Thoughts on economics and liberty

Category: Philosophy

Banishing the concept of foreign aid

Sanjeev Sabhlok

[This was published on 1 October 2009 in Freedom First]

In a civilized free society no one can, or should, be self-sufficient. Division of labour is a typical feature of free societies by which each worker specializes and produces only a small part of what he will ultimately consume. The rest of his needs are met by exchanging, in the marketplace, the goods or services he produces. Therefore no one is self-sufficient. But this does not (or should not) imply dependency. Indeed, the citizen of a free society is an exemplar of self-reliance and independence, and declines charity unless he is in desperate need.

Unfortunately, the concepts of self-respect and self-reliance are totally missing from arguments made by those who insist on increasing foreign aid. Thus, in 2007 the philosopher Peter Singer asked rich countries to spend $808 billion each year in foreign aid.[1]

Aid violates human dignity

The liberal opposes foreign aid. He believes that except for life-threatening emergencies, no one has the right to help us without our prior consent. Self-respecting people insist on being left alone to determine their own destiny, no matter if it leads them to privation and distress. Far better to live in self-created poverty than to receive foreign aid that humiliates the recipient while exalting the donor.

It is one thing for rich nations to trade with poor nations but quite another to look down upon them by foisting unwanted foreign aid. That their ‘generosity’ is suspect is evident from the many trade restrictions they impose on developing nations. It is high time for the West to stop this farce and stop carrying the ‘white man’s burden’. Let the poor nations be left to their fate.

Poverty is never caused by shortage of foreign aid

The liberal opposes foreign aid because he knows that foreign aid has nothing to do with removal of poverty. Poverty has never been caused by a shortage of foreign aid! Recipient countries can, if they want to, bootstrap themselves and become wealthy in less than a generation by adopting the policies of freedom. Capitalism can readily – and without fail – transform poor societies into wealthy ones. But poor countries choose to decline the medicine provided by the Adam Smith pharmacy, preferring the sweet poison administered by Karl Marx & Co., instead.

Therefore, if countries like India want to be poor, what can foreign aid do to stop their desperate mania? Throwing money into such socialist dens of corruption can’t ever help the poor, anyway. In such countries, foreign aid quickly finds its way into Swiss bank accounts of corrupt politicians and bureaucrats. Even where aid is directly supervised by donor nations (as in Afghanistan or Iraq) corrupt practices can easily creep in because no one is accountable. As Peter Bauer found, foreign aid usually makes poverty worse.[2]

Countries like India can, if they want, readily eliminate poverty by using a negative income tax regime (see my article in the August 2009 issue of Freedom First). But they don’t want to eliminate poverty. They want, instead, corruption-ridden subsidies and misdirected wasteful programs. And if that is what they want, then that is what they should get. Why should foreign nations interfere by giving foreign aid?

Aid arms dictators and increases genocides

There is also a deeply sinister side to foreign aid. Foreign aid is fungible. During a drought, local politicians would have bought food worth Rs. X of their country’s own money for the poor; but with foreign aid taking care of food, they can happily divert Rs. X to purchase guns. Aid therefore strengthens totalitarian dictators and increases genocides and global terrorism.

Teach the poor to fish, don’t give them fish

The most important argument against foreign aid is that it is only a palliative. Charity can give people fish to eat today but it can’t teach them to fish. It also becomes additive, particularly for bureaucrats of international organizations who need poverty in order to protect their jobs.

The permanent cure for poverty is therefore clear: not to keep giving fish but to teach the poor how to fish. Genuine well-wishers of the poor should therefore stop all charitable work and become equal partners and friends of the poor. They can, as part of this role, teach poor nations about freedom and good governance. Taking this approach is not only ethical, cheaper, and far more effective, it will also ultimately protect the West from terrorism.

But before the West can think of teaching freedom to poor nations, it must throw open its markets and eliminate trade barriers. Its credibility will remain suspect until it actively supports free trade.

Having done that, it can adopt a range of respectful methods to teach the poor nations. One way could be to make the classics of freedom (such as books by Adam Smith and John Locke) readily available at low cost in bookshops in poor nations. Apart from this general educational approach, it is crucial that Western nations do not directly teach poorer nations; for that could be interpreted as racist arrogance. Freedom must be promoted through poor nations’ own nationals.

Developing country liberals can be supported by giving them scholarships to study in good Western universities provided they commit to return to their countries afterwards. Forming official partnerships with poor nations should also be explored. One example could be the secondment of developing country bureaucrats to local, state and federal governments of the West where they will pick up the processes of good governance. Finally, policy partnerships can be created through which the rich and poor countries jointly work on agreed policy areas such as regulatory reform.

