What is the underline principle and relevance of liberty?

A short answer would be life, liberty and property: the right to life, the right to have liberty and the right to hold property. By acquiring property one starts to own yourself. Liberty was first promoted as an economic base in relation to Soviet state communism. The belief was to create an ideology or way of thinking that ran counter to the idea of community ownership. The language of ‘necessary evils’ was used to describe conservatives and ‘ends’ meant economists. So the idea that society called tolerate certain actions as long as it ended up in a favourable position which guaranteed an end, usually the financial kind.

We are free to make choices in our life; some will be productive whilst others will be destructive. The importances of our actions which are chosen allow us to exist, to make choices and to learn from our mistakes. Liberty enables us to be free thinking individuals who develop a strong sense of the right to be human and to respect those rights that underpin liberty. This can be seen as perception based on experience of based on a whim.

Rights are freedoms of actions and not a given. Rights and guarantees have to be defined as if they are too open there are no limits to what has to be made real. One could ask why states aren’t sounded out for treating people differently as if an individual was to do the same there would be repercussions. The state has no obligation and most state functions are fraud, operating without the total will of the people. All political power grows out of the barrel of a gun.

How do markets work through voluntary contributions?

Capitalism works without the threat of violence or cohesion by pointing out the flaws in the so-called enemies of capitalism. The man who acts on brute force who uses violence as an answer to any problem or the man who doesn’t like physical actions but mythical alternatives are not the ideal types. So the safe road to walk down is the road to capitalism.

Here are some key points to understand how capitalism works: Individuals, through their differences benefit from voluntary transactions buy securing the right price in the market. This is simply called supply and demand. Entrepreneurs get a sense of unfilled demands and financial reward for satisfying those needs. The price mechanism only works if there is competition and won’t work if there is a monopoly. A market allows you to build up capital and allows one to build wealth on the backs of other people, who can then make more money based on the capital they have managed to accumulate.

It is a collaborative system that can only work if people make the capitalist system go around. Most of it is based on trust and human relationships which create a moral system, so people are not forced like being in a socialist environment. Free market capitalism raises people out of abject poverty and allows people to enjoy the benefits that were only open to the elite few. This then establishes an equal society as long as there is equality of opportunity.

So what does liberty have to do with banking, inflation and recessions?

Like most complicated situations there are two competing narratives vying for attention. The economy can be viewed as a broken down car that needs to be fix by getting a jump start. Alternatively the economy could be seen as a drunken person who has partied too hard and is now returning to sobriety – coming back to reality. Whichever position you currently subscribe to the mechanisms of monetary policy enable the economy to be moved in those competing directions.

The Libertarian position would argue for the separation of credit and savings which would make the future value exceed the interest payments. Likewise that future value would not have a market return, thus really ending the boom-bust cycle. Inflationary bubbles are created by people spending and consuming instead of saving. These structural reasons are why the cycle must unwind as credit crisis always follows from the inflationary bubble.

Recession is the next step in the cycle based on the overestimation of consumer demand where the economy corrects previous inconsistencies. Recovery should follow but we tend to jump from recession to inflationary bubble. Public debt is the main contributionary factor. Government gets money from borrowing, taxation, selling of government assets or through inflation. We need to look at profitability based on actual demand rather than inflationary measures.

If you have a planning committee that meets every month to set the price of shoes, what happens if there is demand for more shoes in between those months? The sellers would have to sell at a cheaper price than they could actually get for the shoes and the planning committee would artificially raise the price of shoes when the demand does not materialise.

What is worse government failure or market failure?

Schools, hospitals and the welfare system are prime examples of government failure. The problem is democratic institutions ensure that self interest is served; people do not then become servers of wider public good. Smaller self interest groups would be able to campaign more effectively than larger campaigning groups. The qualities of public policies that are being supplied by the politicians are woeful. Most voters do not have access to what politicians are actually doing. A voters vote has a 1 in 70,000 chance of really affecting the outcome received. Similarly economic policy interventions tend not to improve market failures. Democracy is the worst form of government along with everything else. The advocates of democracy would rather rely on imperfect markets than using the implementation of imperfect regulation which would be a better option. Governments should learn to compare the alternatives and play them through to the end.

What is the proper role of government? Some of the options are Anarchism/anarcho-capitalism which is based on voluntary actions. The Minimal/lightwalthman state only requires a small role of government. Classical Liberalism believes in basic infrastructure and welfare for the needy. Social democracy provides a bigger role for the state including provision for education, welfare, health. Communism and Fascism work by the nationalisation of means of production.

Currently the state spends over 50 % of GDP on welfare which traps people in poverty. The NHS is one of the worst examples of medical care in western world. Business regulations tie up employment issues in red tape. Race relations have had a profound impact on the freedom of association. Individual rights have been taken away by the coercion of government. People must learn from their mistakes in order to be fully grown adults and the state must stay out of the way of that process.

Does state prohibition work?

Somewhere in the world each of the following activities or substances are illegal: Prostitution, pornography, gambling, recreational drugs, gun ownership, and boxing. Boxing is illegal in Sweden and Norway. Individuals should have a right of self-ownership; therefore individuals may do as they wish, as long as they do not infringe the rights of others. The big question is defining those grey areas of ‘harm to others’. What seems to be missing from the debate is the fact that rights are okay as long as they do not impact on other people.

The moral argument is where the discussion should end but most people are left dissatisfied with those arguments

1. Prohibition places markets into the hands of criminal enterprises
2. Prohibition increases the risks of already risky activities
3. Prohibition criminalises otherwise law-abiding people
4. Prohibition imposes substantial opportunity cost on society (money spent on pursuing consent crimes)
5. Prohibition increases public ignorance
6. Prohibition almost never works

Why do prohibitions fail?

1. Off-setting behaviour
2. Forbidden fruit effect
3. Addresses symptoms rather than causes of social problems
4. Requires a level of interference and public spending unacceptable in a free society

The moral choices should be for individuals rather than for the state to impose those restrictions on people.