Classical Liberalism and Effective Altruism

by Luis Pablo de la Horra

In Why Nations Fail, economist Daron Acemoglu and political theorist James A. Robinson argue that the only way for developing countries to escape the poverty trap is through inclusive institutions such as formal property rights, the rule of law, political pluralism, or certain redistributions of wealth that create a level playing field for everyone.

Acemoglu and Robinson’s thesis isn’t new. Since Adam Smith, classical liberals and libertarians have rightly emphasized the idea that institutions play a decisive role in creating the foundations of a thriving country. However, a country doesn’t move from poverty to prosperity overnight. Although the examples of Hong Kong or South Korea during the 20th century suggest that economic flourishing may be easier and faster to achieve than previously thought, this process has historically been slow and arduous.

Given this generally unavoidable and slow development process, we are left asking ourselves what we can do to either relieve the burdens of economically developing countries or speed them along the way to higher standards of living. This is where effective altruism comes into play. According to the Australian philosopher Peter Singer, effective altruism is an ethical framework that emphasizes the idea that “we should use our lives to do the most good that we can.” To better understand the premises of this rather abstract idea, we can use Singer’s  popular thought experiment:

“Imagine you come across a small child who has fallen into a pond and is in danger of drowning. You know that you can easily and safely rescue him, but you are wearing an expensive pair of shoes that will be ruined if you do. We all think it would be seriously wrong to walk on past the pond, leaving the child to drown, because you don’t want to have to buy a new pair of shoes – in fact, most people think that would be monstrous. You can’t compare a child’s life with a pair of shoes!”

If we extrapolate this hypothetical situation to the real world, the corollary is simple: allowing people to suffer or die from preventable causes is wrong, so we must do as much as we can to prevent it. In other words, when placed in this hypothetical situation, it becomes clear that human life is more valuable than our own material goods and that relieving human suffering is intrinsically obligatory.

At this point, it is reasonable to criticize effective altruism as nothing more than a rebranding of traditional charitable giving. The primary difference is that effective altruism advocates the use of empirical evidence to find the most cost-effective ways of helping others. That is, it’s not enough to donate part of one’s monthly income to charity. Rather, one must intentionally seek ways to maximize the impact of their charitable giving with the assistance of empirical evidence.

Fortunately, some organizations, like GiveWell, provide lists of charities and foundations that best utilize donated funds. For instance, the evidence available suggests that donating $7 to the Malaria Consortium protects a child from Malaria. Similarly, GiveWell estimates the Malaria Consortium has one of the lowest costs per life saved: $3,300. This number humiliates the implicit costs per life saved of 76 U.S. regulations, which ranges from $100,000 to a billion dollars per life saved. Under the principle of effective altruism, a donor looking to help others would contribute most effectively by donating to charities like Malaria Consortium because they use funds more efficiently with better results.

But effective altruism may appear to be at odds with classical liberalism and libertarianism that promote the independence of the individual. After all, Singer’s political positions are far from either school of thought. Yet classical liberalism and libertarianism are perfectly compatible with effective altruism. Indeed, effective altruism is based not on coercion, but rather on voluntary cooperation. As such, effective altruism doesn’t demand governments to increase taxes to give the proceeds to those in need. In contrast, it appeals to people’s sense of compassion and solidarity, which, by definition, can only be voluntary. In fact, effective altruism lays bare a lesser-known face of the market that is often overlooked by its critics. That is, the market is an institution that allows people to work cooperatively and peacefully towards a common goal, whether that goal is for profit or for selfless ends.

The overwhelming evidence shows that, in the long term, the only way to lift developing countries out of poverty is by promoting the type of inclusive institutions Acemoglu, Robinson, and many classical liberals before them have argued for and promoted. However, by focusing too much on the long term, classical liberals and libertarians have often overlooked what can be done in the short term.

Effective altruism provides an ethical framework compatible with the concept of freedom on which classical liberalism and libertarianism are based, and that compels us to act and help those who are suffering or could die from preventable causes. Incorporating effective altruism into the framework of chartable giving satisfies short-term needs of developing countries while respecting the classical liberal and libertarian idea of long-term solutions of economic development.

In his work The Theory of Moral Sentiments, Adam Smith underscores the sympathetic nature of human beings:

“How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.”

Effective altruism is one way to channel this innate sympathy Smith wrote about more than two centuries ago into helping our fellow human beings.

Luis Pablo de la Horra is a Ph.D. candidate in economics at the University of Valladolid. His work has been published in several media outlets, including The American Conservative, CapX and Intellectual Takeout.


The views expressed on austriancenter.com are not necessarily those of the Austrian Economics Center.

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