World History: Recent Episodes
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World History includes not only works on global history but history of any country, other than the US. Soviet Union, Roman empire, British empire, China.
When Mises wrote that the fascists had "saved European civilization," he could have been describing Francisco Franco of Spain, who kept Spain from becoming a communist dictatorship.
Original Article: "What Mises Really Thought about Fascism"
The real effects of the atomic bomb on Hiroshima were hidden from Americans until the New Yorker published an exposé in 1946. Americans finally were confronted with the truth—even if they didn't want to believe it.
Original Article: "The Bombing of Hiroshima: The Crime and the Cover-Up"
While the government promotes CBDCs as tools for "inclusion," it is more likely that they will be another vehicle for federal intrusion.
Original Article: "CBDCs: The Ultimate Tool of Financial Intrusion"
On this episode of Radio Rothbard, Ryan McMaken and Tho Bishop talk about the Chinese economy. While some of the left see China as a model for governing, those on the right often assume their rise relative to the US is inevitable. Ryan and Tho look at the recent challenges to the Chinese economy.
Recommended Reading"The Chinese Economy: Market Socialism with Chinese Characteristics" by Antonio Graceffo: Mises.org/RR_149_A
"China Enters the Doom Loop" by Peter St. Onge: Mises.org/RR_149_B
Download Anatomy of the State for free at Mises.org/Anatomy
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
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For the past fifty years, the US has not had a military draft. Unfortunately, the end of conscription did not mean US military interventions abroad ended.
Original Article: "How Conscription Ended Fifty Years Ago"
Progressives have distinguished themselves in the past half century by being against progress. That trend is unlikely to change.
Original Article: "Real Progress versus the Progressives"
In a free society, political crimes like treason and "seditious libel" are few and far between. Under despotic regimes, on the other hand, political crimes multiply.
Original Article: "Why Governments Love Political "Crimes" Like Treason and Sedition"
In the Gulag, political prisoners were systematically terrorized by ordinary criminals with the encouragement of the authorities. It was hoped this would help the regime liquidate the state's ideological enemies.
Original Article: "How the Soviets Used Common Criminals to Destroy the Regime's Enemies"
The recent actions of the Federal Reserve are reminiscent of central bank activities in wartime.
Original Article: "Has World War III Already Begun?"
Social democrats are so desperate to cast off limits on government that they'll embrace anything that justifies their ambitions. So they invent theories of money that are very, very wrong.
Original Article: "Progressives Have Corrupted Not Only Money, but Its History as Well"
Even under chattel slavery, inequality was still pervasive. Carpenters, sugar boilers, blacksmiths, cabinetmakers, and rum distillers constituted an elite core of slaves.
Original Article: "Even in Slave Economies, the Division of Labor Was Inescapable"
The East German secret police, the Stasi, developed the art of mass surveillance using pre-digital methods. Modern tech now makes the job a lot easier.
Original Article: "How East Germany's Stasi Perfected Mass Surveillance"
The Christian nationalist state is one in which civil rulers—for a time—regard the Church as a convenient ally. Once this comes to an end, however, the "Christian" state transforms into a state hostile to those it was once designed to protect.
Original Article: "The Dead End of Catholic Nationalism"
Professor Quinn Slobodian believes that free markets must lead to tyrannical worker exploitation, and socialism is the only solution. In truth, market competition is the answer.
Original Article: "Cracked-Up Slobodian"
In order for nations to have capital development and market-based economies, they must have a cultural framework that accepts these developments. Too many nations do not, and they languish in poverty as a result.
Original Article: "Cultural Change Is Necessary for Capital Development"
Socialists and communists claim to support the rights of "indigenous" peoples. However, that support rings hollow given how the USSR abused the native peoples of Siberia, all while American socialists and communists uncritically supported the Soviet Union.
Original Article: "The Soviet Abuse of Indigenous Peoples"
Government statistics on inflation in the food sector have failed to account for skimpflation and shrinkflation.
Original Article: "Shrinkflation and Skimpflation Are Eating Our Lunch"
Like many colonial ventures, Belgium's involvement in the Congo had some successes—and many failures.
Original Article: "Belgian Colonialism of the Congo: Facts and Fiction"
Featuring Per Bylund, Lucas Engelhardt, Karl-Friedrich Israel, Tate Fegley, Shawn Ritenour, and Timothy Terrell.
Recorded at the Mises Institute in Auburn, Alabama, on July 28, 2023.
Download lecture slides at Mises.org/MU23_PPT_24.
Recorded at the Mises Institute in Auburn, Alabama, on 26 July 2023.
Postwar Germany was occupied, in ruins, with an economy in chaos. Germans were reduced to using cigarettes supplied by American GIs as money.
Original Article: "To Smoke or Not to Smoke: The Cigarette Economy in Postwar Germany, 1945–48"
It's fitting that the G7 recently met in Hiroshima because the policies they are following are blowing up the world economy.
