing. There’s nothing new about investment. That’s the historical problem.
And the economic problem is that sheer capital accumulation—sheer piling up of buildings, machines, or indeed university educations—comes very quickly, economists have always known, to diminishing returns. If you had two cars, I guess that’d be nice. Three would be junk. Four would be a burden. Diminishing returns is very strong. So those don’t work, and I’ve written extensively on why they all don’t work. Coal is one explanation. Well, that doesn’t work either, and they all don’t work. So why? Why did we get rich? How did we get rich?
Mounk: Interesting. So this traditional story is that over time people were able to save and accumulate these things, and that then allowed them to reinvest, and so on. Okay. We’ll come back to a steelman version of that perhaps later, but if you’ve ruled that out, if that isn’t working, then what’s the alternative view that can make sense of this growth?
McCloskey: The alternative view that I favor is the creation, in the eighteenth century in northwestern Europe—first in Holland, then in Britain, and most particularly in Scotland, and then more or less accidentally at the same time in the English colonies in North America—of the idea of liberalism in a certain way, a certain ideology. This is ideology, Marx’s word, and I think it’s a very useful one. Ideology changed in this corner of the world, especially in the late eighteenth century. The idea of equality of permission became much stronger than it had been in the past. Hierarchy, in other words, was in question.
We still have hierarchies, but they’re often hierarchies of a sort that we admire and want more of. Inventors make money, good singers make money, and good football players make money. But in earlier times, hierarchy was inherited and had nothing to do with progress. The result was, I claim, and I show that innovation enormously increased. Ordinary people were allowed to have a go. This is an English commonplace, and having a go made the poor even innovative. So it’s through innovation, not through sheer accumulation, that we became rich.
Then the question is why innovation? My claim is this change in ideology. Once that genie was out of the bottle, other people in the world became interested in this matter. When you look at protests—the ones in Iran last year, or the ones a few years ago against Putin, or the Arab Spring, or Tiananmen Square—always what they’re asking for is this equality of permission. They’re not asking for special subsidies or government programs to help this person or that person. So it’s this ideological change that made the modern world.
Mounk: So let me get at the heart of why it is that hierarchy is such an impediment to economic growth, and the specific ways in which hierarchy went away. There are two kinds of challenges to this. One is to say, well, look, you can have hierarchy and have economic growth—the king still wants to be richer, even if most of the benefits of economic activity flow to a few people. So why is it that, before these new ideas came into being, the specific kind of hierarchy that existed really was such an impediment to innovation that it basically stopped economic growth for thousands of years?
And then, of course, one challenge that people are going to have is to say, but you look at 1850, and there still are very steep hierarchies between men and women, between one social class and another, between people in Britain and people in the colonies. So in what sense is the difference in the nature of a hierarchy between 1750 and 1850, or between 1650 and 1900, if you prefer, so qualitatively important—but gives you just enough non-hierarchy that this kind of innovation can start to occur in a way it didn’t earlier?
McCloskey: It’s slow. It’s gradually expanding. The first great victory of this ideology is abolishing slavery in the British Empire in 1833, and then eventually in the United States. Then the women say, well, why not us? And that takes a long time to come to fruition. And the queers—in northern Europe there’s a hundred-year reign of terror against homosexuals, especially male homosexuals. And then there’s, in the United States, this horrible continuation of slavery and so-called Jim Crow. Eventually, in the 1960s it starts to fall, but it’s reviving right now as we speak. So yes, there are these hierarchical, racist, classist, imperialist, in general radical conservative forces that keep trying to make it go away.
But as Tocqueville pointed out in the 1830s, after his visit to the United States, the great modern movement is equality—that everyone’s supposed to be the same, and there’s not to be, at least, inherited hierarchy. Now, of course, we all have bosses—at least I do, and lots of people do—but we’re free to leave if we want. We might have to leave for a much poorer job, but on the other hand, we’re free to leave, whereas a slave isn’t. A wife, under English common law, could own no property except her dress and her jewelry. That was it. So it’s slow.
