Straight to the point

Kind hosts in Vienna asked me to speak on Adam Smith, this year being 300 years since his birth in 1723. The lecture was arranged by The Hayek Institute and the Austrian Economics Center, in Vienna, delivered June 26, 2023. I speak slowly, so if you try the video, try 1.5x speed:

Adam Smith versus the Great Reset – Daniel Klein

The title, “Adam Smith versus the Great Reset,” singles out one representative of a meaning of liberalism. Smith affirmed a presumption of liberty, captured in his words, “allowing every man to pursue his own interest his own way, upon the liberal plan of equality, liberty, and justice.” Smithian liberalism leans strongly against the governmentalization of social affairs.

The title also singles out a phrase—The Great Reset—representing something contrary to Smithian liberalism. The Great Reset represents something anti-liberal; it is a form of anti-liberalism. The Great Reset leans strongly in favor of the governmentalization of social affairs. 

So, with our title, we have a liberal, Adam Smith, someone who is anti-governmentalization, and a set of anti-liberals, who are pro-governmentalization. We have Adam Smith versus the Great Reset.

I have not investigated the World Economic Forum. I have not tracked their discourse and influence. I have not tracked the governmentalizations advanced in the spirit of the Great Reset. 

But I have carefully read the book, Covid-19: The Great Reset, by Klaus Schwab and Thierry Malleret, published in 2020. According to the bios contained there, Schwab is the Founder and Executive Chairman of the WEF. Malleret holds a PhD in Economics and works for the WEF. The bio says that that Malleret has worked in the prime minister’s office in France, and, “He has written several business and academic books and has published four novels. He lives in Chamonix, France.”

The underlying message of the book is: Knuckle under or we will hurt you. 

The “we” is some undefined regime or network or axis of anti-liberals like the authors.

The book is an act of intimidation. It presages growing governmentalization, it advocates growing governmentalization, and communicates: Obey us or get hurt. Knuckle under or we will hurt you. 

The book is not only anti-liberal in its political outlook, it is illiberal in its manner of discoursing. Its whole manner is dishonest; the book is disagreeable to any dignified and self-respecting reader. 

As I said, it is a book of intimidation and bullying. Its appeal would be to those readers who enjoy bullying and intimidation—either the bullying of others or perhaps even of themselves. 

The illiberality of the book also often takes the form of gaslighting. Gaslighting is the sowing of lies, deception, and confusion, so that the bullies can assert themselves as the only focal plan of social action. 

Gaslighting is a sort of propaganda or psychological warfare. It is a bit like the so-called “Rules-Based Order:” DO WHAT WE SAY OR BE BOMBED. 

Brutal reductionists, they.

I will explain why the book is dishonest and illiberal, but first, you are probably asking yourself, what is “The Great Reset?”

That’s a good question. The book does not make that clear, and that unclarity reflects what I said was the true message of the book: Knuckle under or we will hurt you.

I tried to find direct quotations from the book that say what the Great Reset is. I will share quotations that are most like a sort of definition, but, as you will see, they do not offer clear definitions:

COVID-19: The Great Reset is an attempt to identify and shed light on the changes ahead, and to make a modest contribution in terms of delineating what their more desirable and sustainable form might resemble. (Intro, 13) 

Later, they write:

The young generation is firmly at the vanguard of social change. There is little doubt that it will be the catalyst for change and a source of critical momentum for the Great Reset. (103)

At the end of the book, they tell of:

replacing failed ideas, institutions, processes and rules with new ones better suited to current and future needs. This is the essence of the Great Reset. (249)

(I have added boldface to some words here, and in quotations that follow.)

So, what is “better?” They make no bones about it; it is greater governmentalization of social affairs. They project governmentalization through ESG control of business, extensive surveillance and tracking, government financing, government favor and disfavor, big government everywhere. 

I infer that they look forward to a one-party state like the CCP in China, that crushes dissent and usurps free and fair democracy. They don’t say that, of course, but everything they advocate spells that dystopian result, and it is hard to believe that they do not see that.