Original Article: "The G7 in Hiroshima: The Latest Attempt to Impose a Unipolar World"
Einstein might have been one of history's most brilliant men, but even his great mind could not have made socialism work. Unfortunately, he wasn't smart enough to see that.
Original Article: "A Great Man Cannot Salvage a Bad Idea"
As geopolitical tensions rise, the Chinese political leadership tells the US government to desist pushing its "color revolutions."
Original Article: "China Calls Out the USA for Instigating the Infamous Color Revolutions"
People commonly believe that a society without central political authority will dissolve into chaos. But a small kingdom within Spain existed peacefully for seven hundred years under what we would call anarchy.
Original Article: "Coto Mixto: Anarchy in Galicia"
While George Orwell wrote magnificently against totalitarianism, his attempt to defend socialism in The Road to Wigan Pier stumbled badly.
Original Article: "Review: Orwell's The Road to Wigan Pier"
Modern progressives don't like to refer to their long-held support of eugenics. In fact, American progressives influenced the Nazis, who launched their own murderous eugenics schemes.
Original Article: "The Boston Brahmins, WASPs, and Nazis: The Pursuit of Eugenics"
In 1948, Ludwig Erhardt rescued a German economy that was in shambles simply by invoking free markets and currency reform. Our economy needs its Rothbard moment.
Original Article: "Rothbard’s Button Doesn’t Exist, but It Needs to Be Invented"
While Japan made some technological transfers to these places, prosperity came to them later, with the advent of free-market economies.
Original Article: "Was Japanese Colonialism the Engine of Later Prosperity for Korea and Taiwan? Probably Not"
Every day, more and more Americans are awakening to the reality that the institutions in control of this nation are failing them. From violence in the streets, inflation in our stores, increasing tyranny and censorship, and absolute buffoonery on public display in halls of political power. The ruling class is getting richer while most of us suffer, and new generations are becoming increasingly warped by the dangerous ideologies of the left.
Recorded at The Depot Craft Brewery & Distillery in Reno, Nevada on May 20th, 2023.
A century ago, Argentina was one of the world's wealthiest nations and the Argentine peso rivaled the dollar. Today, Argentina is famous for periodic hyperinflation.
Original Article: "Argentina Sleepwalks into Hyperinflation (Yet Again)"
The dollar became the dominant global currency not so much because of its own merits, but because of the self-destruction of the pound sterling caused by the British state and central bank.
Original Article: "How the Dollar Became the World's Top Global Currency"
While the horrors of the transatlantic slave trade have been well documented, people other than slave traders and slaveholders benefitted from it, with some surprising results.
Original Article: "Historical Effects of the Transatlantic Slave Trade"
Walter Bagehot, as Jim Grant writes, believed that bankers and central bankers should exhibit financial discipline. He would not recognize today's banking world.
Original Article: "From Discipline to No Discipline: The Sorry Evolution of Modern Banking"
Adherents of leftist dogma increasingly push the notion that teachers should be permitted to distract, confuse, or influence their students by discussing their personal beliefs, ideas, and private activities and choices in the classroom.
Original Article: "How the Woke Left Is Destroying Education"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Most Western historians claim that World War I came about because of aggression from Germany and Austria-Hungary. However, Great Britain and its ANZAC allies were not innocent bystanders.
Original Article: "How Australia and New Zealand Helped Provoke and Escalate the First World War"
This Audio Mises Wire is generously sponsored by Christopher Condon.
A generation ago, the Berlin Wall fell and the USSR collapsed. Today, US monetary authorities are bringing down our own country.
Original Article: "Role Reversal: The Collapse of the Dollar-Enforced Empire"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Philosopher Susan Neiman may be a leftist, but she recognizes the dangers of woke progressivism.
Original Article: "Wisdom from a Yenta"
This Audio Mises Wire is generously sponsored by Christopher Condon.
The challenge at hand is more than simply opposing the state. Rather, it is necessary to build up, reinforce, and sustain institutions that can offer alternatives to the state.
Original Article: "To Fight the State, Build Alternatives to the State"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Central banks usually don't admit their guilt in the destruction of money, but the Bank of England unwittingly comes clean.
Original Article: "The Bank of England: Money Creation in Their Own Words"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Collusion was a way of life with state-chartered enterprises. Little has changed, as firms with political connections still gain profits from their collusion with the state.
Original Article: "The Theory and Practice of Conspiracy"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Resources are scarce even when money is not.
Original Article: "A Permanent Wartime Economy"
This Audio Mises Wire is generously sponsored by Christopher Condon.
[This article is excerpted from volume 2, chapter 10 of An Austrian Perspective on the History of Economic Thought (1995).
Another important reason for Marx's failure to publish was his candid depiction of the communist society in the essay "Private Property and Communism." In addition to its being philosophic and not economic, he portrayed a horrifying but allegedly necessary stage of society immediately after the necessary violent world revolution of the proletariat, and before ultimate communism is to be finally achieved. Marx's postrevolutionary society, that of "unthinking" or "raw" communism, was not such as to spur the revolutionary energies of the Marxian faithful.
