|Peter Boettke|

A free society is a "giving" society, not a "taking" one. In fact, all "taking" is limited to cases where there is a corresponding "giving". But in a truly free society, the "giving" will far exceed the "taking". The core principle of social cooperation in a society of free individuals is productive specialization and mutually beneficial exchange. But such a society also relies on compassion and caring to aid those in desperate need through no fault of their own. While the standard political discourse is focused on a battle over the public purse --- either the state demanding more resources to finance its activities, or opponents arguing that the state should be starved of resources --- the real debate that is too rarely discussed is the appropriate scope of governmental activities. The public discourse for those who advocate a free society must move from starving the state of resources to starving the state of responsibility.

One very ineffective strategy for starving the state of responsibility is to deny that there are social ills of poverty, ignroance and squalor. A free market, the argument might go, will eliminate all social ills through its ruthless efficiency and constant movement toward technological improvement and greater material well-being. I am as strong a believer in the powers of the market as anyone you will met, but I am willing to admit that even in the most laissez faire society we can imagine, there will be social problems of poverty, ignorance and squalor that must be addressed, and the price system may not be the best mechanism for addressing those issues. Instead, we might need to rely on voluntary charity and non-profit initiatives to address serious problems. It is important to demonstrate that the logic of political action may very well fail in the delivery of the required services to address the identified social ills -- as the work by Gordon Tullock so exemplifies, or even that of Charles Murray. But for a defense of a truly free society, we must move I would argue beyond the critique of public sector solutions, and demonstrate that the volunatry sector can take up that responsibility effectively and efficiently.

Phlianthropic enterprise will be necessary for a free society to work. The remaining question is not about whether or not "giving" is part of a society of free individuals --- it is! -- the question is how to give effectively to address the social problems of poverty, ignorance and squalor.

I have actually thought about this question quite a bit -- do in no small part to my long association with the great Richard Cornuelle. I was, because of Dick's sponsorship, able to be engaged for close to 20 years in both sides of this enterprise as a recepient and as a giving officer. My main thoughts about the supply side of this enterprise can be found in a paper with David Prychikto that was published in Conversations in Philanthropy, 1 (2004) and in some subsquent work with Chris Coyne, but see our paper "An Entrepreneurial Theory of Social and Cultural Change" (2004).

In a free society, the motivating incentives and the guiding signals provided by private property rights, free pricing and accurate profit and loss accounting serve to steer economic activitiy in a way to realize the gains from trade and capture all the gains from innovation. But in a free society can we be as confident about the activities in the non-for-profit sector being steered to realize the desired results and provide the ameliorating and alleviating actions so as to effective address the problems of poverty, ignorance and squalor. What is the functional equivalent in the non-profit space of property, prices and profit/loss?

There is no clear answer. And furthermore, the contemporary efforts to "measure" effectiveness suffer all the same basic economic accounting problems that G. Warren Nutter identified with Soviet measures of economic activity and well-being. You cannot pretend to have "market data" where no "market" exists, and trying to develop proxies is an elaborate exercise in fabrication. You will measure something, but you will not measure value creation, nor will you measure effectiveness at solving the problems, let alone solving them efficiently.

So what are we to do if we must rely on "giving" for a free society to work, but we cannot rely on something approximating the measures of mutual gains from trade and improvements in the productive specialization of individuals that we do in the market?

Well, in the articles above the case was made for a shift in the philanthropic measures from betting on projects to betting on people and then relying on reputational collaterial as the key disciplinary device. Ultimately, you are betting on projects that will address the social ills of poverty, ignorance and squalor, but the greatest project design in the world will not be very good unless you have the best talent you can get who are committed to that project working toward that goal. People make projects work. And the best predictor of people is past productivity in pursuing projects similar to the ones you want to bet on now.

If you get caught up on projects, and not people, then "giving" can be misdirected by intellectual fads and fashion. The presentism of the moment dictates the activity, rather than a long term vision of what is the "right thing to do".

In an essay originally written to honor Hayek in 1979, James Buchanan addressed the issue of funding in the battle of ideas, and he makes the following observation which I believe is as relevant today and as keen an observation as it was then for today. As Buchanan wrote:

But I want to draw your attention to something more, to an aspect that allowed Professor Hayek to endure the lonely years, an aspect that may too readily be overlooked. Hayek’s position was made more tolerable by a few sources of external financial support, a few scattered persons with access to funds who recognized the value and importance of ideas. Hayek was given such support for his research, for The Constitution of Liberty, and for the beginnings of Law, Legislation and Liberty. He was supported indirectly, but importantly, via support of the Mt. Pelerin Society, the international society of market-oriented scholars and leaders, a society that was created and maintained almost single-handedly by Hayek. He was supported by lecture invitations to such as the old Volker Fund conferences, where he could try out his ideas, and where so many of my own generation first came to know both the man and these ideas. I cannot list all of those who supported Hayek in those lean years; I do not know who they were. I only know that they were an extremely small group of men and foundations, and I also know that the Realm-Earhart Foundations were almost unique in sticking to Hayek through the very worst of times. I think we should draw some lessons from this experience. We should, I think, appreciate that ideas matter, and that financial support for the generation of ideas matters. Those who supported Professor Hayek in the lonely years were courageous in their expressions of confidence in the man and the ideas he represented. They were not demanding of him some immediate relevance to then-topical issues of policy; they were not demanding of him that he try to communicate his ideas to mass audiences; they were not demanding of him that he produce fancy numbers to test self-evident hypotheses. (emphasis added)

'Tis the season for giving, and we should give wisely and generously to the causes we care deeply about and those in our family and communities who we love and cherish. But in our giving, think about the broader issue of what is demanded of a free society and to think about how effectively we are going to starve the state of responsibility. It is only if we can rely on the market and the non-market voluntary sector to not only deliver the material standards of living we desire, but also to ameliorate and ultimately alleviate the social tensions of poverty, ignorance and squalor will a free society be on the menu of choices for social change. In order for that to be realized, we have to bet on people, not on projects. Trust that the right people will do what is required to meet the long term goals, and to hold them accountable for their misteps. The past is the best predictor of future success, and reputation is the most cherished asset we all hold. Outside of the clear incentives and signals of property, prices and profit/loss, this is the best we have to rely on in order to make sure that "giving" results not in "takng" but in effectively "doing."