The difference from the CCP, however, is the globaltarian flavor of the Great Reset. They imagine organizations like WHO on the stage, and presumably the anti-liberal globaltarian network behind the scenes. The book often points to globaltarian answers, without using that term “globaltarian.” 

Schwab acts like a ringleader of the globaltarian network, even though he is not a government official and has never been elected to anything. That reflects a contempt for honest, bottom-up democracy, and for freedom.

By the way, the quotation demonstrates the shabby nature of the reasoning in the book. The Great Reset is defined as replacing “failed” institutions with “better” ones. They build betterness into the definition. They never justify the betterness of what they advocate; they merely assert it. Their reason is a sham, a fraud. That is one of the ways in which their discourse is illiberal and dishonest. They never formulate issues clearly as vying positions, and then honestly argue for the position they favor. Instead, at best they formulate a silly choice between positions, and then simply assert the betterness of the position they favor. 

In the Conclusion they write:

Resetting is an ambitious task…but we have no choice but to try our utmost to achieve it. It’s about making the world less divisive, less polluting, less destructive, more inclusive, more equitable and fairer than we left it in the pre-pandemic era. Doing nothing, or too little, is to sleepwalk towards ever-more social inequality, economic imbalances, injustice and environmental degradation. Failing to act would equate to letting our world become meaner, more divided, more dangerous, more selfish and simply unbearable for large segments of the globe’s population. To do nothing is not a viable option. (244)

Before showing more quotations from The Great Reset, I should give some time to Adam Smith. But there is one more quotation I want to share:

The more nationalism and isolationism pervade the global polity, the greater the chance that global governance loses its relevance and becomes ineffective. Sadly, we are now at this critical juncture. Put bluntly, we live in a world in which nobody is really in charge. (114)

There are three absurdities about the passage. The first is “global polity.” The second is the notion that it would even be possible to put someone “really in charge” of global affairs. The third is that it would be desirable to do so. 

Let’s consider the thought of Adam Smith.

Where Smith describes his system of natural liberty he writes:

All systems either of preference or of restraint, therefore, being thus completely taken away, the obvious and simple system of natural liberty establishes itself of its own accord. Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of men. The sovereign is completely discharged from a duty, in the attempting to perform which he must always be exposed to innumerable delusions, and for the proper performance of which no human wisdom or knowledge could ever be sufficient; the duty of superintending the industry of private people… (Smith, Wealth of Nations)

The expressions “innumerable delusions” might make one think of Klaus Schwab. Smith also wrote critically of the man of system, saying:

The man of system…is apt to be very wise in his own conceit, and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests or to the strong prejudices which may oppose it: he seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board; he does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them… (Smith, Theory of Moral Sentiments)

Is the man of system a good description of Klaus Schwab? I don’t know. It could be that Schwab is consumed by vanity, wickedness, and cynicism, and does not really have any faith in what he advocates. 

Adam Smith suggests that the most important task of government is to guard against human wickedness when he writes:

The fatal effects of bad government arise from nothing, but that it does not sufficiently guard against the mischiefs which human wickedness gives occasion to. (Smith, TMS)

I don’t know what motivates Klaus Schwab. Greed, selfishness, vanity, misanthropy, a lust for domination and deception, wickedness? I don’t know. All those get balled up together, under massive self-delusion, in the crooked timber of humanity. You can often tell from the manner in which a person discourses.

But let me speak more generally about Adam Smith. 

Smith’s ethics are patterned after benevolent monotheism and thus he maintains the ethical framework of the Christendom in which he wrote. 

Christendom developed nation-states, first with absolutism but, by virtue of teachings such as jurisprudence and moral philosophy, a more liberal sort of nation-state. The wars of religion taught Christendom that in modern society, government could no longer tend and lead the higher things. In more traditional society, before the printing press, the community was more cohesive in the higher things, with social life expressing an integration of the higher and lower things. 