For Marx took to heart two bitter critiques of communism that had become prominent in Europe. One was by the French mutualist anarchist Pierre-Joseph Proudhon, who denounced communism as "oppression and slavery," and to whom Marx explicitly referred in his essay. The other was a fascinating book by the conservative Hegelian monarchist Lorenz von Stein (1815–1890), who had been assigned by the Prussian government in 1840 to study the unsettling new doctrines of socialism and communism becoming rampant in France. Not only did Marx show a "minute textual familiarity" with Stein's subsequent book of 1842, but he actually based his concept of the proletariat as the foundation and the engine of the world revolution on Stein's insights into the new revolutionary doctrines as rationalizations of the class interests of the proletariat.Stein treated French socialism and communism as ideologies of the propertyless proletariat, aiming to destroy the historical foundations of European society based on the principles of individual personality and private property. The difference of course, is that Marx, in contrast to the other "classless" socialists and communists, embraced this connection to the proletariat, whereas Stein condemned and warned against it. See the excellent and illuminating work by Robert C. Tucker, Philosophy and Myth in Karl Marx (Cambridge: Cambridge University Press, 1961), pp. 114–7. Stein's book, Lorenz von Stein, Der Socialismus und Communismus des Heutigen Frankreichs (Leipzig: 1842), remains untranslated. (Later editions were entitled Geschichte des socialen Bewegung in Frankreich, 1850, 1921). Stein spent his mature years as professor of public finance and public administration at the University of Vienna, 1855–88.
Most remarkably, Marx admittedly agreed with Proudhon's, and particularly Stein's, portrayal of the first stage of the postrevolutionary society, which he agreed with Stein to call "raw communism." Stein forecast that raw communism would be an attempt to enforce egalitarianism by wildly and ferociously expropriating and destroying property, confiscating it, and coercively communizing women as well as material wealth. Indeed, Marx's evaluation of raw communism, the stage of the dictatorship of the proletariat, was even more negative than Stein's:
In the same way as woman is to abandon marriage for general [i.e. universal] prostitution, so the whole world of wealth, that is, the objective being of man, is to abandon the relation of exclusive marriage with the private property owner for the relation of general prostitution with the community.
Not only that, but as Professor Tucker puts it, Marx concedes that
raw communism is not the real transcendence of private property but only the universalizing of it, not the overcoming of greed but only the generalizing of it, and not the abolition of labour but only its extension to all men. It is merely a new form in which the vileness of private property comes to the surface.
In short, in the stage of communalization of private property, what Marx himself considers the worst features of private property will be maximized. Not only that, but Marx concedes the truth of the charge of anticommunists then and now that communism and communization is but the expression in Marx's words, of "envy and a desire to reduce all to a common level." Far from leading to a flowering of human personality as Marx is supposed to claim, he admits that communism will negate it totally. Thus Marx:
In completely negating the personality of men, this type of communism is really nothing but the logical expression of private property. General envy, constituting itself as power, is the disguise in which greed re-establishes itself and satisfies itself, only in another way … In the approach to woman as the spoil and handmaid of communal lust is pressed the infinite degradation in which man exists for himself.Quoted in Tucker, op. cit., note 8, pp. 155. Italics are Marx's.
All in all, Marx's portrayal of raw communism is very like the monstrous regimes imposed by the coercive Anabaptists of the sixteenth century.Indeed, it is no accident that Marxian historians, from Engels to Ernst Bloch, have been great admirers of these regimes and movements, first, because of their communism, and second, because they were certainly "people's movements," bubbling up from the lower classes.
Professor Tucker adds, perhaps underlining the obvious, that "these vivid indications from the Paris manuscripts of the way in which Marx envisaged and evaluated the immediate postrevolutionary period very probably explain the extreme reticence that he always later showed on this topic in his published writings."Tucker, op. cit., note 8, pp. 155–6.
But if this communism is admittedly so monstrous, a regime of "infinite degradation," why should anyone favor it, much less dedicate one's life and fight a bloody revolution to establish it? Here, as so often in Marx's thought and writings, he falls back on the mystique of the "dialectic" — that wondrous magic word by which one social system inevitably gives rise to its victorious transcendence and negation. And, in this case, by which total evil — which interestingly enough, turns out to be the postrevolutionary dictatorship of the proletariat and not preceding capitalism — becomes transformed into total good.
To say the least, Marx cannot and does not attempt to explain how a system of total greed becomes transformed into total greedlessness. He leaves it all to the wizardry of the dialectic, now a dialectic fatally shorn of the alleged motor of the class struggle, which yet somehow transforms the monstrosity of raw communism into the paradise of communism's "higher stage."
The answer lies not in doubling down on political unity, maintained through endless violence or threats of violence. Rather, the answer lies in peaceful separation.
Original Article: "Secession Is Inevitable. War to Prevent It Is Optional."
This Audio Mises Wire is generously sponsored by Christopher Condon.
American and European political elites seem to be wanting the Russia-Ukraine war to be fought to the last Ukranian and have done nothing to bring peace. It's time for a change.
