The impetus for writing this note was a piece by the well-known Russian commentator Yulia Latynina titled “In Defense of the Cannibal’s Rights, or Liberal Fundamentalism.” In her article, Latynina discusses how human rights organizations help the international bureaucracy oppress everything under the sun. Without entering into a debate with the content of Latynina’s article, I will note only one passage that led to the writing of this piece:

“A new ideology dominates the world, and the name of this ideology is liberal fundamentalism. Liberal fundamentalism denies the state the right to wage wars and arrest people, but believes that the state should provide everyone with money, housing, and education. Liberal fundamentalism calls any Western state a dictatorship, and any terrorist a victim of the Western state” — Latynina informs us.

Honestly, I reread this paragraph several times to make sure I understood everything correctly. I might have accepted this statement, gritting my teeth, if it were clear from context that she was talking about American “liberalism,” which, before claiming this name for itself, was always and everywhere called socialism. But no — she is talking not simply about liberalism, but about some “liberal fundamentalism.” Remembering that fundamentalism is, so to speak, an attempt to “hold fast to the roots,” I became even more bewildered, because anyone even slightly acquainted with liberalism knows that it — and especially in its “fundamentalist” version — absolutely cannot believe that “the state should provide everyone with money, housing, and education.”

This looseness in terminology, to put it mildly, caused me while reading Latynina’s article to constantly check whether she calls by “terrorism” the same thing I do, and whether it turned out that she was actually talking about cross-stitch embroidery circles?

This example is yet more evidence that an ongoing “war of terms” is underway in the world. Latynina’s free use of language goes far beyond incompetence. One cannot make such a mistake; such things can only be intentional.

Until relatively recently, this problem was associated primarily with the manipulation of meanings, which dictatorships are so fond of doing, and the classics describing this occupation are, of course, Orwell and Bradbury (the latter, I remind you, has “firemen” who burn books). However, the activity of substituting meanings flourishes mightily even without any dictatorships.

Let me provide a closer example. In Ukraine, they have finally settled on an ideological label for the “Donetsk people.” Do you know what Yanukovych and Azarov are called there? You’ll never guess. They are “neoliberals” — along with Mubarak and Gaddafi, by the way. What brands them as such is their cooperation with the IMF and the desire to “save on working people.” Again, let us set aside the content itself and focus on the terminology. Note that calling Yanukovych and Azarov “liberals” somehow didn’t quite sit right. But calling them mysterious “neoliberals” — that works just fine.

I never paid close attention to the intricacies of the emergence of “neoliberalism,” “neoconservatism,” and the like. I recall that the specific origin of at least the first term was most frequently mentioned.

It seems this is indeed the case, because the Wikipedia article states in the very first part that “the well-known liberal writer Mario Vargas Llosa believes that no independent phenomenon called ’neoliberalism’ exists, and that the term was invented by opponents of liberalism ‘in order to semantically devalue the theory of liberalism.’”

The subsequent content of the Wikipedia article only confirms this conclusion. “According to the theory of neoliberalism, nations and states also act in the role of enterprises in the world market,” Wikipedia informs us. “From the standpoint of the philosophy of neoliberalism, the existence and functioning of the market possesses inherent value, independent of its impact on the production of goods and services, and the laws governing market structures form the fundamental basis of ethics. Accordingly, neoliberalism makes no distinction between a market economy and a market society, and its ethical concept harkens back to mercantilism.”

Again, for anyone familiar with liberalism, this collection of words will only provoke laughter. For those who are not familiar, let me explain: the first sentence, about nations and states appearing on the market as enterprises, is precisely one opinion among many held by statist theorists — that is, supporters of the state and its intervention. This opinion directly leads them toward protectionism, not toward demanding its abolition, as the Wikipedia article claims. The two following sentences are simply ideological accusations against liberalism from the leftist camp, formulated as a “neutral” description. It is as if a medieval inquisitor, arriving in our society and describing it in Wikipedia, would report that “they not only do not believe that the trial by water can identify a witch, but also believe that witches do not spoil crops and do not cast spells on livestock.” Particularly amusing here are the references to mercantilism — the struggle against which liberalism actually began — but let us leave that aside.

What I want to point out is that the very concept of “neoliberalism” is internally contradictory. I have no objection to people professing whatever confused and contradictory views they like; I object to these views being somehow tied to already existing ideas. Call them something else — why drag liberalism in here and tack on this “neo”? If, bearing in mind that “a cat has four legs and a long tail,” we call a dog that has the same distinctive features a cat, we commit an error of classification, even if we call the dog a “neocat.” Exactly so, some resemblance to certain liberal theses does not make the mythical “neoliberalism” a reality.

When you call something “neo,” you thereby affirm a close connection between this phenomenon and its predecessor. The very name “neoliberalism” postulates a connection with “old liberalism.” And such a connection, pardon me, does not exist — if only because “neoliberalism” does not exist as a coherent idea. Therefore, it should be recognized that Mario Llosa was indeed right.