As far as the earlier hierarchy, as you point out, why wasn’t it in the interest of the ruling class to allow people to innovate? Because they could themselves take the rents, say on land, that would be increased by this. To some degree, the British ruling class in the eighteenth century realized this, and indeed the aristocrats owned mines and built canals and were involved in trade, as many comparable aristocracies were forbidden to do. In France, for example, if you engaged in trade as an aristocrat, you lost your aristocratic standing, which was extremely valuable because in France it amounted to not having to pay any taxes. So you’re right, there’s a kind of stupidity that’s necessary in the minds of the ruling class, but it doesn’t see that abolishing slavery, allowing women to be free, allowing ordinary people to innovate is probably good for them too.
Now, one more point on this. The fact of the United States was very important, I think, in all this. It was said frequently by commentators in the nineteenth century, and not only American commentators, that this strange claim—which of course wasn’t true, but was slowly being implemented—that all people are treated equally, was a powerful solvent, so to speak, of hierarchy in Europe. And it worked eventually.
So it’s not accumulation, and I think many economists now are understanding this, and economic historians too. Then it’s gotta be ideas. Now, my friend Joel Mokyr, a great economic historian, thinks it’s science. He and I agree that ideas are where the action is, but his idea is about science, and I think it’s certainly true that right now a lot of innovations in the world come from science. But I don’t think Joel’s correct that in the nineteenth century very many of them did.
Mounk: So Joel Mokyr, of course, is one of the winners of a Nobel Prize this past year, 2025. Tell us a little bit more about the difference of opinion you have. In his view, it is really the beginning of the application of the scientific method and scientific progress which allows us to develop a steam engine and do all the other kinds of things that are at the heart of that material explosion that you start to get in the factories of Manchester and so on, in England of the late eighteenth and then the nineteenth century.
Now, you’re somewhat sympathetic to this idea, but you actually put broader emphasis on things like the different valuation of the bourgeoisie and bourgeois values—that once upon a time to be a merchant is shameful, whereas to be a priest is to have an honorable profession, and over time, in one part of the world, that starts to change. Suddenly, to be a merchant, an inventor, a tinkerer who comes up with things that increase material wealth, comes to be seen in a much more positive way. That is actually what presumably is also necessary for people to become scientists and these other things. So tell us a little bit where exactly the difference of opinion lies, and why it is that we should buy your ideas-based story rather than Mokyr’s ideas-based story.
McCloskey: An illustration of it is the case of the Dutch. Joel was in fact raised in Holland before he moved to Israel, and he would agree that in the sixteenth and seventeenth century this high valuation of merchants and the ending of kings—Spanish kings, most particularly—allowed the Dutch to invent many things, both commercially and scientifically, in the 1600s especially. So even from his own country, there’s an example of what I call the bourgeois revaluation, causing science to progress.
But the problem with his argument is that most of the inventions that matter to the economy have nothing to do with science in the eighteenth and nineteenth century. For example, the steam engine—yes, but it’s not entirely a scientific innovation. People had to have a notion that air was heavy, and you could call that science, but the subsequent history of the steam engine shows that it wasn’t terribly important until well into the nineteenth century. John Clapham, a great economic historian of a much earlier generation, pointed out that by the middle of the nineteenth century, most manufacturing wasn’t using steam—it was still handicraft or water power. If you look across the Atlantic, water power was crucial in New England manufacturing through most of the nineteenth century. It was important in England too, England and Scotland, in the eighteenth and into the nineteenth century.
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And then there are all these other innovations, which Joel and I agree are important, like concrete—reinforced concrete in particular—which has nothing to do with science. Road building has nothing to do with science. Canals are made much easier to maintain and to build with the invention of the steam engine, the steam shovel, but most of the canals in Britain were dug by hand. And so it goes.