But with the printing press there was contestation of interpretation in the higher-things space. Disagreement and difference broke out. 

At first, the different visions tried to enforce their particular view of the higher things, to reestablish control. That is what the left wants to do today. Leftism tries to take control of what is true, beautiful, and good, and to shut down descent. Leftism is at war with modern society.

But in the 17^th and 18^th century what happened is that jurisprudence and political theory devised a solution: Certain basic rules would form a basic social grammar, the rules of not messing with your neighbor’s person, property, and promises-due—thus, basic security of one’s own at the lower level. 

One is then otherwise allowed to pursue higher things differently, as long as those pursuits do not mess with your neighbor’s stuff. 

Meanwhile, government was encouraged to act similarly, to not mess with the governed’s stuff without very good cause. In this way, jurisprudence writers and political theorists embraced the nation-state, but said, let’s make it a liberal nation-state. 

Smith and others christened their political outlook “liberal.” So the first political liberalism was Smithian liberalism, and it was the spine of liberalism for at least 100 years. Liberalism 1.0 is Smithian liberalism.

Smith suggested a very limited role for government, because he knew that government necessarily lacked the knowledge to do good. Moreover, it lacked the incentives to correct its errors. In fact, government has many pathological incentives, which prompt it to do evil. 

From all sides, moral, economic, cultural, and political, Smith generally leaned against the governmentalization of social affairs.

Smith knew that as organizations became larger, centralized, and top-down, they became more corrupt. In his ideal system of natural liberty, besides nightwatchman functions of safeguarding the social grammar, securing the lower things, Smith suggested only some basic infrastructure services and perhaps limited government involvement in education. 

Characteristic of his approach was local, independent control and independent finances based on user fees, voluntary contributions, and only sometimes local taxation. He believed in what the Catholics called subsidiarity, or decentralization. Not only do locals have better knowledge and ability to do good, they have less power to do widespread evil, which, remember, is the real fatal effects of bad government. 

Smith would be adamantly opposed to globaltarianism. He knew that moral obligation was naturally grown from the bottom up, just as Edmund Burke spoke of little platoons teaching us our duties. Smith wrote:

The administration of the great system of the universe, however, the care of the universal happiness of all rational and sensible beings, is the business of God, and not of man. To man is allotted a much humbler department, but one much more suitable to the weakness of his powers, and to the narrowness of his comprehension—the care of his own happiness, of that of his family, his friends, his country… (Smith, TMS)

Smith saw country as a natural and necessarily political form. But he most definitely saw the nation as the top polity, whose sovereignty and independence were not to be sacrificed to some human institution above it. 

Allegiance and duty to country is not a matter of consent or social contract; it is an organic growth. Without organic roots, governance is even more of a sham and a menace, as the supranational institutions of today consistently demonstrate. 

Smith would stand with national sovereignty, dead set against the globaltarians.

The liberal solution was a brilliant one. The presumption of liberty implies, of course, a presumption of free enterprise. Moreover, Smith morally authorized the pursuit of honest income. Thus, he morally authorized a new attitude toward honest income, including innovation, and a presumption of liberty. Using the expression “invisible hand,” he explained that the freedom of action would generate beneficial results. Friedrich Hayek later called it spontaneous order. 

Adam Smith died in 1790. His moral authorizations brought the surge in economic well-being we call the Great Enrichment. 

Also, for most of the 19^th century, Europe enjoyed a time of relative peace (compared to previous centuries or the 20^th century). 

Unfortunately, at the end of the 19^th century, anti-liberalism surged. Anti-liberals like Lenin, Stalin, Hitler, Mussolini, and Mao tried to impose big government, as though to turn back modern society, pretending that by governmentalizing social affairs someone could be—as Schwab and Malleret dream—“really in charge.” 

Someone “really in charge” could once again lead and tend the higher things throughout society, integrating the lower things and the higher things in their own particular way. This hallucination appeals for foolish people who have not made their peace with the modern world. Like all anti-liberals, Lenin, Stalin, Hitler, Mussolini, and Mao were frauds and despots. We got big government. And world wars. And misery. And dehumanization. 

