Liberalism & Global Crises: Are You Strong Enough to Be Free

Liberalism & Global Crises
University of Central Punjab, 17. Nov. 2009

Olaf Kellerhoff
Resident Representative Pakistan

Olaf Kellerhoff Liberalism & Global Financial Crises 17.11.2009

Overview
1. Friedrich Naumann Foundation
working for Freedom in Pakistan since 1986
2. Liberalism
– a history of thoughts
political philosophy based on equality
3. Liberalism
& Global Financial Crises
Are you strong enough to be free?

Friedrich Naumann (1860–1919)


Resident Representative Pakistan Olaf Kellerhoff
Islamic History + International
Relations (MA) at Hamburg Univ.
Missions & Experiences abroad
Somalia
Marocco
Turkey
Kosovo (3x)
Afghanistan (3x)
Lebanon
Apprenticeship as photographer


1. FNF


Founding a foundation: President Heuss
First president of the Federal
Republic of Germany,
Theodor Heuss (1884–1963),
founded the endowment
1958
Heuss named the foundation
after his mentor Friedrich
Naumann

Theodor Heuss – lifelong liberal: founding
member of the Free Democratic Party (FDP)
and its first chairperson
1. FNF 2. Thoughts 3. Global Crises


Changing this world
Naumann = protestant priest
confronted with social question in
Hamburg at an orphanage
Getting active
– liberalism as solution:
published a magazine
founded a party
became MP
parliamentarian, politician, Friedrich Naumann (1860–1919),
philosopher – mastermind seen by Max Liebermann


Friedrich-Naumann-Stiftung für die Freiheit
Founded 1958: civic
education for Germans
regional offices in the
provinces
Liberal Institute (LI)
think tank
Scholarship department
International Academy for
Leadership (IAF)
Headquarters in Potsdam (Germany), Jan. 2009 since 1963 abroad


Worldwide: in over 60 countries

Regional
approach



Sharing the
fate with
FNF in Pakistan
Pakistan…
working for Freedom in
Pakistan since 1986
objectives:
liberal democracy
civic education
human rights
free market economy
peaceful conflict resolution
… and consequently working for betterment



Small team – big outcome
Syed Hussain Shah Muhammad Nisar
handyman handyman
outside the office inside the office

Muhammad Anwar
Chief-Administrator Munazza Batool
Program Coordinator



Sustainable work through partners
Crucial Element is the self-responsible programme work of
our partners. FNF trains, consults, interlinks and funds.



LFP-Elections in Larkana Meeting in Mithi

Seminars, workshops, meetings

Lahore

(FGP), Karachi,
Management
Conflict

Jul. 09
Children’s parliament (SPARC), Isl. 09


Millenium Development Goals
Pursuing MDGs… UN initiative in 2001
– achieved by 2015
1. Eradicate extreme poverty and hunger
2. Achieve universal primary education
3. Promote gender equality and empower
women
4. Reduce child mortality
5. Improve maternal health
…with German tax payers’ money: 6. Combat HIV/AIDS, malaria, and other
Minister for Economic Cooperation and diseases
Development, Heidemarie Wieczorek-Zeul, 7. Ensure environmental sustainability
and German Ambassador, Michael Koch, in
discussion with the German foundations. 8. Develop a global partnership for
development
Serena Hotel, Islamabad, Apr. 2009


Political Foundations
Instrument to implement
constitution:
The political parties contribute to the
formation of the political will of the
people. [German Basic Law, Art. 21]

Weimar Republic (1918–
1933): Democracy without
democrats
=>civic education
Pluralism: democracy taught
with different views
learning respect for each other



Same view
– different duties
party:
develops political objectives and raises
political will to achieve those goals
Courtesy of © Harald Kirschner

faction:
turns party will into parliamentary
work
foundation:
research and formulation of policies
capacitates political actors
Delegation of the foundation at raises political interest
the party’s parliamentary group hall


2. Liberalism
- a history of thoughts


Liberal: Misuse and Misunderstanding
Liberal: from latin: liber – free
Liberalism – concerning Freedom
Libertarian: a person who upholds
the principles of absolute and
unrestricted liberty esp. of
thought and action
Libertine: a person who is
unrestrained by convention or
morality, one leading a dissolute
life



Liberalism
political philosophy
economical ideology
worldwide movement
hardly an undisputed
definition
– Liberals avoid Dogmas
=>approach by seven
selected thinkers
Hambach Festival, 1848 (Germany)



You belong to yourself
John Locke (1632–1704),
English philosopher
social treaty theory incl.
protection of individual rights
and property
Self = continuity of
consciousness
religious tolerance
Locke –
Initiator of Enlightenment


Self-interest as driving force
Adam Smith (1723–1790),
Scottish moral philosopher,
father of modern economics
in Theory of Social Sentiments:
value of sympathy
in The Wealth of Nations:
human is striving for benefit

Adam Smith,
seen by Etching 1787


The mainspring is competition
Frédéric Bastiat (1801–1850),
French political economist and
member of National Assembly
in Harmonies économicques:
self-interest + competition
in La Loie: through development a
just system of laws + demonstrates
by these laws a free society

The state is the great fictitious entity by which every-
one seeks to live at the expense of everyone else.


