The stagnant West must rediscover freedom to salvage its prosperity

How to describe this year, if 2020 was the pandemic-hit West’s true annus terribilis? Perhaps counter-intuitively by its opposite, annus mirabilis – used by poet John Dryden to describe 1666, the year of the Great Fire of London. His point was that things could have been much worse. The damage inflicted by the fire, although considerable, was not total. It was also a time of terrific geopolitical breakthroughs. In particular, the English defeat of the Dutch navy established England as a naval power.

There are vague parallels with 2022. Having barely recovered from the pandemic, the West has found itself engulfed by a global energy crisis. Yet, as inflation peaks and recessions are predicted to be sharp but short-lived, there is hope of recovery. There has also been one miraculous development: Western values of freedom and democracy have been astonishingly vindicated as authoritarianism’s flaws are laid bare.

At the height of the pandemic, many speculated that China’s model of government might usurp America’s as the world’s most respected. But in the wake of the shock zero-Covid protests, Xi Jinping has been forced into a humiliating climbdown. As bodies pile up in crematoria, the folly of indefinite lockdowns has been exposed.

Meanwhile, Russia has given a masterclass in authoritarianism’s ability to quite literally corrode a country’s foundations, with Vladimir Putin’s once-feared military forces proving to be clapped out and brittle after years of mismanagement. Here we have seen the perils of a court so rotten with intrigue and terror that it would institutionally conceal problems from its leader.

And yet the irony is that, as it becomes clearer that the West has the right values, it also becomes more apparent that the conceptual model that emerged during the Cold War to protect these values has collapsed. And nowhere has the Old World’s reckoning been more cruelly spectacular than in Britain, with the spontaneous combustion of Liz Truss.

There is no point mincing words: Thatcherism and Reaganomics have been demolished by the very animal spirits of the free markets that, some 40 years ago, they unleashed in good faith. History has come full circle, with neoliberalism, like the mythical monster Ouroboros, devouring its own tail. The same problems can be seen elsewhere. In Germany, not only has the dream of globalisation crumpled, but it is dragging down chunks of the country’s industry with it. In America, libertarianism has died with a whimper, as the Republicans, even after Trump’s demise, morosely swing behind protectionism and high spending.

Thus the West is confronted with an ominous ideological vacuum. The Right is trying to fill it with a renewed emphasis on order – in particular with a crackdown on illegal immigration. The Left, meanwhile, envisages a new march towards equality.

It is, therefore, more urgent than ever that the Western nations come up with a framework for furthering their core value of freedom.

The first step is simple: to acknowledge that this is a worthy value under threat. Indeed, it is startling how few political leaders are willing to stick their necks out in condemning Covid lockdowns, which curtailed freedoms we had taken for granted for centuries. One of the few exceptions is Ron DeSantis, the governor of Florida, who has dared to acknowledge that the West (not just China) made a mistake in imposing such draconian policies.

Second, Western leaders need to fill the gaping hole left by the demise of the “end of history” narrative (that is, that the world had reached a final stage of harmonious globalisation), ideally with a new galvanising story about freedom. For the value of freedom desperately needs a telos, an ultimate goal. Cultivating the kind of entrepreneurial, creative and intellectual freedom needed to make the most of the Fourth Industrial Revolution is a worthy place to start.

This project should be pursued not from a place of hubris but with a new humility – acknowledging that neither liberty nor progress is inevitable. Rather than conceitedly declaring the “end of history”, for instance, the West should draw more detailed historical lessons from the past. After all, the computer – a new general-purpose technology to rival steam and electricity – was supposed to spur a new wave of civilisational progress. As the bursting of the tech bubble followed by a bout of flat productivity suggests, something has gone badly wrong.

It is likely that the West is stagnating because it has grown neglectful of freedom. After all, history teaches us that previous industrial revolutions were driven by a specific set of ingredients, many liberty-related. The emergence of a rural English capitalist class endowed with an almost divine faith in the glories of “improvement” and competitive production was crucial. This was in contrast with the rest of the Continent, in particular France, where elite power was rooted in state-bestowed privilege and seigneurial rights.

And yet today’s entrepreneurs are suffocated by high taxes and meddlesome regulations. Moreover, a middle class bolstered by artificially inflated property prices has become bogged down with securing access to limited professional – often public-sector – posts. In short, the West increasingly looks less like England before the first industrial breakthrough, and more like France on the eve of its ghastly revolution.

Equally problematic is the EU model that emphasises economic integration and regulatory alignment over national competition. We seem to have forgotten that a big reason that Europe blazed the trail of modernity is that the Roman Empire’s decline spurred healthy competition between individual states.

Finally, libertarians deflated by the Truss experiment would do well to take a closer look at the economic ideas emerging from the underrated post-Schumpeterian school. Many of their policy proposals are pertinent, such as the need for central banks to prioritise growth over inflation and their blunt insistence that states must be willing to redirect welfare funding to fund innovation.

Things may look grim, but there is still cause to have hope. With chaos comes opportunities. Dejected lovers of freedom should try to grasp them.