But prior to the 20^th century there was the liberal arc in Europe, an arc rising out of Christianity, high from about 1776 to 1876, and declining thereafter. It was the liberal era, and our remnant liberalism is once again under severe assault by anti-liberals. 

Our job is to make Europe liberal again—MELA. To do that, we must teach the anti-liberals the folly of their ways. 

We must persuade our fellow human beings against anti-liberalism. We must persuade our fellow humans to make their peace with the modern world, so they are no longer duped or intimidated by people like Klaus Schwab.

Let’s look some more at what the anti-liberals are saying.

A word that Schwab and Malleret use an awful lot is the future-oriented helping verb “will,” as in “this will happen” or “that will happen.” They keep telling us what will happen. 

[S]mall businesses will suffer disproportionately… many will not survive. (192)

[B]ig businesses will get bigger while the smallest shrink or disappear. (193)

Many of the predictions as to what will happen are to the effect that social affairs will become more governmentalized:

The most forward-looking countries and their governments will instead prioritize a more inclusive and sustainable approach… (64)

[G]overnments will most likely…decide that it’s in the best interest of society to rewrite some of the rules of the game and permanently increase their role. (93)

Health and unemployment insurance will either need to be created from scratch or be strengthened… Social safety nets will need to be strengthened… [E]xtended unemployment benefits, sick leave and many other social measures will have to be implemented… [R]enewed trade union engagement will facilitate this process. Shareholder value will become a secondary consideration, bringing to the fore the primacy of stakeholder capitalism. (93)

Some countries will nationalize, while others will prefer to take equity stakes or to provide loans. … Businesses will also be held to account on social and environmental fractures for which they will be expected to be part of the solution… [T]he role of the state will increase and…will materially affect the way business is conducted…. [B]usiness executives in all industries and all countries will have to adapt to greater government intervention… Taxation will increase, particularly for the most privileged… (94)

Nowhere will this intrusion of governments…manifest itself with great vigour than in the redefinition of the social contract. (95)

[Two primary features of the social contract will be altered:]

1. A broader, if not universal, provision of social assistance, social insurance, healthcare and basic quality services.
2. A move toward enhanced protection for workers and for those currently most vulnerable… (98)

Hearing of the future that they foretell, one is apt to think to himself: “They will hurt me if I don’t knuckle under.” 

The anti-liberals Schwab and Malleret continue:

The logical conclusion of these two points is this: governments must do whatever it takes and spend whatever it costs in the interests of our health and our collective wealth for the economy to recover sustainably. (44)

The artificial barrier that makes monetary and fiscal authorities independent from each other has now been dismantled, with central bankers becoming (to a relative degree) subservient to elected politicians. It is now conceivable that, in the future, government will try to wield its influence over central banks to finance major public projects…(67)

On the dial that measures the continuum between the government and the markets, the needle has decisively moved towards the left. (92)

They quote Mariana Mazzucato saying that governments should “move towards actively shaping and creating markets that deliver sustainable and inclusive growth.” (92)

How will this expanded role of governments manifest itself? A significant element of new ‘bigger’ government is already in place with the vastly increased and quasi-immediate government control of the economy. (92)

Governments led by enlightened leaders will make their stimulus packages conditional upon green commitments. They will…provide more generous financial conditions for companies with low-carbon business models. (145)

[C]limate activists will redouble their efforts, imposing further pressure on companies and investors… (148)

There is a strong case for acting more forcefully on spatial planning and land-use regulations, public finance and subsidy reform… (150)

[B]usiness will be subject to much greater government interference than in the past. (182)

…conditional bailouts, public procurement and labour market regulations… (183)

…constraining…the borrowers’ ability to fire employees, buy back shares and pay executive bonuses. [G]overnments…will target suspiciously low corporate tax bills and generously high executive rewards. (183)

