The free market economic theory as one of the causes that turned a Republic into a despotism.
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The Causes of the Wealth of Nations
The Roman «Open Society»
The First Social Question
The Dictatorship of Augustus
About the Author
Nobody destroyed the creative genius of the Roman Empire,
no blow was dealt to the ancient world by the outside,
no barbarian invaded the centers of the ancient production. It happened as if it
was bent and crumpled by itself suddenly, like a plant whose
roots were not sufficiently fed, and not as a
mighty oak uprooted by the storm.
The political problem of mankind is to combine three objectives:
economic efficiency, social justice and individual liberty.
John Maynard Keynes
No society can surely be flourishing and happy,
of which the far greater part of the members are poor and miserable
Sustained economic expansion in itself guarantees
neither equality nor prosperity;
it is not even a reliable source of economic development
If freedom is not accompanied and supported
with a minimum of economic autonomy,
with the emancipation from the essential needs,
it does not exist for the individual,
it is a mere ghost.
In the age-old search of the causes of the wealth of nations it seems that a firm anchorage has been reached nowadays: overturning the Marxian thesis, the superstructure is the independent variable that explains the economic structure. This explains why rich nations have become rich and poor nations have remained poor. However, it is necessary to solve another problem: why do some countries return poor?
In order to have economic development, it is necessary to have a particular institutional structure, which is able to guarantee individual liberties (i.e., the liberal liberties) and property rights. The institutional instruments required to guarantee these rights and liberties are the separation of powers, the rule of law, political and economic pluralism, democracy and secularism.
Given this institutional structure, the market can function and produce wealth. But at the same time the market generates social questions and, in the absence of a particular construct of rules, it tends to the monopoly rather than to perfect competition.
If this social question is not resolved, the crowd - which by now has no hope for a better future for themselves and their children, and fears of starvation - is willing to offer her arm and her consent, and is willing to voluntarily surrender all her rights to anyone who promises them bread and a hope for a better future.
Therefore, if the free citizen is the fulcrum around which the open society is built, when this citizen, albeit formally sovereign in the pages of the constitution, has not an economic independence and social serenity, enabling him to live a free and dignified existence, he becomes a beggar, then the whole building of an open society collapses in on itself.
This means that a social question, if not resolved, corrodes democracy from within: on the one hand allowing the money to buy the political, military and information power, thus draining all the freedoms and rights guaranteed by the republics; on the other hand originating the consensus of now distraught masses towards the new dictators. To put it from a different perspective, the market left to itself will self-destruct, creating conditions for the emergence of political absolutism.
In the age-old search of the causes of the wealth of nations it seems that a firm anchorage has been reached nowadays: overturning the Marxian thesis, the superstructure is the independent variable that explains the economic structure. This means that the source of the wealth of nations lies in that institutional architecture which can ensure the greatest possible freedom to individuals vis à vis the State power, while guaranteeing at the same time their participation in setting up the rules of their community. In that sense, it could be argued that is Popper's open society ideal type that produces the wealth of nations, that is a society ruled by the law and aimed at ensuring the greatest and most ample rights to individuals. Such rights «must be formally recognized and materially guaranteed. This is possible only if public power is structured in such a way that it has limits, i.e., only if it is not all-powerful and is subject to precise rules. In other words, individualistic culture requires a government based on the rule of law – the only type of government before which individual rights can be upheld. This means that modern society is not composed of subjects but of citizens, i.e., those governed are endowed with a set of inalienable rights they themselves guarantee by participating directly or indirectly in legislation activities and political decisions. Therefore, the protection of elective action refers to the idea of participation. And this, in turn, to the idea of democracy, which is the "natural" organization of a society that has gone forward into the territory of modernity».
Consequently, if an institutional architecture gets close to the open society ideal type, the economic development spontaneously gushes out. On the contrary, where the political power has no limits there is stagnation and underdevelopment. This means that the certainty of liberty, or better, as Gibbons writes, of «a rational freedom », is the first engine of the western development. To sum up, the cause of the “Western miracle” (extended to those non-western countries that adopted such a model) must be identified with its institutions. In fact, through the rule of law, the separation of powers and democracy these institutions ensure the greatest possible freedom to the market and to the civil society, which are the areas in which individuals can freely pursue what they judge right and useful.
This thesis has recently been picked up by Acemoglu and Robinson, whose merit is to provide a «geographic demonstration», highlighting how a political border that divides an open society from a closed society coincides with the border that separates prosperity from underdevelopment.
However, the thesis that they sustain in Why Nations Fail is not new. It is already present in Polybius and in his research into the causes of the success of the Roman Republic, and it is present in the Discourses on Livy
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