What has seriously weakened the liberal tradition, argues Gus diRezega in his unpublished essay, The Tragedy of Classic Liberalism, is that in its focus on the invisible hand of competition, it has forgotten the collective cooperative infrastructure, that is the basis of any competition.

Gus diZerega:

“Many of liberalism’s seminal thinkers were fascinated with how, under conditions of liberty, even selfishly motivated people were led “as if by an invisible hand” to serve the general good. This beneficent outcome arose through competition for customers. I believe it was Hayek who took this insight even farther, and argued that in an emergent order competition serves as the discovery process that enables system wide coordination to happen. These insights became a staple of classical liberal analysis, and I do not question them.

But these discoveries were so exciting, paradoxical, and important, that an even more fundamental insight, one that is also paradoxical in its own way, was little discussed, and often missed. It is that competition arises from cooperation. Life is an intertwined network of cooperation and competition, but cooperation is fundamental. This seems to be true even in logic, as Axelrod’s studies of the ‘prisoner’s dilemma’ game suggests.

Liberalism vastly enlarges the scope of human cooperation, and by doing so, ensures that different people will pursue plans that are incompatible. But in business, science, and democracy, these incompatibilities are discovered after webs of cooperation have arisen. We develop a product, and discover it now competes with another product developed and produced in another cooperative enterprise. From this perspective, competition is fundamentally a product of a complex system rather than individual volition, though obviously it can be that as well. To make the point succinctly, individual cooperation and competition leads to systemic competition as a discovery process which leads to the systemic outcome of coordinating as many plans as possible in a way to facilitate the success of as many as possible.

Focusing on competition and not also cooperation has deeply impoverished classical liberal social and political analysis. Only now is it beginning to be addressed through the study of philanthropy. In fact, I would argue that the reason why Richard Cornuelle’s work did not stimulate much thinking years ago was due to the myopic emphasis on competition, which led thinkers to turn a blind eye to the importance of cooperation.

As another example, the Mondragon cooperatives now comprise over 100,000 workers in many businesses and banks, competing in the open market. They pay well, worker/owners retire with 100% of pay (management gets 80%) and even today their unemployment is 0%. If a business goes under the workers are retrained for other jobs. To my knowledge these cooperatives are both successful and reflect liberal principles, even free market liberal principles, and while the “left” is interested in them, there has never been a classical liberal study of them to my knowledge.

A return to a richer conception of human well-being will both encourage work in neglected areas of analysis, especially civil society, and enable classical liberals to begin contributing to a desperately needed revival of liberalism as a strong and vital alternative to conservatism and oligarchy as principles of American, and human, society.

There is a growing common interest in this project. This vision not only grows from classical liberalism’s most important insights, it also appeals across the entire breadth of liberal thought. Two of civil society’s strongest defenders today are Robert Putnam (Bowling Alone) and John C. Scott (Seeing Like a State). Neither is a classical liberal. There is ample ground here for very fruitful revitalization of a seriously weakened liberal tradition.”