Original Article: "Just Say No to the New Forever War"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Australia is famous for its laid-back culture and for being founded by convicts from Great Britain. It also should be famous for its embrace of entrepreneurship.
Original Article: "Australia: The Nation Founded by British Convicts Embraced Entrepreneurship"
This Audio Mises Wire is generously sponsored by Christopher Condon.
How do societies determine who their heroes are? We know that often those seen as heroes actually made a country worse off.
Original Article: "How Should a Nation Determine Its Heroes?"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Americans often have defended the atomic bombings of Hiroshima and Nagasaki as regrettable but necessary for ending World War II. The actual record tells us a much different story.
Original Article: "Questioning the Military Necessity of Dropping Atomic Bombs on Japanese Cities"
This Audio Mises Wire is generously sponsored by Christopher Condon.
No matter the historical era, governments have excelled at one thing: debasing their own currency. Rome was no exception, as Roman government excesses required inflation—lots of inflation.
Original Article: "Rome's Runaway Inflation: Currency Devaluation in the Fourth and Fifth Centuries"
This Audio Mises Wire is generously sponsored by Christopher Condon.
By all measures, the economic downturn that began in 1920 was worse than what occurred in 1930, yet the economy recovered quickly in 1921. Why the difference?
Original Article: "The Economic Superbowl: 1920–21 versus 1930–31"
This Audio Mises Wire is generously sponsored by Christopher Condon.
The Chinese Community Party's crackdown in Christian churches reflects the perceived antiauthoritarian nature of Christianity and the party's fear of a competing alternative worldview.
Original Article: "Historical Christianity as a Liberating Force in China"
This Audio Mises Wire is generously sponsored by Christopher Condon.
The Pilgrims tried socialism at Plymouth. After two years, they returned to private enterprise. Likewise, Israel was founded as a socialist state but has back turned toward free markets.
Original Article: "A (True) Thanksgiving Tale of Socialism in America and Israel"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Long before there was the infamous German inflation of 1923, the Reichsbank created the scenario of monetary debasement.
Original Article: "The Reichsbank: Germany's Central Bank Lays Foundation of Monetary Disaster"
This Audio Mises Wire is generously sponsored by Christopher Condon.
It has been a hundred years since Mises published Socialism. It is more relevant than ever.
Original Article: "Reflections upon the Centennial of Mises's Socialism"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Thomas Paine, whose fiery essay "Common Sense" made a case for the American Revolution, is a much-neglected American founder.
Original Article: "Born on the Tenth of January"
This Audio Mises Wire is generously sponsored by Christopher Condon.
The standard line from progressives is that free markets usually fail in developing countries. The economic numbers tell a much different story.
Original Article: "Free Markets DO Work in Developing Countries"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Lutheran theologian Reinhold Niebuhr attracted numerous followers in postwar America in part because of his attacks on the free market. Perhaps he should have read Mises.
Original Article: "Niebuhr, My God, to Thee"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Roman keynesianism that ruined the empire and destroyed the Roman economy.
Original Article: "It Didn't Begin with FDR: Currency Devaluation in the Third Century Roman Empire"
This Audio Mises Wire is generously sponsored by Christopher Condon. '
The Soviet regime relentlessly expanded the money supply. To prevent inflation, the regime then created shortages through price controls and economic stagnation.
Original Article: "How the Soviets "Fixed" Inflation, but Ruined the Economy"
This Audio Mises Wire is generously sponsored by Christopher Condon. '
Gold historically has not been money by government fiat. Instead, gold has been the natural choice of people for money, something governments cannot undo (despite its best efforts).
Original Article: "Gold as Natural Money"
This Audio Mises Wire is generously sponsored by Christopher Condon. '
Turkey's economy is reeling under inflation rates likely reaching 170 percent. Not surprisingly, the worst of it is felt by regular people just trying to make a living.
Original Article: "The Turkish Way"
This Audio Mises Wire is generously sponsored by Christopher Condon. '
The Bible the ancient Israelites were warned about the dangers of having a government that would tax them heavily and oppress them. They didn't listen.
Original Article: "An Ancient Warning: Criminal Trespass Is the State’s Essential Feature"
This Audio Mises Wire is generously sponsored by Christopher Condon. '
Some claim that slavery was the main reason for the success of the Industrial Revolution in Great Britain, but the answer lies elsewhere.
Original Article: "What Drove the Industrial Revolution in Britain? It Wasn't Slavery"
This Audio Mises Wire is generously sponsored by Christopher Condon. '
Fortunately, the world is composed of many separate states, which enables "disobedient" residents in one state to escape to others, and fleeing conscription is merely an act of self-defense.
Original Article: "Escaping Russia's Military Draft Is an Act of Self-Defense"
This Audio Mises Wire is generously sponsored by Christopher Condon. '
In wartime, politicians frequently attempt to claim that all the citizens of foreign states are guilty of all the crimes their regimes commit. This is a modern invention, and a barbaric one.