Mounk: To what extent is this a disagreement about what exactly we mean by science? What I mean by that is that obviously there’s kind of capital-S science, where you’re very self-consciously applying some form of a scientific method and you’re publishing your findings in a peer-reviewed journal and so on. And then there’s a broader sense in which the invention of concrete truly stands at the tail end of a process in which people come to have a much more empirical mindset, and come to learn how to engage in experiments. There may not be a PhD scientist involved—I don’t know the history of the invention of concrete, I take it you do know it quite well—it may not be that this is happening at a fancy university by somebody publishing about it, but rather an entrepreneur playing around on the building side. But they’re still, in some broadest sense, applying something like the lessons from a few centuries of scientific inquiry to how they are advancing with technology.
McCloskey: Yeah, I understand, and since the main triumph of the scientific revolution was the discovery of the forces for planetary motion, it’s clear that high science is not practical for quite a long time. But I think it’s wrong—and I would argue in detail with Joel about this—to think that the empirical mindset is something new. People have always been trying out stuff. They just do it all the time. French cuisine, which comes from Italy originally in the court, but then the real source of French cuisine is thousands and thousands of housewives, and then men, chefs, trying out things. I think it’s a calumny on our ancestors to say that the scientific method is new. I don’t think it is.
Mounk: This relates to one of my favorite moments from grad school, when a grad student challenged my professor by saying that something was just—that means and reasoning was just a Western construct. He’s got the wonderful story of an anthropologist, whose name I forget, who was studying the customs of some tribe, I believe in the Highlands of Ghana—I may be wrong about the exact location. After many months of effort, he’s sufficiently gained the confidence of the tribe, and they’re taking him to see the rain man. He goes up to the rain man—it’s a perilous journey across the desert, and he’s hiking up this mountain—and finally the rain man says, “Well, I have a secret stone, and if I manipulate it in this particular way, then most of the time the next day it rains.” He looks at the stone, and it’s a child’s marble.
So the next time he’s getting a little bit of R and R in the next town, staying with friends, and the kid has marbles, he has an idea and asks the kid, “Could I take one of your marbles?” The kid says, “Sure, have this marble.” So he asks, “Can I go back to see the rain man?” He treks across the desert and scales the mountain, nearly falls and dies, and makes it to the rain man. He says, “This holy stone that you have, of which there’s only one in the world—well, I found another one. Look at this.” The rain man is completely astonished, looking at this marble he’s presented with. The anthropologist asks, “What do you think, if you use this stone in your ceremony, is it going to rain tomorrow?” The rain man pauses for a second and says, “I don’t know. Shall we give it a try?”
McCloskey: There you go. That’s the scientific method. This imperial provinciality of Europeans about how foolish their ancestors were—who just believed, if they were highly educated, in Aristotle, and if they weren’t highly educated, believed only in the traditions of their fathers, and those were irrational—and the assumption that people with non-white skin are inferior and stupid and just do what they do: that, as you agree, and I’m sure Joel agrees, has been entirely exploded by modern anthropology and modern history.
I’ve just finished a book on English open fields and enclosures. The theme of the book—it’s quite long, and I’ve been working on it since 1970—is that the English peasants, in their very peculiar-seeming open fields, so-called, were pretty sensible. They weren’t perfect, they got some things wrong, but they knew how to get their daily bread this way, and had every incentive to be reasonable, experimental, thoughtful, soberly observant. That’s all the scientific method is. In fact, I’ve argued in other books, along with certain philosophers and sociologists and historians of science, that in a way there is no such thing as the scientific method. That doesn’t mean I’m against science, or that I don’t believe in being careful in thinking about things. I just mean that there’s no formula. And it’s not new.
Mounk: Yeah, but the scientific method has become this kind of slightly weird, simplified slogan, and it’s interesting how that happens to science. I deeply believe in science, but part of the point of science is that science does never prove X or Y. Insofar as there is a scientific method, it is to retain the understanding that things which we provisionally believe to be right may turn out to be wrong. In popular discourse, the slogan of science is often used to say, this is beyond any doubt, and if you don’t go along with my point of view or my political opinion, then you’re against science—which is actually the least scientific way that you can think about things.
