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Milton Friedman (1912-2006): Evangelist of the free market

In The Fourth Revolution: The Global Race to Reinvent the State (Allen Lane, £20), the latest book by John Micklethwait and Adrian Wooldridge, the former recalls an encounter with a stranger in a San Francisco sauna. The year was 1981 and Micklethwait (now editor of the Economist) was a "freeloader" on a gap year between school and university. The lure of such steamy encounters attracted other Europeans, from David Hockney to Michel Foucault, to California in the Eighties. This, though, is not a memoir of sexual discovery, but of a very different kind of liberation.

For the stranger in question was Milton Friedman, the evangelist of the free market, and by Micklethwait's account of their conversation, his vision of a Britain transformed by his ideas under Mrs Thatcher's leadership "seemed delightfully mad". Yet the rearguard action against big government that Friedman mounted over half a century, first from Chicago and then from San Francisco, was deadly serious. Without the Reagan and Thatcher revolutions, socialism might not have collapsed under the weight of its contradictions. A decade ago, the nonagenarian Friedman summed up the story so far: "We have succeeded in stalling the progress of socialism, but we have not succeeded in reversing its course."

His words ring true here in London — "the mansion-house of liberty", in the words of the poet for whom Milton Friedman was named. Here the Coalition has halted and even slightly reversed the huge increase in state spending since the turn of the century, but has proved more ingenious than ever in fleecing the taxpayer. Only the fear of pushing those of us who pay our taxes beyond endurance limits the Treasury's avarice. All governments, however, love stealth taxes. No taxation without misrepresentation.

In their brilliantly incisive book — just as sparkling as their studies of religion, God is Back, and of America, The Right Nation — Micklethwait and Wooldridge claim that the West is losing ground to the East in the taming of Leviathan. Unless Europeans and Americans reform government by cutting back its functions and adopting the best practice in delivering services, from Indian medicine to Singaporean welfare, they risk being overtaken by China and other rivals. Having repeatedly reinvented the state to deliver law and order, liberty and welfare, they argue, the West now needs a "fourth revolution" to create a leaner, more efficient state to preserve freedom and democracy. It is a compelling argument. But is it enough?

Not in the newly dangerous world we now inhabit. Global competition between states and systems is one thing; terror, annexation and tyranny is another. The soliloquies of the West have been rudely interrupted by the dark lord of the Kremlin. Vladimir Putin knows his Hobbes: "Force, and fraud, are in war the two cardinal virtues." He has employed both in the destabilisation and dismembering of Ukraine, thereby reminding our leaders of the original purpose of statesmanship: peace where possible, war when necessary.

Not only military capability, but credibility too is crucial to deter Putin and his kind. The mishandling of the Middle East, from Libya and Syria to Egypt and Iran, has convinced them that the West has no stomach for a fight. In the straits of Taiwan and the seas around China, in the Black Sea and the Mediterranean, in the Indian and Arctic Oceans, the depleted US Navy no longer calls the shots. If Iraq and Afghanistan were enough to exhaust the West's readiness to deploy force, what would happen if Russian irredentism were to encroach farther West beyond Ukraine into Eastern Europe — a theatre of even greater strategic importance? We already know the answer. Instead of the troops and missiles requested by Ukraine, President Obama sent Meals Ready to Eat. He has treated his Nato allies only a little better.

While embarking on a revolution in government, the 21st century state may need to relearn the lessons of its Hobbesian predecessor: that the first and last duty of any government is to protect its own citizens, both from external aggressors and from one another. To this end the British state created the Royal Navy in the 16th and the Royal Air Force in the 20th centuries. The Army alone lacks a royal title, because parliament was always suspicious of standing armies. All three branches of the Services have martial traditions that are second to none. Yet they have atrophied in the absence of the Soviet threat, just as the Atlantic alliance has been downgraded into a diplomatic antechamber for the EU.

This neglect of defence must end. It may be that we shall now have to repay the post-Cold War "peace dividend", but this is not simply a question of money. Rather, the defence of the West requires an intellectual reorientation. This is why organs such as Standpoint matter. Liberals fondly suppose that the great issue of the day is inequality, to which the answer (as set out by the new darling of the Left, Thomas Pikkety) is a global tax on capital. Conservatives worry about growth, or the lack of it, and demand lower taxes. But both Left and Right have ignored the danger of war: "without a common power to keep them all in awe", as Hobbes warns, predatory despots and terrorist organisations prey on ethnic and religious conflict, especially in weak or failed states.

Even Friedman and Hayek accepted that the nation state is the best means of defence. Before the public can decide between socialism and capitalism, it must first be protected against the enemies of civilisation.

 
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