Original Article: "No, Ordinary Russians Are Not Responsible for the Crimes of the Russian Regime"
This Audio Mises Wire is generously sponsored by Christopher Condon. '
Radical Charles Dunoyer wanted "the municipalization of the world" by which states would be broken up and forced to compete both with the private sector and with countless other states.
Original Article: "The Secessionist French Classical Liberals: Molinari and Dunoyer"
This Audio Mises Wire is generously sponsored by Christopher Condon. '
While the current political narratives claim that only Europeans were involved in the infamous transatlantic slave trade, the Africans themselves were also major players in directing and overseeing it.
Original Article: "Europeans Were Not the Only Slave Traders in Africa"
This Audio Mises Wire is generously sponsored by Christopher Condon.
The rise of democracy blurred the lines between the regime and the people it exploits. This was less of a problem under monarchs, whose interests were clearly separate from the public's.
Original Article: "Molinari Explains the Difference between Monarchy and Popular Government"
This Audio Mises Wire is generously sponsored by Christopher Condon.
The academic and political buzzword today is "decolonialization," but what happens when good laws are discarded on the flimsy basis that they were established during a colonial era?
Original Article: "When "Decolonialization" Creates More Problems than It Allegedly Solves"
This Audio Mises Wire is generously sponsored by Christopher Condon.
The reality of socialism is that it politicizes life entirely. How that is supposed to improve quality of life remains a mystery.
Original Article: "How Do We Define Socialism? By What It Does—and Does Not—Do"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Jordan Peterson has linked identity politics to socialism. Instead, socialism is about empowering the state.
Original Article: "Socialism Is Not Groupthink, but Statethink: A Brief Comment on Jordan Peterson"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Monarchs created Europe's modern states but lost the ability to control them. Then, having grown beyond the tools that helped monarchs turn themselves into absolute rulers, "the state acquired a life of its own."
Original Article: "How Monarchs Became Servants of the State"
This Audio Mises Wire is generously sponsored by Christopher Condon.
With Queen Elizabeth II lying in state at Westminster Hall, hereditary monarchies are under attack as archaic & absurd. Has mass democracy in the West done any better? Ryan McMaken joins Jeff and Bob to discuss.
Read Ryan's Article on Monarchs: Mises.org/HAP361-1 Read Hoppe's Democracy: Mises.org/Democracy
By compensating slave owners for the abolition of slavery, Great Britain ended the scourge of chattel slavery long before it was ended in the Americas.
Original Article: "By Compensating Slave Owners, Great Britain Negotiated a Peaceful End to Slavery"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Economists often deplore the corruption in developing countries, but when institutions are corrupt, don't expect people to have the incentive to be honest.
Original Article: "When Honesty Is Disincentivized, Don't Be Surprised That Trickery Abounds"
This Audio Mises Wire is generously sponsored by Christopher Condon.
The Mali Empire flourished as a trading center and gold-producing region from the late Middle Ages into the mid-seventeenth century.
Original Article: "The Mali Empire: An African Story of Gold and Greatness"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Before it was destroyed by British aggression in 1755, the Acadian community in Nova Scotia provided a window into an anarcho-capitalist society that was cohesive and successful.
Original Article: "The Acadian Community: An Anarcho-Capitalist Success Story"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Much of modern history portrays the African slave trade as purely a European venture. But capturing and sending slaves abroad required both approval and aid from African elites.
Original Article: "The African Slave Trade Wouldn't Have Been Possible without African Elites"
This Audio Mises Wire is generously sponsored by Christopher Condon.
When the Soviet Union dominated Eastern Europe, people there looked to the West—and especially the USA—in hopes of freedom. Today, it is the West promoting culture wars and collectivism.
Original Article: "Trapped by Imperialist Leviathans: The Case for Freedom in Central and Eastern Europe"
This Audio Mises Wire is generously sponsored by Christopher Condon.
In colonial America, "liberty" came to mean rights one possessed outside of government approval. In revolutionary France (and in modern Canada) it has come to mean participation in a political system.
Original Article: "A Tale of Two Liberties"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Like all other places, Africa has a more nuanced history than what people previously have believed. The continent was not devoid of technology before the advent of colonialism, as there were pockets of inventiveness and small-scale manufacturing.
Original Article: "Yes, Precolonial Africa Had Technology and Economic Life before Colonialism"
This Audio Mises Wire is generously sponsored by Christopher Condon.
If the situation were reversed and protestors had invaded the Capitol to support a left-wing candidate, we can be sure that the vocabulary used to describe the event would be quite different.
Original Article: "'Coup' Means Whatever the Regime Wants It to Mean"
This Audio Mises Wire is generously sponsored by Christopher Condon.
National divorce does happen, and debts are not necessarily repudiated as a result. We can look to examples from Latin America, Eastern Europe, and the Czech-Slovak split.
Original Article: "After Secession, What Happens to the National Debt?"
This Audio Mises Wire is generously sponsored by Christopher Condon.
While divine monarchy might seem illogical or archaic, it had a larger positive economic impact in society that historians have overlooked.