[P]ressure to improve the social protection and salary level of low-paid employees will increase. [I]ncreases in the minimum wage will become a central issue… 185

Companies that rely on gig workers…will also feel the effect of more government interference… [G]overnments will force those companies…to offer proper contracts with benefits such as social insurance and health coverage. (185)

ESG — climate change…, consumer behaviour, the future of work and mobility, and supply-chain responsibility… (186)

[ESG considerations have] the potential to destroy substantial value and even threaten the viability of a business. (186)

More and more, companies will have to prove that they treat their workers well.. [otherwise they will feel] the wrath of activists, both activist investors and social activists. (187)

[D]ifferent types of activists are learning to work together to further the goals to achieve a more sustainable future. (190)

Here are some passages about tech and surveillance: 

[T]he containment of the coronavirus pandemic will necessitate a global surveillance network capable of identifying new outbreaks as soon as they arise… (33)

This transition towards more digital ‘of everything’ in our professional and personal lives will also be supported and accelerated by regulators. (155)

A tracking app gains insights in real time by…determining a person’s current location through geodata via GPS coordinates or radio cell location. (160)

[Tech developments] will progressively blur the boundaries between public healthcare systems and personalized health creation systems… (206)

They advocate “tracking the user’s real-time movements, which in turn affords the possibility to better enforce a lockdown and to warn other mobile users in the proximity of the carrier…” (160)

In banking, it is about being prepared for the digital transformation. (206)

And here are some passages of globaltarian flavor:

The absolute prerequisite for a proper reset is greater collaboration and cooperation within and between countries. Cooperation…can be summed up as ‘shared intentionality’ to act together towards a common goal. (248)

[Progress] will only come about through improved global governance… (113)

WHO…is the only organization capable of coordinating a global response to the pandemic… (117)

Here is a prime example of their absurd reasoning—mark the “thus” and “Therefore” in boldface:

Innovation in production, distribution and business models can generate efficiency gains and new or better products that create higher value added, leading to new jobs and economic prosperity. Governments thus have tools at their disposal to make the shift towards more inclusive and sustainable prosperity… (63)

Well-being has to be addressed holistically; we cannot be individually well in a world that is unwell. Therefore, planetary care will be as important as personal care, an equivalence that strongly supports the promotion of principles we previously discussed, like stakeholder capitalism, the circular economy and ESG strategies. (205)

As it is now well understood that physical activity greatly contributes to health, sport will be increasingly recognized as a low-cost tool for a healthier society. Therefore, governments will encourage their practice, acknowledging the added benefits that sports constitute one of the best tools available for inclusivity and social integration. (206)

The Great Reset peroration follows:

It is incumbent upon us to take the bull by horns. The pandemic gives us this chance: it ‘represents a rare but narrow window of opportunity to reflect, reimagine and reset our world.’ (244)

If you look at the definitions of “reset” at Wiktionary, their unstated premise is clear: We are resetting to a new political system. Knuckle under or we will hurt you.

However, early in the book they say:

The macro reset will occur in the context of the three prevailing secular forces that shape our world today: interdependence, velocity and complexity. (21)

We were the first to assert that the more complicated the forms assumed by civilization, the more restricted the freedom of the individual must become. 

Schwab and Malleret do not avail themselves of centuries of wisdom from figures like Smith and Friedrich Hayek. The lesson is that complexity in an object makes that object, and its potentialities, less knowable and less amenable to being mastered. Complexity makes governmentalization more preposterous, more pernicious, and more inhuman. 

But Schwab and Malleret hardly pause over that side of the “secular forces that shape our world today.” Rather, the main message is relentless once it gets going: Knuckle under or we will hurt you.

To the audience in Vienna, I proposed that, instead of a Great Reset, we pursue diverse, peaceful, virtuous endeavors in MELA: Make Europe Liberal Again. That is how we return to Adam Smith’s “liberal plan of equality, liberty, and justice.”

Source: Brownstone Institute Read the original article here: https://brownstone.org/