It seems we are dealing not with ordinary confusion — which is so characteristic of Wikipedia — but with a phenomenon typical of the left: when describing their enemies, they themselves invent the definitions and ideology that these enemies allegedly hold. Llosa’s observation clearly indicates that for all the diversity of contemporary liberalism, there is no powerful current within it that identifies itself with “neoliberalism.” Such a current exists only in the minds of the left, and they joyfully inform the world about it in Wikipedia notes and other public places.

Someone will tell me that all this is, so to speak, ideological nitpicking that has no bearing on the lives of working people. Of course, that is not true, but for lack of space, I will simply provide an example of a substitution of meanings that has the most practical significance. Let me turn to inflation.

Let us take the specie standard, in which the monetary unit is defined by the weight of the metal. Now imagine that someone produces coins of lesser weight but with the same face value. Why does he do this? Because he can pass off the same weight of metal as a greater number of monetary units — that is, make more coins from the same piece of gold or silver. States usually do not like such people, call them counterfeiters, and put them in prison. However, states themselves regularly engaged in “debasement of the coin” — that is, quietly reduced its weight while maintaining the face value. That is, a situation arose when the number of monetary units (coins) significantly exceeded the amount of money (the weight of metal accepted as the monetary unit). This is inflation.

Before the Second World War, inflation meant precisely an increase in the money supply carried out by the state. However, then, for many reasons, inflation came to mean price increases, which usually follow as a result of this procedure. Here is where the substitution occurred: when the consequence began to be called by the same name as its cause, and the cause itself was, as it were, removed from the public’s field of vision.

However, price increases are caused by changes in supply and demand. In countries like ours, chaotic state activity and corruption affect price increases. And is all this inflation? More precisely, does this indicator have political-economic, rather than purely theoretical, significance in such cases? Of course not.

One might find it amusing to watch how consumer prices change over the course of a year, but the main thing — the state’s production of the money supply — is no longer captured by the inflation parameter, and therefore it no longer has any practical significance.

P.S. By the way, since we were talking about liberalism, let us note that the activities of liberalism’s opponents confirm the things that liberalism describes and declares to exist regardless of whether we desire them or “believe” in them. For example, the self-organizing market. The way substitutions of meaning spread shows how the market operates and how effective it is. Without any conspiracies, censorship, organized coordination, or directives from the “center,” based purely on self-interest and the coincidence of interests, a picture of the world convenient for the participants in this process emerges through substitutions of meaning.

On the Idea of Improvement, “Belief in the Market,” “Models,” and Lord Acton

In any discussion on political economy topics, sooner or later the moment arrives when one of the sides begins to assert that all of this is, so to speak, a matter of faith. “You believe in the market,” my opponents say to me. Another version of the same approach is playing the “models” card. There is, they say, a “market model,” and there exist other, obviously “non-market” models.

The whole trouble is that while non-market models do exist and can be described, it is impossible to determine what exactly a “market” model is. Similarly, it is impossible to determine what the “belief in the market” is supposedly about. And another trouble is that nowhere is this written down. The things I want to say come to me only because I have to read and think on this topic.

So, I will begin by stating that no “market” exists — not in the sense in which we ordinarily acknowledge the existence of something. That is, there is no office, no sign, no bosses, no subordinates, no instructions, no directives, and no orders. What does exist? There are institutions. What are these? They are patterns of behavior. You can follow them — and most often you do — without even being aware of them. You cannot clearly isolate and describe institutions; they are changeable and blur as you approach them. Why? Because they are the practice of people. People learn — most often unconsciously — from each other practices that produce results and which they therefore consider useful. Institutions are, for example, law or money — no one invented them specifically; they are practices that allow for better results.

What then can we call a “market economy”? This is any free production and exchange between people. A “market” arises where a human “self” appears — the ability to separate oneself from another and to separate “mine” from “yours.” Even in an isolated tribe there are elements of a “market economy.”

Therefore, any economy is market-based. The USSR or North Korea also has a “market.” The whole difference between eras and countries is the degree to which some people allow other people to freely produce and exchange the products of their labor. The freer it is, the less it resembles North Korea. Calling this a “model” is somewhat meaningless, because this “model” has existed throughout human history, and it is unclear what a “non-model” would be.

Where then do all these ideas about “models” and “faith” come from? As in any other endeavor, the world we see often differs from the real one. To all appearances, the Earth is flat, and the Sun rotates around it, but it seems that in reality this is not quite so. The same applies to institutions arising through practice. After all, no one created them specially; they have no author. Therefore, to comprehend the effects that arise from free production and exchange, special mental efforts are needed. These special efforts began to be applied in the eighteenth and nineteenth centuries, and many interesting things were discovered regarding the origins of the wealth of nations. It turned out that the real regularities often differ from people’s everyday notions of what they themselves are doing.