Original Article: "Divine Monarchy: Exploitative or Beneficial?"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Mention Rastafarianism and most likely Reggae, dreadlocks, and Bob Marley come to mind. However, Rastafarianism helped downtrodden Jamaicans resist the oppressions of colonialism.
Original Article: "Rastafarianism's Antistate Beginnings: It's More Than Just Bob Marley's Music"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Names like Menger, Böhm-Bawerk, Wieser, Hayek, and Rothbard are well-known to adherents of the Austrian school of economics. Emil Kauder isn't one of those names, but Murray Rothbard brings his contributions to Austrian thinking to light.
Original Article: "Emil Kauder as an Austrian Dehomogenizer"
This Audio Mises Wire is generously sponsored by Christopher Condon.
It’s impossible to simply declare nationalism itself to be good or bad. Its goodness or badness depends primarily on its effect on existing regimes and state institutions.
Original Article: "Is Nationalism a Good Thing? It Depends."
This Audio Mises Wire is generously sponsored by Christopher Condon.
Modern socialists claim that Hitler's Nazi regime was the antithesis of socialism. Hitler would have disagreed, as he saw himself and his movement as being primarily socialist.
Original Article: "The Competing Ideologies for the Collectivist Mind"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Featuring Joseph Becker, Anthony Cesari, Felicia Jones, and Alex Voss. Recorded at the Mises Institute in Auburn, Alabama, on 30 July 2022.
Fellowships in Residence at the Mises Institute in Auburn, Alabama, are available to graduate students and post-docs interested in scientific research in the Austrian school and libertarian political economy. For more information, visit Mises.org/fellows.
The Mises Institute’s Master of Arts in Austrian Economics is the first graduate program in the United States dedicated exclusively to the teaching of economics as expounded in the works and great treatises of Ludwig von Mises and Murray N. Rothbard. For more information, visit Mises.org/edu.
Students can also apply for scholarships to Mises Institute events at Mises.org/events.
Featuring Per Bylund, Tom DiLorenzo, Lucas Engelhardt, Sandy Klein, Robert Murphy, Patrick Newman, and Tim Terrell. Recorded at the Mises Institute in Auburn, Alabama, on 29 July 2022.
It is hard to explain through evolution how we know any necessary truths. Does this give us reason to abandon necessary truth? Nozick thinks so.
Original Article: "Nozick on Morality and Evolution"
This Audio Mises Wire is generously sponsored by Christopher Condon.
The West Indies played a vital role in growing the British economy in the eighteenth century.
Original Article: "The Industrial Revolution and the West Indies: Did the Colonies Spark Progress in the Metropole?"
This Audio Mises Wire is generously sponsored by Christopher Condon.
More than sixty years after being "liberated" by Fidel Castro and communism, Cuba has become a large slave state where people enjoy little freedom.
Original Article: "More than Sixty Years after "Liberation," Cuba Is a Communist Slave State"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Groups targeted by class warriors in America will achieve more if they follow the Igbos’ path and ignore the politics of grievance.
Original Article: "Africa's Entrepreneurs: The Igbos of Nigeria"
This Audio Mises Wire is generously sponsored by Christopher Condon.
"Repealing the twentieth century" sounds like madness to many. Yet the progressivism that came from that century will be the death knell of civilization if not stopped.
Original Article: "Civil Society and Counterrevolution against Progressivism"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Keynesian economics is a scourge to any nation that tries it, and African countries are no exception.
Original Article: "Nine Ways Debt and Deficit Spending Severely Harm African Societies"
This Audio Mises Wire is generously sponsored by Christopher Condon.
The standard line among the Great Reset crowd is that capitalism exploits poor nations and causes poverty. In reality, capitalism and free markets have reduced poverty around the world.
Original Article: "Developing Countries Don't Need Wealth Transfers; They Need Free Markets"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Neither the Ukraine war nor tough weather changes would threaten a global food shortage in a normal market environment. Unfortunately, world markets are riddled with regulations, killing production.
Original Article: "Government Intervention Is Fueling Food Shortages"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Though Kuttner thinks the New Deal a great success, he himself lays out some of its many problems.
Original Article: "The New Deal: Admissions against Interest"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Totalitarian societies do not become that way overnight. There are recognizable signs and stages which show how a society slides into that abyss.
Original Article: "The Five Stages of Totalitarianism"
This Audio Mises Wire is generously sponsored by Christopher Condon.
While the standard secular narrative is that Christianity held back science and human development, history tells a different story, one of literacy and the development of human capital.
Original Article: "Christianity and the Development of Human Capital: Challenging the Narratives"
This Audio Mises Wire is generously sponsored by Christopher Condon.
“Fascist” these days is little more than a term of abuse for opponents and has no cognitive value, but in what follows I’ll be using it in a precise sense, to designate a supporter of the regime established by Benito Mussolini in Italy. Was Ludwig von Mises in this sense a Fascist or a Fascist sympathizer? The question on its face seems absurd, and so indeed I shall be arguing it is; Mises was a defender of the free market, liberty, and peaceful international relations, in contrast to the state-controlled economy and violence of the Italian dictator.
