Matt Ridley: When populism falters and the elite strikes back

I am writing this from the Netherlands, where one of the most gruesome paintings in the Rijksmuseum, by Jan de Baen, depicts the eviscerated bodies of the de Witt brothers, hanging upside down after the mob had killed them and then roasted and eaten their livers in 1672. 

It is an episode mentioned in a new book published this week by Douglas Carswell, MP, called Rebel, in which he wrestles with an eternal dilemma: why populist revolutions sometimes bring tyranny.

The republics of Rome, Venice and the Netherlands all experienced the same thing: an inept populist revolt against the growing power of an oligarchy — by Tiberius Gracchus, Bajamonte Tiepolo and Johan de Witt respectively — followed by a counter-revolution that resulted in an even worse oligarchy that throttled prosperity, in the form of Sulla, the Council of Ten and William of Orange respectively. The coups that killed the French and Russian revolutions were similar, but more about new forms of tyranny than returns to old ones.

Carswell sees parallels in today’s populism. Despite a hundred commentators saying so, Donald Trump is not like Nero or Hitler, but he may be like Gracchus (“a cross between Jeremy Corbyn and Donald Trump”): an anti-oligarch insurgent who soon makes oligarchy look preferable. After Trump, Americans may fall back in love with the bicoastal elite. Faced with Le Pen, many French will feel that énarques are not so bad after all. Prime Minister Farage would have made us appreciate PPE graduates again.

It is the Dutch parallel that is perhaps most instructive. Mr Trump has seen off a Bush and a Clinton, just as Johan de Witt tried to prevent the stadtholder of the Netherlands becoming a hereditary position, owned by the House of Orange. The similarities perhaps end there. De Witt was a cultured doctor of law with a fascination for Roman history who believed in free trade, free speech and republicanism. Yet in the end he ushered in monarchy, bankruptcy and decline.

That decline was not, Carswell says, because the Dutch lost their entrepreneurial spirit, as historians sometimes lazily assert, but because the Orangist elite became closed and parasitical, living off the spoils of conquest and investing their regressively raised taxes in bonds issued by overborrowed government, rather than in ships and shops. By 1713, 70 per cent of tax revenue went on servicing debt. “A free-wheeling republic had become a restrictionist, rentier state,” as Carswell puts it.

There is a lesson here. Europe as a whole is heading down the same path: slow growth and far too many people living off redistribution rather than enterprise — in private, public and voluntary sectors. The goose that always lays the golden eggs of prosperity is the habit of exchange and specialisation: people doing what they are good at, and getting better at it with innovation, while swapping the results freely with others through commerce. (Disclosure: here Carswell draws on my own recent books to buttress his case, and he showed me the text before publication.)

Carswell reminds us that “every society that ever managed to sustain intensive economic growth did so by staying close to the free-exchange end of the spectrum”. Like a rainforest ecosystem, commerce is a self-organising system that results in spontaneous order and complexity. For instance, nobody has planned or is in charge of the job of feeding ten million people for lunch in London today, but this incredibly complex task will be achieved smoothly.

Yet history shows that free exchange is constantly at risk of being infected and captured by parasites and predators who live off productive people through taxes, tithes, rents, slavery, subsidy, war and theft. This is what killed the goose in ancient Greece and Rome, in Renaissance Italy and Holland’s golden age. From time to time anti-oligarch insurgents are needed to purge the parasites, expel the predators and free the economy from their burden.

Now, says Carswell, is such a time. Forget the Ukip debacle: he is as genuine a rebel as parliament contains, who wants to “rein back the emerging oligarchy”. One of the problems with most of the new radicals, whether a Trump, a Farage, a Wilders or a Le Pen, is that they seem to be in thrall to the myth of the big (wo)man, who will lead the people to the promised land. Carswell wants to challenge the myth of the Big Man who knows everything. Instead he would allow the organisation of society along bottom-up lines.

He would end the power of central bank bureaucrats, allowing customers to decide banks’ reserve ratios by choosing among different options with different risks and rewards.

In place of debased fiat currencies, he would have self-regulating currencies controlled by competition, not by officials, along the lines of Bitcoin. He would have corporations regulated by those who own them and those who buy from them, rather than by easily lobbied crony regulators and subsidy providers. He would have public services controlled by members of the public.

All easier said than done, of course. And in politics he would undermine the power and privilege of the cartel of the main political parties with their public subsidies, access to patronage and ability to gerrymander constituencies to preserve safe seats: “In Clacton, I have twice taken on and defeated the established parties by doing for myself, often on a laptop, what political parties spend millions failing to do well.” It is now possible to do politics without party. Trump, Bernie Sanders and Emmanuel Macron all ran almost independently of their parties.

Carswell is right that the left does not get this. He cheered when Corbyn was elected, but says that radicals on the left do not understand how free exchange has elevated the human condition or the way that redistribution ultimately sustains oligarchy. We end up with the spectacle of left-wing activists such as Owen Jones and Paul Mason campaigning alongside Goldman Sachs and Christine Lagarde on behalf of the oligarchs of Brussels.

You might ask what a low-grade oligarch like me is doing endorsing this insurgent philosophy against my interests. The truth is I spend most of my time exchanging prose for profit, or speaking up in parliament for innovation and free exchange, and against cronyism and subsidy, usually ineffectively.

So when the revolution comes, metaphorically at least, I will join Douglas at the barricades.

Matt Ridley, a member of the British House of Lords, is an acclaimed author who blogs at www.rationaloptimist.com.