Elena Leontjeva | President, Lithuanian Free Market Institute
In November 2022, Elena Leontjeva received Atlas Network’s Sir Antony Fisher Achievement Award in recognition of her leadership of the Lithuanian Free Market Institute and the LFMI’s essential role in Lithuania's successful transition from communism after independence. The essay that follows is adapted from her remarks in accepting the award at Atlas Network’s Freedom Dinner.
In the 1990s, my integrity was challenged by a journalist who asked me: “What will you do if the free market is eventually established?”
“I will retire,” was my answer. This became the title of the published interview.
It took us ten long years to re-establish a free market in my homeland Lithuania after it gained independence from the Soviet Union. Those of us involved with the Lithuanian Free Market Institute at its founding in 1990 had an immense challenge on our hands. After all, while order is easy to destroy, it is difficult to restore.
We had to install all the crucial elements, and all the basic institutions, for people to become truly free. And we had to do it almost instantly, for if one vital element was missing, the system would not function.
We worked to achieve sound money, free prices, private property, capital markets and a stock exchange, private pension insurance, tax reform, and eventually, a school voucher system. I was both fortunate and humbled to be a part of those historic endeavours. I was blessed to co-author the Lithuanian currency board reform, which protected the country from any central bank’s monetary policy for 21 years. Our model for business taxation—whereby taxes on profits are deferred until the payment of dividends—was eventually exported to Estonia and other countries in the region.
In Lithuania, we succeeded in installing the foundational institutions of liberty and therefore we transitioned from the backwardness of central planning to the dynamism of a free market economy. As a result, the standard of living rose incredibly—above that of some Western European countries. The average monthly income has surged from $20 in the 1990s to $1,800 today.
We accomplished this foundational work by 2001. With my mission complete, I remembered my promise, and I retired to write a novel.
Delving deeper into creative writing, I came to better appreciate that the Human Being is the central element of any social order, and therefore is at the center of any transition. He can be a complicating variable. We rewrote laws in Lithuania with relative speed, but you simply cannot rewrite what is in the human heart and human condition.
This is why the transition from communism was much more difficult for nations that endured Soviet rule for three generations, compared to those who lived under it for only two.
Why is it that those countries, which were exposed to communism longer, suffered such painful and erratic transitions? Simply put: they had a lack of the most important resource—people capable of being free. Some of these countries are now shedding blood on the European continent.
By depriving a human being of liberty, communism damages the very essence of who we are. The communists’ god is force without limits. People who are used to being oppressed lose their capacity for social interaction grounded in liberty. When they lose this, they also lose the capacity to produce their daily bread through responsible action, peaceful cooperation, and exchange.
This is the drama of a communist society: it cannot sustain itself, and it cannot return to liberty. Such states sustain themselves only on the capacities of former generations, and on access to the abundance created in the free world.
Eventually, tyrannical states such as this are doomed to famine and expiration.
Within the free world, I believe it is our duty to withhold the fruits of our liberty, rather than enabling tyrannies by providing them access to the miraculous innovations that have become commonplace where there are free institutions.
We also must hold fast to the nature of our own institutions, lest they become meaningless and deformed. This brings me to the reason I returned from retirement to again lead the Lithuanian Free Market Institute in 2020 after the publication of my novel.
2020 was, of course, the year of COVID. My return came with a sense of déjà vu: I saw the state taking over again.
Money can play its proper role to coordinate human action only when it is scarce. During COVID, central banks transformed money into a tool of redistribution as well as a sign of abundance.
Dear friends, here we arrive at an insight: the government can multiply—or, rather falsify—money, but it cannot multiply the phenomenon on the other side of the equation: time.
Global demand has been stimulated by central banks around the world. But for supply of products to reach the stimulated demand, people need time.
It takes three months to produce a semiconductor. It takes three years to build a new factory to produce more semiconductors. A grain planted takes a whole season to yield a harvest. A woman carries a baby for nine months. All processes take place in time.
By printing money, governments instantly created an increase in demand for goods and services, but their supply requires time. It requires hours of labor, months of productive processes, and years of investment.
This contributes to the chronic shortage of labor globally. We need labor that is willing and able to produce and supply things that are in high demand. We are lacking talents. We suffer from the mismatch between the demand, which was augmented by fiat, and the supply, which requires time to be produced.
Money has been produced ex nihilo, instantly. But time cannot be multiplied—even by the most Omnipotent State.
This is why our economies are creeping today. This is why the free world is also losing the capacity to produce daily bread. It is our duty to spotlight that the state interventions of today are out of sync with natural phenomena as exemplified by time.
If we truly desire a sustainable future, we will recognize these post-pandemic calamities as warning signs of the disastrous end to which economic statism can lead humanity.
But here, paradoxically, I see hope. What does it mean if time is pushing back against the interventionism of the state? Well, since time is an inextricable part of our natural existence it means that nature itself protests and puts limits on government intervention.
Hope comes from the understanding that nature is on our side. Or rather, that we are on the side of nature.
Today, as I receive the Sir Antony Fisher Achievement Award in this festive, family atmosphere—among old friends and among younger kindred spirits—let me note that we belong to a third generation of think-tankers and freedom advocates, tasked with carrying forward the legacy of our predecessors.
We are equipped with capacities that Sir Athony Fisher did not have at the time he launched his first think tank. We now have existing models of think tanks to learn from, a philanthropic culture to tap, and a vibrant global network as the source of so many collaborations. This is an empowering legacy that has been left to us. But just like in a family, we have a challenge. We can waste this legacy, or we can magnify it.
Dear friends, too much is at stake today. Let us be bold to prove ourselves responsible successors to those who build our freedom movement. If we remain faithful to the principles of free societies—and mindful of the important role we can play for our countries, big and small, and even for humanity at large—I am confident we will succeed.