Despite all this, some historians have answered our question in the affirmative, and foremost among them is Perry Anderson, a formidable Marxist scholar. In an essay “The Intransigent Right at the End of the Century,” which appeared in the London Review of Books in September 1992 and has been often referenced since then, Anderson says of Mises that “there was no more uncompromising champion of classical liberalism in the German-speaking world of the Twenties … [but] looking across the border, he could see the virtues of Mussolini. The blackshirts had for the moment saved European civilization for the principle of private property; ‘the merit that Fascism has thereby won will live on eternally in history.’”
Anderson accurately quotes from Mises’s Liberalism but nevertheless utterly distorts Mises’s view. Mises offers in that book a penetrating criticism of Italian fascism, and only by extracting the quoted sentence from its context, and distorting its meaning, has Anderson been able to portray Mises as a supporter of Mussolini. In what follows, I shall endeavor to explain Mises’s view of fascism, as he expounds this in Liberalism. In doing so, I have been preceded by the great historian Ralph Raico, who addressed the topic in an essay of characteristic brilliance, “Mises on Fascism, Democracy, and Other Questions,” but his account has a different emphasis from mine.
Mises’s discussion is contained in “The Argument of Fascism,” a section in the first chapter of Liberalism, “The Foundations of Liberal Policy.” Mises maintains that the coming to power of the “parties of the Third International”—i.e., the Communist parties controlled by Soviet Russia—has changed the nature of European politics for the worse, in a way that even World War I did not. Before the Communists came to power, the influence of liberal ideas imposed patterns of restraint on authoritarian forces.
Before 1914, even the most dogged and bitter enemies of liberalism had to resign themselves to allowing many liberal principles to pass unchallenged. Even in Russia, where only a few feeble rays of liberalism had penetrated, the supporters of the Czarist despotism, in persecuting their opponents, still had to take into consideration the liberal opinions of Europe; and during the World War, the war parties in the belligerent nations, with all their zeal, still had to practice a certain moderation in their struggle against internal opposition. (All subsequent quotations are from Liberalism)
Things changed when the Communists came to power.
The parties of the Third International consider any means as permissible if it seems to give promise of helping them in their struggle to achieve their ends. Whoever does not unconditionally acknowledge all their teachings as the only correct ones and stand by them through thick and thin has, in their opinion, incurred the penalty of death; and they do not hesitate to exterminate him and his whole family, infants included, whenever and wherever it is physically possible. (p. 47)
We now come to a part of Mises’s argument that is crucial to understanding his opinion of fascism. He says that some opponents of revolutionary socialism thought they had made a mistake. If only they had been willing to kill their revolutionary opponents, disregarding the restraints of the rule of law, they would have succeeded in preventing a Bolshevik takeover. Mises clearly associates the Fascists with these “nationalists and militarists” and says they were mistaken. Revolutionary socialism is an idea, and only the better idea of classical liberalism can defeat it.
What distinguishes liberal from Fascist political tactics is not a difference of opinion in regard to the necessity of using armed force to resist armed attackers, but a difference in the fundamental estimation of the role of violence in a struggle for power. The great danger threatening domestic policy from the side of Fascism lies in its complete faith in the decisive power of violence. In order to assure success, one must be imbued with the will to victory and always proceed violently. This is its highest principle. What happens, however, when one's opponent, similarly animated by the will to be victorious, acts just as violently? The result must be a battle, a civil war. The ultimate victor to emerge from such conflicts will be the faction strongest in number. In the long run, a minority—even if it is composed of the most capable and energetic—cannot succeed in resisting the majority. The decisive question, therefore, always remains: How does one obtain a majority for one's own party? This, however, is a purely intellectual matter. It is a victory that can be won only with the weapons of the intellect, never by force. The suppression of all opposition by sheer violence is a most unsuitable way to win adherents to one's cause. Resort to naked force—that is, without justification in terms of intellectual arguments accepted by public opinion—merely gains new friends for those whom one is thereby trying to combat. In a battle between force and an idea, the latter always prevails. (p. 50)
Mises has no use for Fascist domestic policy, and its foreign policy is no better.
That its foreign policy, based as it is on the avowed principle of force in international relations, cannot fail to give rise to an endless series of wars that must destroy all of modern civilization requires no further discussion. To maintain and further raise our present level of economic development, peace among nations must be assured. But they cannot live together in peace if the basic tenet of the ideology by which they are governed is the belief that one's own nation can secure its place in the community of nations by force alone. (p. 51)
But what about the sentence quoted by Perry Anderson? The merit that Mises ascribes to Italian fascism is that it has saved Italy from a Communist takeover, which would have resulted in the application of Bolshevik methods of extermination. It is in that respect, Mises holds, that it has “saved European civilization” and won for itself merit that will “live on eternally in history.” Mises does not claim that only the Fascists could have stopped the Communists; his claim is rather that the Fascists in fact did so. (This is a matter that has aroused much controversy among historians; for another defense of Mises’s view see the article by Ralph Raico previously cited.) By wrenching a sentence from its context, Anderson has converted a condemnation of fascism into a defense of it. It is as if someone were called a communist sympathizer because he wrote that "Soviet communism has earned eternal glory by saving Europe from Nazi barbarism," even though the writer was a strong critic of communism. In fact, that is exactly Mises's view, as readers of Omnipotent Government will recollect.