McCloskey: But observe: if you don’t have a liberal society, that skepticism—reasonable skepticism—can’t flourish. I don’t mean complete skepticism, I don’t believe in anything, I don’t believe there’s a door there, that’s obviously insane. But reasonable skepticism can’t flourish without it. That’s where to come back to the example of Holland. It was a liberal society in the sixteenth century, and no wonder it prospered in the seventeenth century. It fought against the Spanish Empire, which had the best army in Europe, for eighty years, and like the Ukrainians, it won.
You see the connection: a free society, free speech, freedom of religion is where it all comes from, of course, but free speech, free movement, free contracting, free this, free that, makes for a scientific and technological explosion. Now, by the way, there’s a problem we have in thinking about this connection between science and industry or prosperity, which is we tend to put together “science and technology” as though it were one word. That elevates the role of the university scholar and downplays the role of the guy on the Toyota factory floor making a suggestion.
Mounk: So how does all of that story fit one of the cases of the most impressive economic growth today, in fact probably the fastest economic growth in history, which is China? One way of looking at China is to say that this is a society that lacks key hallmarks of liberalism. It certainly does not have free speech. It only to some extent has some of that valuation of bourgeois virtues that you talk about. On one hand, it’s a quite materialist society. On the other hand, there’s not a lot of sanction from on high about the pursuit of money, etc. The idea of being a member of the party, a civil servant, and so on, is in some ways valued more highly. But what it did start to have under Deng Xiaoping was something much simpler, which is just the market mechanism—the invitation for the open exchange of goods. So does that indicate that your theory pitches what is required a level too high? What we need is something rather simpler, which is just the ability to profit from free exchange of goods and services and the incentives that creates?
McCloskey: Well, two points. One is that the devices such as the electric light and so forth that the Chinese adopted, actually much earlier than 1978, were invented in free societies. Slaves don’t invent as much. It’s conceivable they can invent, but ordinarily they don’t. That’s the first point.
The second point is that the Chinese Communist Party said making money is glorious. They in fact sponsored the idea after 1978. Again, it was slow, but it finally went until 2003—being a millionaire in China was a capital offense. Now, of course, they didn’t enforce it after Mao, but they in fact had their bourgeois revaluation, except that, as you say, nothing else changed, in the sense that the Chinese Communist Party is still in charge. The same thing happened in a milder way in Singapore, which is a tyranny—now it’s a sensible tyranny, and tries not to be too obvious about it, but it is. The father and son in Singapore put people in jail for being opposed to them.
But the key point you make is perfectly true: there’s no Chinese model, so to speak. What the Chinese Communist Party did was adopt capitalism. That’s completely obvious. There was corruption involved—you had to pay off the communist party official in your neighborhood—but still, you’re allowed to open a store, or start a factory, or move. The largest migration in human history happened in China in the 1990s and 2000s. Two hundred million people moved from the interior of China to the coast, to work in the new factories. Now, again, they weren’t completely free. If you move from the interior to Beijing, you can’t send your child to university. You still have to have permission to live in Beijing, and lots of people don’t, even though they’re there.
A further point is that the Chinese, in their fifty years of experience with socialism, didn’t lose their ability to open a store and run a factory or work in a factory. Well, they’d certainly worked in a factory before. So it was by adopting capitalism that this happened.
Mounk: What about the ability to invent things? You’re talking about the fact that obviously a lot of the basis for the rapid economic growth in China, certainly in the ’80s and ’90s, was imported technology, and then perhaps in the 2000s and early 2010s, a lot of it was technology that was then emulated in China—the kind of copycat approach to a lot of technology, which allowed China to ascend the technological ladder at a very rapid pace. But at this point, China is actually able to compete and outcompete the West on many goods and services. China is probably somewhat behind on artificial intelligence compared to the United States, but is well ahead of countries in Western Europe. With a lot of robotics, the country is arguably ahead. On electric cars, China is at this point arguably ahead. In a lot of very specialized areas, the country is ahead. So if we think that kind of innovation requires liberal values or liberal institutions, do we need to say that China has liberal values or institutions, or how do we square the circle here?