Act like you want without harming others
John Stuart Mill (1806–1873).
English philosopher + political
economist, MP
On Liberty: The harm principle +
self-government
Tyranny of majority
=>limits on the ruler’s power,
constitutional checks
How can great minds be produced in a country
where the test of a great mind is agreeing in
the opinions of small minds?


Constant Change and Reform
Edmund Burke (1729–1797),
Irish statesman, political theorist
rejects the idea that societies
can be planned => against any
ideological revolution
condemning imperial practices in
British India

A state without the means of some change
is wihtout the means of its own
preservations.


Limited role of the state
Friedrich August von Hayek (1899–
1992), Austian-British Economist +
philosopher, Nobel laureate
in Road to Serfdom: against all
totalitarian regimes
Welfare state undermines basis of
free society

I am certain that nothing has done so much to destroy
the juridical safeguards of individual freedom as the
striving after this mirage of social justice.



All life is problem solving
Karl Popper (1902– 1994),
Austrian-British philosopher
Critical rationalism:
no ultimate truth
The open society – undermining
most forms of authoritarianism +
totalitarianism

Will the sun rise tomorrow?


Liberty leading the people
before Socrates
Locke: Two treatise on
Government, 1690
American Revolution, 1776
French Revolution, 1789
Hambach Festival, 1848
19th century economic
La liberté guidant le peuple
take-off
Eugène Delacroix, 1830


“We are the people!”
Protestant Prussia
Totalitarianism:
National Socialism
Communism
Peace & freedom after
1945
Renaissance since 1989

Berlin Wall open: 12. Nov. 1989



Neoliberalism
Answer of world economic
crisis 1929
Classical liberalism too much
stress on economic issues
and too much laisser-faire
The new (gr. neo) liberalism:
state as supervisor of
framework in which forces
Social Misery described by Charles
may act and interact freely
Dickens – State has to supervise.



Comparison of Values
Socialism Liberalism Conservatism
Social justice Freedom Order
Material equality Rule of law Duty
Redistribution Choice Tradition
The common goals Tolerance Hierarchy
Classless society Entrepreneurship Authority
Solidarity Competition Discipline
Public ownership Property Endowment
Social responsib. Responsibility Charity



3. Liberalism
& Global Financial Crises


Free market economy

Individual decision-making, coordinated by
market prices, combined with overarching private
ownership are the basic elements of a system we
call the market economy or “free market”.



Capitalism

Economic System […] in which most of the means
of production are privately owned and production
is guided and income distributed largely through
the operation of markets.
Encyclopaedia Britannica



Government interference
UK and US monetary policy to blame
US government policy, by encouraging banks to lend
to people with poor credit records, was a contributory
factor in undermining US banks’ balance sheets.

This problem was exacerbated both by the presence of
the securitisation agencies, Fannie Mae and Freddie
Mac, and by dishonest behaviour by some US
borrowers.

Booth, Philip [Ed.]: Verdict of the Crash.
Causes and Policy Implications. London, 2009.


Lack of framework

International bank capital regulation did not reduce
the risk of insolvency. It may have contributed to the
crisis.




Designing the framework
Specific legal mechanisms should be brought in to
achieve these goals. A variety of approaches is
possible, and these would not involve detailed
regulation of the activities of banks.
Such an approach to regulation would ensure that the
risk of failure fell squarely on a bank’s shareholders
and counterparties rather than on taxpayers.




World Economic Freedom Index
Fraser Institute
Contributions from Institutes all over
the world
Also Friedrich Naumann Foundation
For Pakistan: Alternate Solutions
Institute, Lahore
Pakistan ranking 110 out of 141

Free download: www.freiheit.org



Free Market Pakistan?
Liberalization of
Telecommunication
Subsidies on Ata?
Fixed sugar price?
Cement?



Coming up soon
Salman, Ali [Ed.]: Price Controls. Implications
on Liberty and Welfare. – published by FNF
The Pakistani state intervenes in the market by fixing
prices of an increasing number of commodities
ostensibly for welfare of larger public. In some cases,
the fixing of prices is pronounced and carried out
with a political vengeance, whereas in some cases the
fixing of prices is done quietly through administrative
measures.



Conclusion
In each scenario, liberal choices of the market are
compromised. […] However this is often achieved at the cost
of economic freedom, which essentially demands freedom of
choice for both suppliers and the consumers. This state
intervention distorts the incentive structure, increases budget
deficits and crowds out capital allocation for public goods
such as education, health and infrastructure.



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Also in Urdu www.southasia.fnst.org


International Online Conference
Crises and Cleavages in Pakistan, Nov. 9-21
With experts from Pakistan and Germany e!
fre
f or
Prof. Rasul Bakhsh Rais, LUMS
Anees Jillani, Chairperson LFP
ster
gi
Dr. Huma Baqai, University of Karachi
Re
Hassan Khan, KhyberTV
Prof. Jochen Hippler, University of Bochum
and others…

http://focus-pakistan.fnst.org

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