Liberalism at the End of the Tunnel

On June 20, 1948, the German Economic Council, at the insistence of Ludwig Erhard and against the opposition of the Social Democratic Party, decided to lift restrictions on price freedom. It is said that Erhard's appeal to his colleagues was: "Don't sit around doing nothing, abolish something!"

Later, journalists published a dialogue between General Clay and Erhard:

Clay: "Mr. Erhard, my advisers tell me that you have made a big mistake. What do you say to that?"

Erhard: "Mr. General, don't pay attention to them! My advisers tell me the same thing."

Clay: "How can the rationing system be relaxed when there is such a shortage of goods in the country?"

Erhard: “Yes, but, General, I have not relaxed the rationing, I have abolished it. From now on, only Deutsche Marks will be in circulation instead of coupons. And they will work tirelessly… Give it a while.”

Erhard devoted the entire summer of 1948 to freeing the German economy from Nazi ideas. Regulations and directives in various fields were abolished. Erhard’s motto was: Don’t sit idle, abolish something.

Erhard’s predictions came true. The liberalization of prices allowed German consumers to convey their demands to producers. The increased prices, in turn, were enough motivation for entrepreneurs to produce more products. All this had a catalytic effect on the German economy. Wollick wrote: “The country changed overnight. The mediocre, hungry figures who had been scrambling to find food in the streets returned to life.”

Because Erhard's ideas were working, the Chancellor of the new Federal Republic of Germany, Konrad Adenauer, appointed him as Germany's Minister of Economics. Erhard held this position until 1963, when he himself became Chancellor.

Throughout his career, Erhard advocated free-market economic principles. A staunch supporter of liberal economics, in 1950 he joined the Mont-Pellegrin Society of Liberals, whose founders included such prominent figures as Friedrich Hayek, Frank Knight, Karl Popper, Ludwig von Mises, George Stigler, Milton Friedman, and others.

To better understand the principles that guided Erhard in his work as a scientific economist and politician, here are some of his statements:

“The German liberal system must proceed from the conviction that freedom is one and indivisible, and that human freedom in any sphere is impossible without political, religious, economic, and spiritual freedom. Collectivist thinking has always sought to divide these fundamental spheres of human values ​​and to encroach on the space of his freedom.”

“A collectivist-totalitarian economic system, which ultimately serves only to glorify and strengthen state power, can achieve great success in the easily controlled areas of basic industries, but it can never serve man, or, in other words, it can never offer him a wide choice of goods that will enrich and embellish his life.”

Erhard is considered one of the fathers of the so-called “social market economy.” But here is what Friedrich Hayek had to say about it: “Once, in a conversation with Erhard, he said to me – “I hope you understand what I mean when I talk about a social-market economy. I mean that a market economy is inherently social and there is no need to make it so.”

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Ireland’s economic success in the period 1987-2007 was determined by many factors. These are: liberal economic policies, investments in education, creating a favorable environment for foreign investment, increasing the level of globalization and achieving and maintaining a national consensus. For the past 40 years, Ireland has been one of the fastest growing economies in the world. In 1973, it was the poorest country in the European Union, with an annual income of $ 2,400 per capita. 46 years later, in 2019, Ireland's per capita income is 33 times higher, second only to Luxembourg among EU countries. The average annual income of a person living in Ireland is $78,000. Ireland has one of the most globalized economies. In 1973, the country's population was 3.1 million, but now it is 5 million and growing every year. Ireland is considered one of the best places in the world to do business.

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Sweden was once incredibly poor and hungry. By the 20th century, the average Swedish working-class family could live in a one-room apartment with a kitchen. Many shared a room with other families. But then, everything changed. Sweden experienced the greatest economic and social development its people had ever experienced, and one of the fastest in the world. Between 1850 and 1950, the average Swede's income more than doubled, while the population doubled and life expectancy increased by 28 years. A nation of poor farmers became one of the richest countries in the world.

This is a history that should be studied by countries that want to be where Sweden is today, because if they want to be heroic, they must do what Sweden did before, not what Sweden did after it was rich.

In 1763, the father of Swedish liberalism, the young priest Anders Chidenius, wrote: “A homeland without freedom and dignity is a big word with little meaning.”

Chidenius was a modern priest, steeped in the idea of ​​the Enlightenment.

In Sweden, the poor were thought to be lazy and hopeless. Chidenius turned the tables: the poor were smart and hardworking – they had to work to survive in such a difficult geographical and economic climate. The problem is that they must spend most of their energy on avoiding regulations, taxes, and corruption. One issue he constantly grappled with, however, was the legalized classes, which forced the poor to work for aristocrats and big farmers, and made it impossible to negotiate a change in their output.

By carefully spreading this belief in human freedom, Chidenius created a system of liberal ideas. He wanted a minimal government that would ensure “the security of our lives and property,” with its sole purpose being to prevent “foreign dangers and domestic oppression.”

The size of government and the level of taxes were to be drastically reduced. Markets and trade were to be completely free. He opposed subsidies in sectors of the economy. Farmers should have the right to own their land, and even the poorest farmer should have the right to manage his labor. People should be free to discuss ideas and express their opinions. Even in matters of religion, he thought that the government should be liberal and give equal rights to all faiths. “I speak exclusively of the small but blessed word, freedom,” he said.

As a result of several well-written pamphlets published, parliament voted for the liberalization of trade, the reduction of subsidies, and lower taxes. Most importantly, Chidenius demanded absolute freedom of the press. As a result, the decisions and documents of the authorities became public. This was a unique development for 1766, and Sweden gained a reputation as a country of free debate.

Chidenius explained: Every individual spontaneously tries to find a place and trade what he can in order to increase the national income, unless the law prohibits him from doing so. Every person seeks his own benefit. This tendency is so strong that every society in the world is based on it. Otherwise laws, punishments, and rewards could not exist; society would be completely destroyed. Any labor that is in great demand is well calculated, and that which is well paid is in great demand. The concept of national income, as it must hardly appear to our new entrepreneurs, is the simplest. It gives freedom to all legitimate transactions, and not at the expense of others. It protects the business of the poorest and encourages enterprise and free trade. It weighs all in the same scale, and determines exactly who is to be encouraged. It relieves government of a thousand problems, of acts, and of supervision. When the personal and the national purpose coincide, the painful egoism, which always tends to private advantage against acts, can be checked by mutual competition. It allows the Swede to exercise his God-given right to the omnipotence of nature, to help himself in whatever way he finds optimal.

Much has happened in Sweden since then. Liberals have also found themselves in opposition. Nevertheless, the fact that the revolution later restored the status of free speech in the Swedish Revolution meant that a genuine liberal movement could take shape.

P.S. Today, in Germany, Sweden, and Ireland, the economy is strong, the state is secure, the people are well-off, and their life expectancy and birth rate are high. In some places, a financier and in some places a priest created a liberal order. Ilia (Chavchavadze) fought for this, Zviad (Gamsakhurdia) also, sacrificed himself for this idea. And in Georgia, Moscow worked well to mentally distort the minds of Georgians. So, only such an order is an opportunity for us to become stronger, because at the beginning of the tunnel is empire, at the end – liberalism. You yourself must choose where you stand.

“Don’t sit idle, abolish something!”

Zurab Maghradze