No matter which method of engagement with the poor nations is chosen, one thing is clear: that the calls by international organizations and utopian philosophers to establish global foreign aid ‘targets’ should be rejected outright. The best foreign aid target is precisely equal to zero; not one cent more.

Compensation for pollution

There may be cases, unrelated to foreign aid, where rich countries can be called upon to transfer funds to poorer nations. This can arise where developing countries experience negative externalities from pollutants such as greenhouse gas emissions emitted by rich countries. I should note here that this argument is contingent on unequivocal proof of harm (particularly in the case of CO2, there are numerous dissenting views about whether it is a pollutant in the first place). Such compensation must not be made out to the governments of poor countries. Instead it should be transferred to private businesses that ‘clean-up’ the environment, such as by growing new trees.

Freedom Team of India, and Adharshila

The Freedom Team of India ( has now floated Adharshila, a concept that involves creating ground-level branches to promote liberal ideas. The team has also established a Speakers Panel comprising eminent Indian liberals. An increasing number of opportunities therefore exist for all Indian liberals to get involved. Please join! Even small contributions of your time and effort will quickly add up.

[1] Singer, Peter, ‘Giving till It Doesn’t Hurt’, The Age, 6 January 2007.

[2] See his 1991 book: The Development Frontier: Essays in Applied Economics.

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Greek thought, the harbinger of world liberty, has its direct source in INDIA

While revising my manuscript The Discovery of Freedom‘ (DOF) I could not but help noting how similar the view of Indian sceptics including Buddha, and Socrates were. And that Indians came earlier in historical time than the Greeks. So yesterday I had this question: did India influence Greece? A bit of reading from books at home and a bit of research on Google seems to have ‘solved’ the puzzle.

When, upon reading A Critical History of Greek Philosophy by W.T. Stace (MacMillan,1965) I came across his rather niggardly view on Indian philosophy, arguing that Indian thought doesn’t arise from ‘pure thought’ and that it is ‘poetic rather than scientific’ (p.15), I decided to investigate further. I have now found a recent American PhD dissertation (2000) that uses the most recent sources to firmly demonstrate that it was INDIAN scepticism that traveled to Greece through Persia and brought out the temperament of questioning that finally led to Socrates. I’ve extracted a short section from the dissertation below (the dissertation is publicly available). I encourage everyone to read the entire dissertation, if for nothing else but to learn more about the sophists and to understand the importance of Protagoras who may ultimately turn out to be more important in world history than even Socrates.

Does it matter to me whether humanity has benefited in the areas of mathematics (number system) and philosophy more from India than from, say, Greece? I’m not particularly fussed where the source is, India or Greece. These ideas belong to all of us. Humanity. No country owns them, at least not today. What I do want, though, is accurate attribution of sources. It won’t do to attribute the first seeds of rational thought in the world to Greece when these ideas arose in India, and were transmitted by Indians to the Greeks. I’m not a specialist in history so I won’t finalise my opinion on this issue, but I will note in DOF the strong possibility of Rahula’s research findings being true.


Extract from The Untold Story about Greek Rational Thought: Buddhist and Other Indian Rationalist Influences on Sophist Rhetoric, PhD dissertation by BASNAGODA RAHULA, found as PDF on the internet. [Copy on my server] [This is a conversion from PDF to text – a painful process with a lot of errors. A lot of manual editing, and references have been removed. They are all available in the original PDF].

General Signs of Indian Influence on Protagoras and Gorgias

Three factors may justify the possibility that the unusual resemblance of Indian rationalist thoughts to Greek sophist thinking was caused by a connection between the two societies. First, Protagoras, the alleged father of Greek sophistry, was given Persian education, an easy route to the access of Indian wisdom. During Xerxes’ invasion of Greece, Protagoras’ father, an extremely rich person in Abdera, entertained Xerxes and received the emperor’s permission to educate Protagoras under Magi. This report was supported by Herodotus’ notes that Xerxes, during his return journey, “stopped at Abdera and made a fact of friendship with them [people in Abdera].” As Untersteiner noted, Protagoras was a young child when Xerxes’ visit to Abdera took place, and Protagoras education under Magi could have been arranged for a later date (2). Based on the traditional practice of the pupil’s visiting the master, one may conclude that Protagoras later went to Susa and studied under Magi. This visit would have been more profitable for Protagoras since he would hardly miss Indian wisdom those days in the central part of the Persian empire. On the other hand, wherever Protagoras was educated, knowledge coming from Persia could have included Indian thinking since Darius had already accommodated, as the next chapter will elucidate, Indian wisdom in the Persian empire. Protagoras’ Persian education seems to be a strong support for his possible acquisition of Indian concepts in epistemology and other fields.

