The idea of a free society has seen better days. On the world stage, strong dictatorships, war in Europe and the crumbling of many features of democracies raise doubts about their superiority. Do dictatorships not pool their resources more successfully for strategic political, military or economic ends? Are they not undermining democracy and the rule of law with fake news? Can we still trust democratic decisions?
In Switzerland, meagre election results for the FDP and financially risky electoral outcomes that would have been considered impossible a few years ago are gnawing at the liberal self-image. Is liberalism, even if the extreme left and right like to call themselves liberal, fit for the future? Aren’t the ideas of the 19th century outdated? Don’t we need a new liberalism, a new way of thinking about the economy and society?
Such doubts have to do with an overestimation of liberalism. Firstly, liberalism is neither left nor right and is hardly capable of winning a majority. This was already the case in Switzerland in the 19th century, when the liberal party embraced the most diverse currents and owed its electoral success to the majority for a long time. Second, Swiss liberalism, whose concept of the state is neither understood nor accepted outside Switzerland, is fundamentally different from that of other countries. Because the state is structured from the bottom up, as long as it is controlled by direct democracy and shaped by militia politicians, it is less of an enemy than in other countries.
Third, liberalism is not a panacea. It does not promise (nor does it aspire to) paradise on earth, it is far from perfect, but there is no more humane alternative to it, either in theory or in practice. Liberalism is open-ended. Fourth, it is not about outcomes, but about rules for living together. If the rules do not stifle spontaneity, they will, in the long run and on average, produce better results than an autocrat, a council of wise men, or an elected government can ever achieve through intervention of any kind.
A large, divided family
This liberalism is particularly suited to the future of small countries. For one thing, decentralised structures are more resilient to uncertainty than centrally controlled systems. Diversity and non-centrality build resilience. Second, the liberal anchors of self-determination, personal responsibility, competition, private property, stable money and minimum social security are largely timeless. They have worked well, and they can be used to tackle problems such as migration and climate change. Liberals should not sacrifice these principles to the zeitgeist, otherwise they will damage their credibility and forfeit the solving power of liberalism.
Among the factors that have made Switzerland’s success possible, besides chance, two that have had a strong influence on Switzerland should be examined more closely: the form of government and economic policy. With the constitution of 1848, the revision of 1874 and the right of initiative of 1891, Switzerland embarked on a unique path of liberalism and popular rights. It was well received by opposition forces abroad, but not by those in power. But Europe was divided and the states were at war with each other.
Things are different today. The EU is something of a big, if often fractious, family. Yet there is no reason for the world’s only semi-direct democracy to move its institutions closer to those of parliamentary democracies, which are sceptical of the will of the people. For most European politicians, direct democracy is a disturbing factor. Liberal Switzerland has to put up with it because this unwieldy construct has given it freedom and prosperity. Who would want to do without such a driving force? Whether Switzerland can de facto preserve its institutions with closer ties to the EU is crucial to its identity.
Liberal Switzerland is also sceptical about everything big, and therefore about centralism. The country has found that non-centralised structures create proximity to citizens, allow for experimentation and, although supposedly inefficient, promote prosperity in the long run. The reason for this is that fiscal competition between cantons and municipalities for residents and companies disciplines politics; there is always the threat of voting with one’s feet. This should be maintained. The affirmation of differences, competition also in politics and the proximity of decisions to those affected are deeply liberal positions.
Switzerland’s independence went hand in hand with a very early openness to the world. Out of poverty, a thirst for adventure and entrepreneurship, Swiss people moved around the world, founded companies, became rich thanks to their skills, but kept in touch with their homeland or returned in later years. Because of the small domestic market, Swiss companies were quick to set up branches in neighbouring countries and overseas. At the same time, immigrants wrote part of Switzerland’s industrial history. They integrated, found work, worked their way up and founded companies. Global networking through emigration, immigration and direct investment should remain the guiding principle of Swiss foreign (economic) policy.
Switzerland is not an exemplary market economy. But although it suffers from regulatory neglect, it is in a better position than other countries, especially its neighbours. With its mixture of work ethic, partly liberal framework conditions and economic common sense, it has held up very well for around 150 years. Protectionism and cartels have been somewhat offset by the competitive pressures brought by international companies from abroad. In addition, regulation, taxes and government spending were moderate for a long time, and the authorities were service-oriented. The fact that Switzerland has become one of the richest nations in the world is also an achievement of the system, the politicians and the sovereign.
In economic policy, the direction of any liberal awakening today is particularly clear:
- Entrepreneurship should be recognised as a source of wealth and innovation;
- Performance should count again instead of being demonised;
- Property should be protected by law and stability policy;
- In the medium term, the state should not spend more than it takes in;
- It should limit itself to what is necessary, so that a compulsory tax ratio of less than one third of GDP can be achieved;
- The rules of coexistence should not be obsessed with details and should be limited to essential principles;
- Economic competition remains the best instrument for discovery and disempowerment;
- Fiscal federalism is its indispensable natural counterpart;
- Free trade should be upheld without ifs or buts.
At the same time, liberals should not allow themselves to be guilt-tripped by those who blame liberalism for everything from the financial crisis to global warming. An alarming number of liberals take far too little credit for liberalism’s achievements. The prosperity of the developed world, the lifting of hundreds of millions of people out of deep poverty in the emerging world, the doubling of life expectancy in a hundred years, the massive reduction in working hours or the power of the people to vote out those in power are all more or less due to liberalism.
Above all, liberals should stop seeing the equalisation of income and wealth as particularly social. Liberal social policy should secure the livelihoods of the lowest classes through their own efforts and, where this is not possible, through the solidarity of fellow human beings and the community, and guarantee a society of openness and permeability for the upwardly mobile. Any further redistribution is neither liberal nor social.
It takes strength and vision
Unfortunately, the liberals followed the path to a semi-socialist welfare state and redistributive democracy because they wanted everyone to share in the growing prosperity, because they gave in to the etatist tendencies of the population, and because they joined the left-led march from a society of self-responsibility to a society of entitlement out of sheer dissociation from the national conservatives.
Turning away from undesirable developments and returning to the central principles of liberalism requires courage, strength and clear-sightedness, as well as a good deal of robustness. It takes courage to be unmodern. Instead of pining for modernity and uncritically invoking progress, liberals should safeguard the liberal, direct-democratic foundations of Switzerland’s long history of success. Not all change is progress per se.
It also requires the strength to be – temporarily – unpopular. The welfare state and debt have reached a level where a few mini-reforms are not enough. Any restructuring requires painful austerity. You don’t have to take a chainsaw like Javier Milei in Argentina. Even Switzerland, despite its low level of debt by international standards, will have to learn that new demands require cuts elsewhere.
Ultimately, we need liberal clarity because collectivism keeps reappearing in new guises, such as the benevolent paternalist, the defender of inclusion and identity, or the climate protector. The advances of the “totalitarians in our midst” (F.A. von Hayek) are usually associated with the affirmation of collective coercion, as a result of the absolutisation of concerns that are often legitimate but expressed without moderation. This internal threat to the democratic societies of the West is perhaps greater today than the external one.
This article is reproduced here with the kind permission of the NZZ.
