Friday, July 25, 2008

Prosperity and Freedom

Prosperity begins with freedom. But what is freedom?

Freedom is a process, not a result. It is a process that taps all the knowledge scattered among the human race, knowledge that is impossible to collect in time or in one place. Freedom utilizes more knowledge than any one person could ever gather and manage. On a large scale, everything freedom produces is indirect, unpredictable, and sometimes even unpleasant. That is why it is so difficult to "manage" a free society. It is endlessly adaptable and endlessly creative.

At the same time, freedom must have commonly accepted rules of behavior in order to get anything done. These rules evolve in the culture, where they are drawn from human nature. Secondarily, they are expressed in legislation and regulation, which codify the evolving norms of behavior.

Understanding the nature of freedom makes it possible to understand prosperity, whether we are talking about individual wealth, the wealth of a successful company, or national wealth. Unless it is accumulated by force or fraud, wealth must be earned in a free society. That means dealing with an environment that is constantly evolving and with knowledge that is rarely complete. The image of the confident entrepreneur who never makes a mistake or is haunted by doubt is about as accurate as belief in a god-king.

Individual liberty, private property rights, and free trade do not guarantee a utopia. But they do make it possible to efficiently utilize all the knowledge that humans discover, and do so morally, without violence or theft.

Freedom is a process that does not guarantee prosperity; it make prosperity possible. But what form and shape that prosperity might take is anyone's guess, an adventure into one new world after another.

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