McCloskey: Where liberalism is crucial: if in a Chinese research university, ideas are entertained freely—not ideas about politics or society, but ideas about the technology that they’re focusing on—then you get the same effect. Hierarchy of the old sort, which is often re-established under socialism or fascism too, those kinds of hierarchies reach down into the details of the society and stop innovation. So it’s not terribly surprising that China has become innovative in lots of fields. For example, on electric cars, what should happen is that the United States and Europe should allow Chinese electric cars to come in here and there, and that would be true liberalism, but of course there are forces preventing that, protectionism of various sorts. So in a way, in some fields, China is more free in its economy than in Britain or the United States. For example, in buildings: in both Britain and the United States, and in lots of other rich countries, we have a big problem of housing scarcity—in London compared with the north, and on the coasts in the United States compared with the Midwest. That’s entirely caused by interventions in the market that don’t exist in China. So in that respect, they’re more free economically. Not at all in other respects.
Now, this is a tragedy for the Chinese, that they’re not free, as the students in Tiananmen Square demanded—allow us equality of permission, make us free in all things.
By the way, it’s not only China that grows fast by allowing the economy to work well. I’m of Irish descent, long ago, and when I first went to Ireland in 1967, it was a third world country. When I went back in 1996, O’Connell Street was thronged with prosperous Irish people. In the meantime, Ireland had adopted capitalism, so to speak, in a thoroughgoing way, and the result was that Ireland is one of the per capita richest countries in the world. By the way, China is still quite poor. I hope it improves, and Xi Jinping is probably going to stop it from improving, but its income per capita is still about equal to that of Brazil, or about the world average.
Mounk: What do you think is the state of appreciation for the kind of bourgeois virtues that you think stand at the root of this economic progress in the West? On the one hand, you look at opinion polls, and a lot of young people value a lucrative career and making money over a lot of other things that you might think are important, like love or a meaningful private life. So it seems like we’re more materialist than we’ve ever been, in ways that perhaps aren’t always positive. On the other hand, I think there’s a lot of attacks on enterprise that are coming both from a growing share of the left of the political spectrum, but also in a weird way from the kind of post-liberal right. J.D. Vance just a couple of days ago attacked the idea of GDP as not really what we should care about, and values. So, do you think that, if you think that the origin of economic growth was in a sense a rhetorical move, a set of ideas, then are we in danger of discontent with our current reality inspiring a new rhetorical move that then casts off these ideas in ways that make it impossible to continue growing?
McCloskey: Yes, we are, and that’s why I write my books endlessly. I was a Marxist when I was young. I used to sing “The People’s Flag is Deepest Red.”
Mounk: I grew up singing “The Internationale,” whereas “The People’s Flag is Deepest Red,” in German, is the melody to the most famous Christmas song, so I didn’t sing that.
McCloskey: Well, it’s not that—I sing now “Land of Hope and Glory.” I’m not a Tory. I’m a classical liberal. Anyway, the threat comes from both the left and the right. In the United States, this lunatic we have as president is from the right. Not that this guy actually had any political ideas worth the name, but he’s gotten into alliance—he’s got people around him who are straightforwardly fascist. You can’t call them anything else. Stephen Miller, for example, and a number of others.
Then from the left, we have the kids, the young people, saying, well, let’s try socialism. Socialism sounds nice anyway. It sounds like a family—we’re going to make the country into a family, and families are socialist enterprises and should be. You don’t send your six-year-old out to work to pay for lunch. But these are young people, or people who haven’t experienced actual hardline socialism such as prevailed in Eastern Europe. So there’s always going to be a job to persuade people that neither authoritarianism, the daddy kind of model, or socialism, the mommy kind of model, is wise. I call it liberal adultism. The proposal is that people should treat themselves and others as adults.
Robert Burns’s great anthem of 1795, “A Man’s a Man for A’ That,” is an appeal to be a self-respecting adult.
Mounk: Tell us a little bit about how you think about the nature of liberalism. You’ve mentioned a couple of times in the conversation the idea that permission really stands at the center of liberalism—the permission to pursue the life you want and to do the things that you find to be particularly important. And more broadly, even though you’re an economist, we might think that you think the most important thing about liberalism is that it’s efficient, or that it leads to economic growth, but you really have a kind of deeper defense of what it is that this permission that liberalism comes with gives to people. How should we think about why liberalism is important?