Second, Protagoras was the pupil of Democritus who was presumably benefited by a multitude of Indian concepts, including Buddhist concepts as his major source of influence. Philostratus was the first informant of Protagoras’ learning from Democritus,’ and this information can also be true, “concerning the intellectual development of Protagoras” (Untersteiner 2). Particularly, Democritus’ theory of knowledge seems to have enkindled a new interest in epistemological inquires among his followers, and Protagoras’ directions in the same field may have been guided by Democritus. Protagoras’ closeness in his epistemological studies to the Indian counterparts will be discussed later, but here it should be briefly stated that Democritus’ possible Indian influence could hardly leave no marks on his pupil Protagoras.

Third, Gorgias was the student of Empedocles, whose philosophical theories reflect his possible familiarity with Indian idealistic and rationalistic views. Laertius and Quintillian and some others reported that Gorgias studied under Empedocles, and there is no reason to doubt these reports. As Untersteiner indicated, Empedocles’ influence on Gorgias is “generally recognized by scholars” (92), and Gorgias’ particular interest in epistemology is a possible sign of this influence. It is probable that both Protagoras and Gorgias exhibited a similar interest in epistemology and both maintained skepticism towards metaphysical concepts since the teachers of the two sophists retained a particular interest in the same field.

The major aspects of sophist rational thought and their similarity with the Indian counterpart will be discussed in separate sections, but it seems apt to highlight here a unique flavor in argumentation entertained by Protagoras-the flavor for arguing for or/and against any topic-as a possible Indian derivation. Perhaps this hypothesis appears to be an overstatement since argument on probabilities is said to be of Greek origin. Nevertheless, a careful examination of the practices in Indian debating during the sixth century B.C.E. and comparison of those practices with Protagoras’ attitude towards argumentation justify the possibility of this hypothesis.

Interestingly, there was a group of Indian debaters namely Vitandavadins who roamed among all sorts of thinkers and challenged other views. “He [a Vitandavadin] had no views of his own but merely indulged in eristic for the purpose of securing victory in argument” (Jayatilleke 217). Even though the word Vitandavadin did not occur in the Sutta Pitaka, one finds numerous examples that during the sixth century B.C.E. these debaters frequented debating halls, parks, and other meeting places, challenging all sorts of views of other traditions, without maintaining any particular philosophy or theory of their own:

There are recluses and Brahmins who are clever, subtle, experienced in controversy, hair-splitters, who go about breaking to pieces by their intelligence [pannagatena] the speculations of others. Were I to pronounce this to be good, or that to be evil, these men might join issue with me, call upon me for my reasons, and point out my errors.’

These remarks suggest that those “recluses and Brahmins” were not those who held any particular view or theory but those who were indulged in debating rarely for the sake of defeating the opponents and establishing rhetorical power. Whatever concept or theory one held, those debaters opposed one’s position using their intelligence and verbal skill. This practice is farther confirmed by the sentence, “Some recluse or Brahmin is addicted to logic and reasoning.” Saccaka, who earned the description of “one who indulged in debate, a learned controversialist, who was held in high esteem by the common people” was, undoubtedly, one of them. The Majjima Nikaya has preserved a very important sentence that reflects his theoretical practice and skill:

If I attacked a lifeless pillar with my language, it [the pillar] would totter, tremble, quake; how much more a human being!’ Saccaka was more a demonstration of his verbal power than a theorist. Here, he has presented no theory, but simply boasts about his invincible rhetorical power. ‘Whoever he argued with, he defeated the opponent’s theory without insisting on a particular view of his own but only using his verbal skill (eristic) and argumentation (antilogic) that would suit to the occasion. The Samyutta Nikaya has provided “an eye-witness’s account of these recluses and Brahmins in action” (Jayatilleke 221). Kundaliya, a visitor to the Buddha’s monastery, told the Buddha that he (Kundaliya) would visit parks and frequent assemblies as a regular habit because he had found interest in seeing some recluses and Brahmins having being engaged in debates. The purpose of those debates was only to emphasize their own argumentation (itivadapa mokkhanisamsam) and to disparage that of others.” All this evidence indicates that debating for the mere sake of reflecting the opposition had become a prevalent practice, as well as a crowd-gathering entertainment, during the time of the Buddha. The topics reportedly argued about by those controversialists speak a volume of this peculiar practice of debating. Most of the topics were in pairs, representing the thesis and the antithesis of the same subject. The following is the first list of such topics given in Pali texts:

