This is a great book that synthesizes the work of many thinkers in the classical liberal tradition while actively engaging with their critics. The book mixes both theory and practice and I found myself highlighting material on almost every page.
Mark Pennington lays out a model of classical liberalism based on what he calls âRobust Political Economyâ which seeks to answer 3 questions:
1. Which institutions perform best when people are not omniscient?
2. Which institutions perform best when people are motivated by self-interest?
3. Which institutions perform best when people have limited knowledge and are prone to self-interested behavior?
He starts by noting that two of the fundamental organizing principles of classical liberalism are the freedom to associate and disassociate with others and the private or several ownership of private property. He then points out that this leads to the development of âspontaneous ordersâ which have 3 key benefits:
1. They are better placed to cope with conditions of imperfect knowledge and bounded rationality
2. They allow for experimental evolution
3. They provide safeguards against the abuse of power where people do act out of their self-interest
There are valuable insights throughout the book and I found myself highlighting and making margin notes on just about every page. Here are 2 brief quotes that demonstrate what I mean:
âIn a process which removes the âexitâ option, the costs of supporting irrational policies are spread across all other members of society rather than being concentrated on those holding to false beliefs.â
âThe âweakâ interactions that characterize commercial relationships bring together people from many different social and cultural backgrounds and in so doing may create opportunities for the development of new social bonds and shifting identities.â
The author actively engages with the critics of classical liberalism throughout the book. These includes market failure, social justice, communitarian, and egalitarian critics and his observations often demonstrate the shortcomings within those positions and some cases where their values would actually be better served within the classical liberal framework.
The second half of the book applies classical liberalism to current public policy challenges (poverty relief, international development, and environmental protection). I really learned a lot in this section both in regard to some things that are working as well as what does not work at all. The chapter on poverty relief has very valuable discussions on health and education. The section on international development highlights the fact that âinstitutions matterâ and we should start with a âdo no harmâ principle (for more in the regard, see âDoing Bad by Doing Goodâ by Christopher Coyne).
The author concludes that âideas matter in political economyâ and he has provided a deep synthesis of many of the core ideas of classical liberalism. In discussing how these ideas can be applied to current public policy issues and the âmovement towards the minimal stateâ, he is clear about the need for classical liberals to remain consistent with decentralized, discovery processes. This is a very powerful work that deserves the widest possible readership.
Postscript â I recommend Randy Barnettâs âThe Structure of Libertyâ for those who would like another interesting work on the problems of knowledge, interest and power. I recommend James Tooleyâs âThe Beautiful Treeââ for those who want to better understand how the worldâs poor are educating themselves.