McCloskey: I’m an egalitarian, and I take it you are too. I believe that everyone is equal. I believed it when I was a Marxist—it’s why I was a Marxist—and I believe it now that I’m a non-Marxist. So I think a good society is one in which we’re equal. But then the question is what you mean by equal. The first wave of liberalism, I claim, and try to show, was equality of permission alone. It wasn’t subsidies for poor people, or government projects on a massive scale, and so forth. That wasn’t the appeal. That’s not what the revolutionaries of 1776 in the United States and 1789 in France were thinking of. That’s not what they wanted. You could say it in a kind of crude way: they wanted to be left alone. But that doesn’t mean nasty, extreme individualism where I only care about myself—that’s Donald Trump. No, it’s that they didn’t want kings and husbands to rule over them.
But there’s a second wave of liberalism after 1848, particularly in Europe, and it’s well illustrated by the personal history of John Stuart Mill, who in 1848 is a liberal of the sort I admire, this first kind, this equality of permission. But then he becomes, under the influence of his female friend and eventually his wife, more socialist. So it happens, in the middle of the nineteenth century, in Britain and also in the United States and France and everywhere else, that a statist version of equality comes to the fore. If you had to have a motto for the eighteenth century—I call it primary liberalism—it would be “no involuntary masters.” And if you had to have a motto for the second kind, socialism and the so-called new liberalism, which are both still alive in the world, the bumper sticker would be “no deserving poor.” The only way you can achieve the new deserving poor, according to the nineteenth century theorists, was to involve the state, to expand the state, to redistribute from you to me.
Whereas I claim, and I’ve been claiming for a while, that the first kind, the equality of permission—such as you see in China in the economy and not in politics—leads to enrichment, and leads to equality of important abilities. You have a roof over your head, you have some education, you’re not starving. So the equality that the mid-nineteenth century so-called liberals advocated is in fact achieved in a free society.
Mounk: I think this distinction between the two different notions of equality is very helpful. I also wonder whether in a lot of political debates, people’s instincts lie somewhere in between, or the distinction between which of these notions is actually at stake is not quite as clear as it might be. I found it striking that you describe the later John Stuart Mill as sympathetic to socialism. Certainly he writes a very interesting essay called, I think, Chapters on Socialism, or something like that. But it’s not clear to me that that essay goes all the way into the second camp, and the point here is not a disagreement about Mill, but I think it says something broader that is interesting.
The part of that essay I remember most vividly is where Mill talks about a hundred-yard dash that some sadist might imagine. He’s saying, let’s imagine that this is a totally fair race—a race in which you’re not artificially making somebody carry a heavy backpack, or one person has to jump over hurdles and the other person is running straight ahead. Even so, if the winner of this race got great riches and the last three people were shot, nobody would say that that is a good idea. Now the connection here is that you’re saying, well, actually, what happens if you have a free market and the incentives that go with that is that everybody becomes a lot richer, and I think there’s very strong evidence for that. If you look at the history of China after it opened up to the market, if you look at the history of Ireland, as you pointed out, it’s absolutely true that we need free competition, these market incentives, in order to do that.
But of course, Mill was writing at a time when there was no universal elementary school education, when if you went into debt somewhere, you might be put in prison, and so on. If you happened to be disabled and you didn’t have relatives who were kind enough to take care of you, you’d be a beggar on the street and put in some kind of poorhouse if you were lucky. And so surely there is a way of recognizing both of those values. Even the people who are relative libertarians today truly do, to some extent. They don’t want to abolish universal primary education—they might want primary education to come with vouchers from the state so that there’s competition within elementary schools, or something like that. But they don’t want to say, if you don’t happen to have parents who want to pay for your education at the age of eight, you’re just not going to learn to read or write.