And it is at this point that the confusion in which we all still live arises. This confusion is connected with the fact that at the moment economics emerged as a science, the economy itself — as a process of production and exchange — was highly regulated. Against the general background of faith in science and progress, the new science was expected to provide recipes for “improvement,” and they were not long in coming. In this context, if classical economists understood “improvement” as the removal of existing obstacles to people’s activities, then all manner of thinkers like Karl Marx or the German “Historical School” understood the same improvements as the creation of new obstacles. Everyone talked about “improvements” in the nineteenth century, talked about them in the twentieth, continue to talk about them now, and have been unable to sort this out to this day.

An illustration of the confusion can be found in the classic statement of Lord Acton, who said that liberalism speaks not about what is, but about what ought to be. In reality, as is clearly visible today, the situation is directly opposite. Supporters of freedom say that people themselves can take care of themselves in the best possible way, and therefore “improvement” consists in removing obstacles to production and exchange. Consequently, supporters of freedom speak about what is, not about what ought to be, because those real institutions that we use in everyday life are the product of evolution, not the result of a conscious act of political creation. That is, no matter what you invent, what improvements you make, the reality of human nature will reshape all of this in its own way, and therefore the political practice of supporters of freedom should consist not in inventing new measures of social engineering, but in clearing away and eliminating regulatory debris that prevents people from living.

I believe that the idea of “improvement” or social engineering played a fatal role in the fact that we are still arguing about the same problems that Frederick Bastiat wrote about in the mid-nineteenth century (characteristically, his opponents make the same arguments in the same words as today). The idea of “improvement” naturally presupposes “models,” “plans,” and the specific language that arises around this activity.

Let me provide an example of this confusion between “what is” and “what ought to be,” as well as how specific language prevents people from seeing the reality in which they live. This is an example from Soviet history. An ordinary economist, educated in models and other categories of “improvement,” would say that “there is no market in the USSR.” However, in reality, administrative markets — as Kordonsky tells us — had existed there for a long time, and the mass market — that is, voluntary exchange between people on a large scale — appeared after the weakening of direct violence, in the seventies and eighties. I mean the system of blata, a system astonishing in its scale and efficiency, despite the fact that it was essentially a barter system. Anyone who lived in the USSR remembers that the stores had nothing, but everyone had everything in their refrigerators. Moreover, the subjects of exchange were not only goods, but also services, positions, opportunities, and so on. This is our very “what is” — people, once somewhat released into freedom, created a self-organizing system with their own efforts, which the largest state in the world could not cope with.

Now we move on to models and “what ought to be.” When the USSR began to fall apart — partly thanks to the system of blata — economists trained in models began to talk about the “transition to the market,” “introduction of the market,” and the like. This is our “what ought to be.” And, since there is no other language besides the language of social engineering for such actions, people believed that such a task actually existed. The incorrect language — or, what amounts to almost the same thing, the absence of adequate language — allowed people not to notice, or more precisely, not to give due weight to the fact that they themselves, without any command, created a phenomenon of grand scale: in a huge country, they managed to establish a process of voluntary exchange alternative to state-controlled exchange (I note, quite risky from the standpoint of ordinary economics). Therefore, no one stopped the “reformers” and told them that the USSR had already practically “transitioned to the market” by a completely natural path, and that now all improvements consist in removing the remaining obstacles to the voluntary activities of people. Of course, this task, had it actually been set, would have been very difficult. But it would have dictated completely different decisions than those that were implemented in the late eighties and early nineties under the influence of the idea of “introducing the market.” And I think we would not be experiencing the current economic convulsions and would not be grieving over the prospects of convulsions to come.

I think we all need to start ridding ourselves of the words and constructions generated by social engineering and the idea of improvement. For example, statists like to giggle about the common expression “the market will sort everything out on its own.” They say that idiotic liberals believe in the miracle of the invisible hand, which somehow, in an incomprehensible way, will suddenly on its own make everything good. But replace the word “market” with the word “people,” and everything falls into place. After all, the action of the market is the result of the activity of millions of people who do not know each other. Their efforts are invisible because they are not coordinated from one center, television does not report on them, and newspapers do not write about them. But these efforts are hundreds of thousands of times more powerful, not to mention more efficient, than any targeted actions undertaken by any government. The hard work of millions — that is what underlies the idea of “the invisible hand will sort everything out on its own.” We replaced one word and everything became clear. “People will sort everything out.” This is even somewhat obvious.

And now, about faith. Can it really be that in all of this there is not some axiom that would require only faith? Probably so. And if we are to speak of faith, then I believe that people everywhere and always, with all possible skill and ingenuity, strive to achieve their own goals, as they understand them at any given moment. This is what I believe. And you?