The fact that they were originally in pairs is confirmed by the remarks attested to one particular pair of topics:

1.The universe is eternal/The universe is not eternal.
2. The universe is finite/The universe is not finite.
3. The soul is identical with the body/The soul is different from the body.
4. The enlightened person exists after death/The enlightened person does not exist after death.
5. An enlightened person does and does not exist after death/An enlightened person neither exists nor does not exist after death.'” A more expanded list of thirty-one topics, all in pairs and each pair dealing with the opposite of the same subject as given above, is found in the Lankavatara Sutra.’ The fact that they were originally in pairs is confirmed by the remarks attested to one particular pair of topics:

The threefold world is caused by ignorance, desire, and Karma. The threefold world is not caused by ignorance, desire, and Karma. This pair too belongs to the Lokayata category of questions. (qtd. in Jayatilleke 53)

It is obvious that this development of questions in pairs echoes the practice of debating, in which the mere skill in argumentation was emphasized. Debaters such as Saccaka, whose primary interest was “displaying dialectical skill and defeating their opponents, regardless of the nature of the arguments used” (Jayatilleke 219), would probably argue one day in favor of the infiniteness of the universe and the other day against it, depending on the position of his opponents. Even though some debaters actually held some theories of their own, rhetorical skill was the main weapon that they employed to attack the opposition and defend their own views. The important point here is that in India there was a predominant and widespread debating practice in which both the proponents and opponents vehemently debated on the thesis and the antithesis of the same topic, adducing equally powerful arguments.

In Greece Protagoras was the first rhetor to introduce this kind of argumentation. Laertius said that “Protagoras was the first to say that on every issue there are two arguments opposed to each other.” Clement repeated the same statement, saying that Greeks said, “Every argument has an opposite argument,” following Protagoras.” Seneca wrote, “Protagoras says that one can argue equally well on either side of any question, including the question itself whether both sides of any question can be argued.” Not only did Protagoras introduce this “eristic argument” as remarked by Hesychius,” but he also demonstrated the truth of his theory, arguing “by the method of questioning, a practice he originated.” Protagoras also “wrote down and prepared disputations on notable subjects.” Thus it is evident that Protagoras held his two-logoi theory as one of his major concepts, having introduced it, practiced it, and written treatises on it.

This theory of argumentation seems strikingly similar to the popular Indian concept of arguing for and against the same topic. Just as the topics used by Indian debaters consisted of the direct affirmation and the direct negation of the same statement, Protagoras’ topics also consisted of pairs of two extreme opposites. Similarly, the field from which these questions were drawn seems to be exactly the same for both Protagoras and the Indian debaters:

Protagoras, when once the existence of ‘two logoi in opposition to each other’ was discovered as inherent in all reality whenever one tries to consider it abstractly, translated this properly of the metaphysical world into contradictory pairs of opposites, making of it a precept for argument; that is to say, he must have demolished by dialectical arguments and with a certain systematic severity all the principle concepts created by Reason, beginning from the problem of God in order to pass on to the others. (Untersteiner 35)

Notably, Protagoras’ “contradictory pairs of opposites,” as Untersteiner has stated above, did not originate in traditional Greek rhetoric; rather, it originated in metaphysics, the field from which the Indian debaters also selected their topics. There is the possibility that Protagoras learned this practice from Democritus, who could have been very much exposed to the Indian way of debating while he was in India. One should also wonder why Protagoras was not exposed to the same theory of argumentation while he was receiving his Persian education.

A controversial situation might arise from this disclosure since the argument about probabilities has long been accepted as an essential, inherent characteristic in traditional Greek rhetoric. It should be repeated, however, that the origin of systematic persuasion in Sicily was a little over two decades old when Protagoras came to Athens, and whatever arguments on probabilities that might have existed in Sicily before Protagoras began his rational persuasion in Athens was probably in legal discourses. Contradictory references to the existence of argument about probabilities in Sicily would make this second assumption even more doubtful. Plato, referring to the example of a weakling’s assault on a strong man, indicated that Tisias argued about probabilities in legal discourses. However, Aristotle cited the same example to suggest that Corax, not Tisias, argued on probabilities in legal speeches. In contrast to both, Cicero, relying on another Aristotelian source that is now lost, remarked that Corax and Tisias prepared only a handbook for the civilians to regain their (civilians’) lost property from the fallen tyrants.” Another alleged reference is that Corax “developed a tripartite scheme of oratory to help the citizens speak in the assembly” (Kennedy, Art of Persuasion in Greece 59). However, no argument about probabilities was ever mentioned in this scheme of oratory that was invented at least a decade after the origin of judiciary discourses. If whatever persuasion on probabilities ever achieved any importance in Sicily before Protagoras entered upon rational argumentation in Athens, that would probably be only in legal speeches.