So isn’t there a way to recognize both of those points? To say that part of what we want with equality is that absence of arbitrary masters, that absence of rules that constrain our economic activity for no good reason, which then allows social wealth to accumulate, and is the reason why we’re so much richer today than we were 300 years ago. But of course, we also want to make sure that everybody has the opportunity to a good education, which requires some kind of state intervention, and that those people who are most at risk of the vicissitudes of life are protected in some kind of way—whether that is help to those who are disabled, or those who had some kind of accident and were unable to care for themselves, or whether that’s some kind of social insurance scheme like Social Security, so that people aren’t destitute in old age, or unemployment benefits.
McCloskey: Yeah, well, I entertained that feeling earlier in my life, and thought, yeah, that’s right, we should have the economic and social safety net, as it’s called. I’ve become slowly convinced that it has grave dangers. The Swedes were, of course, the great example of a democratic country with free speech and free press and so forth, but nonetheless had a very big and impressive social safety net. They had a crisis in the 1990s. Seventy-eight percent of production in Sweden went through the state. Now, it wasn’t state-owned enterprises, it was very high taxation, and then very high social benefits of various kinds. In the 1990s—I’m a historian—they realized that this wasn’t working very well, and they introduced, for example, vouchers for schools. So though the state was paying for the schools, it was allowing private schools. Now one quarter of the K-through-12 students in Sweden are in private schools. In a number of other ways, Sweden liberalized. So that’s a nice example of trying to get the balance right.
But one of the troubles with social democracy is that it’s easy to corrupt. In Sweden, the standards of public morality are extremely high, and I could give you lots of examples of it. But they’re not so high in Britain, and they’re really not high in the United States. Right behind me, I have to see it all day long—that orange building in the back is at one end of what’s known as K Street in Washington. That’s where the lobbyists live, that’s where they work, and there are an astonishing number of them. With the excuse of helping the poor, or organizing this or that public service, they create wealth for the rich. There are 1,500 registered lobbyists for the pharmaceutical industry alone on K Street.
Mounk: To be clear on the lobbyists—a lot of people on the left would say, well, that’s precisely the problem with capitalism, these big companies paying lobbyists. But you’re saying actually this is because the state is so involved in the private economy that there’s something for them to lobby for and to argue for. So you put the lobbyists at the feet of a kind of deviation from capitalism.
McCloskey: I go with my left-wing friends and my former self: I’m going to protest the takeover of the government by corporations or by the rich. I want that to stop. How to achieve it? Alas, my friends on the left, and I still have lots of them, say let’s get the government to do it, which is to put the fox in charge of the henhouse. I say let’s make the government less important, let’s make the government a lot smaller. I would be perfectly happy with a small government. In France, 55% of national income goes through the government. It’s not as bad as Sweden was, but 55% of national income goes through the government, and it’s quite high in Britain—it’s in the forties—and it’s high enough in the United States. I would be perfectly happy with a ten percent government that really did help poor people and really did protect the country.
We don’t need a so-called Department of War, as Donald Trump wants to call it—which I don’t mind too much—of the size we have. It’s absurd. Most of the help to alleged poor people goes to rich people. A perfect example is publicly financed education, which is not entirely but largely operated for the benefit of the schoolteachers and the professors. That’s shameful and shouldn’t happen, but it does. That came out in COVID. When we closed the public schools—they didn’t, in Sweden, by the way, which makes my point that Sweden has become much more liberal. It’s virtually the only country that didn’t. We closed the public schools because the old teachers were afraid to teach kids who might be transmitting COVID-19, and that’s appalling. Agricultural subsidies, both in Europe, in the UK outside the EU, and in the United States, are disgraceful—they’re subsidies to rich farmers.
So I want a small, competent government that does the jobs that you and I can completely agree it ought to do—indeed, help the people who can’t take care of themselves. I’m all for that. I’m an Anglican, I’m an Episcopalian, we call it here, and I give ten percent of my income to my church, because my church is good at charity.
In the rest of this conversation, Yascha and Deirdre discuss Deirdre’s experience as a trans woman who transitioned in the 1990s, how attitudes towards trans people have changed in the last 30 years, and how liberals should approach the trans debate. This conversation is reserved for paying subscribers…