When marketing and security stand in for capital, the result is underdevelopment

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Warm and relaxing atmosphere at house X, unforgettable moments at guesthouse Y, homecooked food at restaurant Z. Bed & breakfasts classified by daisies, motels and hostels, but nobody’s inviting you to luxury places. Five-star hotels built at the top of mountains, with restaurants where you’re treated like a gentleman, only seem to exist in Austria and Switzerland, and they’re sometimes exported to our Bulgarian „brothers“. In Romania, special décor is associated with homes you have to share with the host, who brings you food and drink to rustic tables carved out of unpeeled tree trunks.

In one of the lectures he held in Argentina in 1958, after the South American country had gotten rid of Juan Peron, Ludwig von Mises explained why foreign investment is necessary. Because when a country doesn’t have enough capital, on which its citizens’ prosperity depends, the only option is for that country to import it. Unfortunately, instead of realizing that the country had gone through a broad disinvestment process, and that external capital is needed for Romanians to prosper, post-communist political leaders declared: „We won’t sell our country!“ And foreign capital was thus replaced with inflation. Instead of prospering through flows of foreign capital, the population was impoverished in order for politically-connected domestic capitalists to be „manufactured“, and they later became known as local barons.

Despite the decades of communism, elites retained a classically liberal mental structure, which prioritizes liberty and individual responsibility, as well as a minimal intervention by the state in the economy and society. And elites are formed and grown in universities. The war for liberty is won or lost on the battlefield of education. Despite the increasingly frequent assaults by the various forms of the political left, American universities are still managing to preserve the canon of classic liberalism.

The same thing isn’t happening in Romania. We didn’t properly assimilate that particular canon. We had started to do so during the inter-war period, albeit with major obstructions and authoritarian slips, then we were completely blocked by communism. This is the true gap between Romania and the West, and this is why Westerners look down to Romanians who visit their countries. We have an educational gap that we’ve widened in the past years, trying to preserve and redistribute poverty through safety and security institutions instead of creating productivity hikes with the help of markets.

Perhaps there isn’t a clear link between the lack of stars and the dominance of daisies, but the term „healthy“, applied to the marvelous landscape of mountains and to the origins of leaders, makes it become clear when people from rural areas move to the city. Let’s go back to Mises. The liberal concept of social life created the economic system based on the division of labor. The most obvious example of the market economy is the urban settlement, which is only possible in such an economy. In cities, the liberal doctrine is developed in a closed system and this is where it finds the most supporters. But as wellbeing grows further and more rapidly and the more people immigrate from the countryside to the city, the stronger are the attacks suffered by liberalism based on the violence principle. Theimmigrants soon find their place in the urban life, and on the outside they adopt the city manners and opinions, but for a long time civic thinking remains foreign to them. They cannot tailor a social philosophy with the same ease they can tailor a new suit. The philosophy must be earned – and earned through an effort of thought. So we can see, again and again in history, the periods of strong and progressive growth of liberal thought, when wellbeing grows along the development of the division of labor, alternate with periods when the violence principle tries to gain supremacy – when wellbeing drops because the division of labor crumbles.

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