As noted in the introduction, when Gorgias and Tisias visited Athens about three decades after Corax and Tisias prepared the earliest handbook on legal discourses, Protagoras had already enkindled an interest in debates, eristic, and antilogic, using his two-logoi theory. He introduced “the method of attacking any thesis,” conducted debates, and earned the nickname “master of wrangling.”‘ His two books—The Art of Debating and Contradictory Arguments in Two Books—may further authenticate his intention and interest in this field. This rhetorical situation, which apparently had no roots in Greek culture, connects, both in appearance and content, only to the debating habits practiced by the Indian debaters during the late sixth century and the early fifth century B.C.E.

The difference between Protagoras and Sicilian Gorgias may be marked by the latter’s overemphasis on the invincible power of language, ft is apparent that Gorgias had developed this attitude towards language before he visited Athens in 427 B.C.E, as an ambassador to Leontini since his sensational speech in Athens against the impending attack on Leontini by Syracuse bears witness to his confidence in the power of language and his demonstration of that power, “Encomium on Helen” farther clarifies his attitude towards language, “Speech is a powerful lord,” which affects the mentality of all sort of people,” Words are like magic and drags that cause unbelievable changes in individuals,’ While Protagoras maintained that antilogic and eristic would empower the opposing argument, Gorgias mainly held that the power of the language itself might determine the skill in persuasion.

One may observe a close similarity between Gorgias’ emphasis on the power of words and the Indian debater Saccaka’s assertion of the same, Saccaka, as quoted above, maintained the invincible power of words, giving his own exaggerated skill of frightening a lifeless pillar with his words. Based on the awareness of the highly competitive debating background during this time, it may be assumed that there were a host of Saccakas in India, maintaining the same power of words with some variations. This widespread emphasis on the power of language might invite one to investigate a possible Indian influence on Gorgias, who also asserted the same power of words. Overemphasis of language as a tool to beat the opposition in India and to convince the opposition in Sicily was determined by the demands in each society, but the invincible, almost magical power of words might have originated from the same source.

One important clue available to suggest a transmission of this concept to Gorgias is the possibility that Gorgias’ teacher Empedocles had known about the debating practices of Saccaka and of similar Indian debaters. The discussion in the previous chapter revealed that at least two contemporaries of the Buddha-Ajita and Kacchayana­ had held the theory of elements exactly in the same form as Empedocles held it, providing strong support for Empedocles’ possible borrowing of that theory from the Indian sources. Both Ajita and Kacchayana were themselves debaters, but the vital point is that they both were engaged in debates with Saccaka:

Saccaka is made to say that when he joined them [the six famous debaters including Ajita and Kacchayana] in debates, they evaded in one way or other, shifted the topic of discussion, and showed signs of irritation, anger, and displeasure. These are among the recognized ‘occasions for censure,’ and their mention here implies that Saccaka was victorious in these debates. (Jayatilleke 219)

So the probable assumption should be that, if Ajita’s and Kacchayana’s theories of elements reached Empedocles exactly in the same form, the Greek thinker should also have heard about the debating power and practices of Saccaka, the more famous figure than the two theorists of elements. The rest is understandable. Even though one may not hear Gorgias say anything about Empedocles, it is probable that Gorgias came to know about the invincible power of words from Empedocles. This assumption will be farther justified in the next section of the present chapters when Gorgias’ theory of knowledge is evaluated in the light of Indian skepticism.

The lives of the other sophist thinkers except of Critias are surprisingly obscure; little is known other than the reports that several of them were the pupils of either Protagoras or Gorgias. Nothing is known about Thrasymachus other than that he came from Chalcedon in Bithynia and lived in the second half of the fifth century B.C.E. Hippias was a contemporary of Socrates, but his life is unknown except Suidas’ report that Hippias learned from virtually unknown Hegesidamus.’ Antiphon the Sophist was mixed up with two other Antiphons, and, despite having a certain collection of his writings, his early life remains unknown.

Despite the unavailability of biographical details about these sophist thinkers, strong similarities exist between their thinking and Indian thought. Particularly, the common Indian theory of knowledge and the Buddhist theories of sociology and ethics bear an undeniable resemblance with the thoughts of Prodicus, Antiphon, and Critias. Perhaps, Protagoras’ and Gorgias’ inquiry into epistemology paved the way for the rest of the sophists to continue with the same investigation. All sophist thinkers generally maintained a close relationship with other sophists. Several of Platonic dialogues have shown that sophists gathered together and held conversations together. It is possible that the younger sophist thinkers learned from more honorable Protagoras and Gorgias, whose teachers were the possible borrowers from Indian sources.

Addendum: I made the following entry on Wikipedia on 23 March 2010, but my experience with them is very poor and it is that they will likely delete it. So be it. Let this information stay on my web page.

Indian thought as direct precursor of the Sophists

Basnagoda Rahula, in his PhD dissertation (December 2000) entitled, ‘The Untold Story about Greek Rational Thought: Buddhist and Other Indian Rationalist Influences on Sophist Rhetoric’ (Texas Tech University), provides evidence on the influence of Indian philosophy on Protagoras, the founder of sophistry. In particular, “a careful examination of the practices in Indian debating during the sixth century B.C.E. and comparison of those practices with Protagoras’ attitude towards argumentation justify the possibility of this hypothesis.”

Further readings

Accidental compilations of references that may be useful to me for further investigations if time permits:

1) India in early Greek literature: by Klaus Karttunen: here and here

2) India and the Greek World; A study in the transmission of culture by Sedlar, Jean W.



3) Early maritime linksIndian Economic & Social History Review, Vol. 31, No. 1, 65-88 (1994)

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Equal opportunity in the free society

Sanjeev Sabhlok

(This article was published in the May 2009 issue of Freedom First.)

Everyone must be equally free. On that everyone is agreed. But the fact that this equality of freedom translates to equal opportunity (EO), a major plank of the liberal platform, is an area of considerable contention and calls for careful consideration.

The erstwhile Swatantra Party committed, as the first of its 21 principles[1], to “equality of opportunity for all people without distinction of religion, caste, occupation or political affiliation”. Similarly, the Liberal Party of Australia believes “in equal opportunity for all Australians”. But wherefrom do these conceptions about EO arise, and what exactly do they mean?

Meaning of equal opportunity

The most important connotation of EO, on which there is general agreement, has to do with political equality – things like equal citizenship, universal franchise, the uniform application of laws, and absence of discriminatory obstacles to achieving higher (public) office. But as Friedrich Hayek noted, this conception does not mean “that … the chances of the different individuals [will] be made the same.”[2] EO does not imply equal prospects, leave alone equal outcomes. It is an enabling provision, with prospects and outcomes squarely determined by the efforts and demonstrated ability of each citizen.

The second part of EO is the social minimum – a connotation not at all agreed to by all people who advocate liberty. I side with Hayek and most classical liberals on this matter. Thus, Hayek noted in The Road to Serfdom that the (free) society assures everybody of “some minimum of food, shelter and clothing, sufficient to preserve health and capacity for work”. It must be noted that providing for a social minimum must be considered by a government only after adequately providing for defence, police, and justice. In my terminology, EO is a second order function.

It is worth mentioning that the social minimum outlined above has nothing in common with John Rawls’s difference principle which asks “social and economic inequalities are to be arranged … so that … they are to be of the greatest benefit to the least-advantaged members of society”. Rawls’s principle leads to illiberal outcomes and severely distorts property rights. In my view, his is a step towards socialism.

The equal opportunity social contract

But you could ask: Why is the conception of social minimum above not merely another socialist ruse for cross-subsidising the poor? Surely we are not responsible for others (for we didn’t bring them into the world). So why are we being asked to take on responsibility for their existence, even if it is set at a frugal level?

In response, note that equal freedom is meaningless to a sick and starving person or illiterate tribal. If our body and brain doesn’t function or we can’t think critically, we can’t be free. Everyone in the free society must therefore be minimally healthy and possess some basic knowledge.

But consider now the imperatives of our strategic (enlightened) self-interest. A moment’s reflection will show that EO is in our long term interest because it leads to a stable and aspirational society.

We know that our life energy springs from Nature. Therefore, at some point the laws of the jungle could well apply to us. The poor man who steals bread to feed his starving family, or kills a rich man who has denied him even a menial job, thus taking him to the brink of existence, is governed at that moment only by the brutal laws of nature. To construct a moral society we must get away from this precarious ‘state of nature’. We must create incentives to prevent amoral behaviour.

The problem is that Thomas Hobbes’s whimsical Leviathan allowed the rich to gain enormously at the expense of the poor. But this supercilious sovereign soon bit the dust with the beheading of Charles I. Out of this defeat (and the subsequent Glorious Revolution) arose the Equal Opportunity Leviathan where equal political freedom was assured more widely, and individual powers better balanced. Indeed, Kaldor and Hicks show us clearly that if we want stability then those who gain from the social contract must compensate those who l
ose. Buchanan and Tullock (Calculus of Consent, 1962) and other theorists have also thrown useful light on this matter. Robert Axelrod, in The Evolution of Cooperation, showed us how a tit-for-tat rule (balance of powers) leads to stability and cooperation.

The EO society with a social minimum thus acts as a strategic balance-of-powers society in which petty criminals, Naxalite revolts, and beggars sprawled on footpaths are absent because all of them have been empowered to make an honest living. It is important to emphasise that this contract is not motivated solely by the fear of the rich being attacked by the poor. There are untold benefits for everyone from having a healthy, well-educated citizenry. And, of course, we all gain deeply by ridding society of poverty. EO is really good for our soul.

This (EO) society is particularly stable (and optimal). The rich can reap the rewards of their efforts without the state confiscating their wealth. The poor prefer it because merit and hard work are rewarded, thus enabling their upward mobility, even as they can take shelter, if the need so arises, under the social minimum. The EO society thus motivates everyone to work hard (and ethically) to achieve their highest potential.

An equal opportunity package

The EO package has to start with an EO law to eliminate discrimination in opportunities for public office on grounds of religion, caste, sex, physical handicap, economic status, domicile, and the like. This law must necessarily abolish affirmative action and subsidies for religious groups, as both these things violate EO principles by discriminating on the basis of religion and caste, and by going well beyond the requirements of the social minimum (which is applicable to the basic physical and education needs of the poor, not to their desire for religious pilgrimage).

The social minimum (insurance) package includes universal school education delivered through private channels funded by the state in the form of top-up vouchers determined by parental income and assets. Health insurance vouchers as appropriate (not direct health care provided by government!), and emergency care entitlements, come next. Finally, the incomes of the poor are topped up through a negative income tax scheme[3] (NIT) to eliminate poverty without distorting work incentives.

This social minimum has to be paid through an actuarially fair premium raised through taxes, with all calculations made public. My preliminary calculations show that NIT would eliminate poverty in India by redirecting existing (and ineffective) subsidies directly to the poor. For good quality school education some supplementation will be needed through borrowings, but these can be recovered through higher taxes from the well-educated citizens of the future.

In closing, it is important to note that delivering EO will need the resolution of numerous public choice, moral hazard, and public administration problems, some of which I will discuss in the coming months.

Freedom Team of India (FTI)

The FTI ( has now started developing many policies to make India a free country. These will be released for public comment in late 2009. In the meanwhile I look forward to your continuing support of this nascent liberal effort.


[2] In his essay, Liberalism (1973). []

[3] []

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Unbridled capitalism?

The following article was published in Freedom First, October 2008.

Sanjeev Sabhlok

This month I want to focus on a topic on which great confusion prevails in India: the issue of capitalism. I wrote to an eminent Indian economist seeking comment on my draft manuscript of The Discovery of Freedom ( Without yet reading the manuscript, he wrote to me that “completely unbridled capitalism has rarely been followed. I am not sure whether it should be followed. It needs an overarching architecture based on local culture, traditions, history and legal system, among other things.”

I though this response was unwarranted. My manuscript already discusses the institutions of freedom at great length. So that couldn’t possibly be an issue. We both agree that good institutions like tolerance, democracy and justice are crucial. Thomas Hobbes showed why we need a strong state to defend our life and liberty; capitalism is therefore founded on the rule of law and the enforcement of justice. But I find unwarranted and gratuitous the suggestion about not following “completely unbridled capitalism”. Since this perspective reflects widely held misconceptions, I thought it might be worthwhile to examine it more closely.

Whatever else is true about capitalism, this much is clear that never did John Locke, David Hume, Adam Smith, J.S. Mill, Ayn Rand, F.A. Hayek, or Milton Friedman advocate unbridled capitalism or freedom. It seems that socialists like Marx and Nehru have badly sullied the reputation of liberty. The socialists have repeatedly alleged that capitalism caters to so-called ‘capitalists’ and gives them unbridled powers to exploit the weak. But that is totally false. Philosophers of liberty have always insisted that freedom comes with responsibility and justice. Adam Smith opposed mercantilism and monopolistic industrial interests. David Ricardo wanted more competition and free trade. Adam Smith and J.S. Mill advocated labour unions to face the economic power of the owners of industry.

By repeating lies against liberty long enough, socialists have made it appear that the system of natural liberty encourages corruption and things like the sub-prime crisis. But what are the actual facts? Capitalism begins by looking at human nature. The fathers of capitalism, Hobbes and Locke, pointed out that since human nature is far from perfect, some people will always try to cheat, mislead, and misuse their powers. So if anyone cheats, then systems of justice should catch and punish the cheats. Thus everyone must be held equally to account and no one is to be above the law. In this manner, by ensuring all crimes are punished, capitalist societies are today among the most ethical on this planet.

Capitalism is also a system of continuous improvement. Lessons from events like the sub-prime crisis are quickly learned and such events prevented from happening again. Some events are complex and finding their causes can take time; but overall, capitalism is a political and economic system founded on democratic choice, law and order, and continuous improvement. And since the governance of capitalist societies is built on the system of checks and balances advocated by Montesquieu and Thomas Jefferson, the concept of capitalism being unbridled simply does not arise!

We know from history that the rulers of the West did not like capitalism one bit since it insisted on equal freedom for all. Many people like Locke, Voltaire, Burke and Mill had to fight the vested feudal interests to win freedom for ordinary peoples everywhere.

And so our quarrel cannot possibly be with capitalism. Our quarrel must be with socialism. In socialist societies, based as the spurious concept of economic equality, state-sanctioned corruption is the norm. After having worked in the Indian and Australian bureaucracies for a total of 26 years I can say with confidence that there is almost no corruption in the West today. On the other hand, corruption is endemic in socialist India, where not one politician is completely honest and few bureaucrats completely so. For very fundamental reasons, no society can run ethically on the ideas of socialism. But did this eminent economist express concerns about ‘unbridled’ socialism? No! For capitalism has become the customary whipping boy. Protect the criminal and point fingers at the saint: that seems to be the norm.

Consider and compare, for a moment, how life is defended in India and in the West. Employers in India are, for all practical purposes, unaccountable for the safety of their workers. Hundreds, if not thousands of lives are lost in India every year in preventable workplaces ‘accidents’, even as capitalist societies like Australia have astonishing low rates of worker injury. While working for the safety regulator in the state of Victoria I found that not only are safety laws in the West strongly focused on employer accountability, but negligence is punished severely. If I was a mine worker I would be scared to work in socialist India but would happily work in capitalist Australia where my life is well protected.

So who is really unbridled? Who is really immoral? Is it socialist India – where the governments are totally corrupt, where industrialists are gifted monopoly powers by the corrupt state, and where lives of workers are treated with disdain – or is it the capitalist West where governments wage a systematic battle against all forms of corruption and irresponsible behaviour? Clearly, it is not capitalism but socialism we must be afraid of.

It is time that India looks at the facts. We must not be afraid to use the system of natural liberty which was invented by the Englishman John Locke just because it was invented in England. After all, the West happily takes advantage of Indian thinking by using the number system we invented. So let us listen to what Locke said.

Freedom Team of India
Without security of life there can be no freedom. One of the strongest indicators of a free society is therefore the absence of organised killings of citizens. The endless spate of killings in India is telling us that we are not yet free. When Muslim and Maoist terrorists momentarily pause their mayhem, fascist Hindus appear on the scene to kill Christians; and so on… until it has become hard to distinguish what is happening and who is killing whom. Life and liberty are on the back foot, fighting for survival.

Our education system has clearly failed to imbibe the basic virtues of good citizenship. In a democracy those who have grievances should participate in the political process and change things they don’t like. If that doesn’t work, they can lodge their protest through non-violent civil disobedience. But there is a total absence of good leaders in India today to guide the people. In this situation, if liberals don’t unite to lead India then they or their children could well get caught in the crossfire of misgovernance. Why is it that in 1959 an old man aged eighty could start a major political party (Swatantra Party) and give battle for our liberty, but people today have given up without trying?

I would like to thank those who have written to me in support of the Freedom Team ( For those who have not yet got involved, I suggest that you to do so. Working together, we can defend life, liberty and the pursuit of happiness for everyone in India.

Contact Sanjeev at sabhlok AT yahoo DOT com

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