Moscow has used naturalization and immigration to effect demographic change and encourage conflict between ethnic groups in neighboring states. It has proven to be an effective foreign policy tool.
Original Article: "How Russia Uses Immigration and Naturalization to Grow State Power"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Despite the Left's denials that Hitler was a socialist, a careful reading of his writings and speeches tells a different story. His sympathies lay with the workers, not the bourgeoisie.
Original Article: "No, Hitler Was Not a Closet Capitalist"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Ukraine should have been a middle-income country by now. Instead, it is one of the poorest in Europe. If Ukraine joined the EU, it would be the poorest country and well below even Bulgaria.
Original Article: "If Ukraine Joins the EU, It Will Be the Poorest Member by Far"
This Audio Mises Wire is generously sponsored by Christopher Condon.
It is theoretically possible that through huge gains in productivity, the US could escape inflation and stave off a recession. But don’t count on it.
Original Article: "Why It's Looking More like the 1970s than the 1950s."
This Audio Mises Wire is generously sponsored by Christopher Condon.
Do the low inflation rates mean that the purchasing power of Japanese and Swiss citizens has increased relative to other countries over time? The answer seems to be no.
Original Article: "What Causes Exceptionally Low Inflation in Japan and Switzerland?"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Lenin called World War I a war among the capitalists of Europe. He was wrong. It was a war among oligarchs, statists who extract wealth from legitimate economic activity at the barrel of a gun.
Original Article: "The State: It’s Oligarchs All the Way Down"
This Audio Mises Wire is generously sponsored by Christopher Condon.
It is one thing to follow the law for prudential reasons and another thing entirely to assume the law brings with it some sort of moral imperative. Laws rarely do.
Original Article: "In the Age of Covid, We're Reminded an Unjust Law Is No Law at All"
This Audio Mises Wire is generously sponsored by Christopher Condon.
The new cold warriors are gaslighting the public on military spending, claiming spending isn't "keeping up." They want hundreds of billions in new taxpayer dollars.
Original Article: "The War Party Wants a New Cold War, and the Money That Comes with It"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Socialization of the economy led to immediate disaster. In 1920–21, Bolshevik agrarian policy culminated in a famine with an impact unparalleled in modern European history.
Original Article: "Socialist Economies Are Impossible: Lessons from Russia, 1917–22"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Progressives will write the history of covid to hide the mistakes of progressive "experts" and to distance themselves from disastrous or pointless policies. They've done it before.
Original Article: "This Is How the Progressives Will Write the History of Covid"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Here in Canada, the trucker protesters (and their supporters) have been civil and maintained the usual Canadian niceness. This civility has not been reciprocated by the political class.
Original Article: "Report from Canada: The Regime Is Lying about the Truckers"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
In Orwellian fashion, if you want freedom, that makes you a "racist" and a "fascist." So, it is assumed by our overlords to be "fascism" when truckers protest for the freedom to earn a living.
Original Article: "The Canadian Truckers' Battle against Covid Tyranny"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
SEZs are loopholes, and capitalism breathes through loopholes. But like all loopholes, they tend to benefit those who can afford to hire the lawyers who can identify said loopholes.
Original Article: "What Would Mises Have Thought of "Special Economic Zones"?"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Although covid cases in Austria—and most other countries—are rapidly falling, Austria has doubled down on punishing the unvaccinated and become the first country to mandate vaccination for all adults.
Original Article: "Austria Doubles Down on Forced Vaccinations"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
The Dawn of Everything: A New History of HumanityBy David Graeber and David WengrowFarrar, Straus and Giroux, 2021Xii + 692 pages
The Dawn of Everything, which has already attracted much scholarly attention and is a best seller as well, should be a warning to all academics: do not write about economics or the history of modern Europe if you are ignorant of these subjects. David Graeber, who died shortly after this book was finished, was an anthropologist, and David Wengrow is an archaeologist. Both have written extensively in their areas of specialty, and, so far as I can determine, they are well regarded by some of their fellow specialists. Much of this overly long book is an often tedious description of various archaeological sites around the world, based on extensive citation of fieldwork, but it nevertheless contains valuable suggestions and merits careful study. Even here, though, one ought to be cautious. It does not encourage confidence when they tell us “Teotihuacan’s growth to urban dimensions began around the year 0.” You might have expected that even children in elementary school would know that there is no year zero in our calendar.
Unfortunately, they put their knowledge in the service of a political agenda for the modern world, which they defend with poor arguments disfigured further by gross errors. They are left anarchists and regard capitalism as an evil, “hierarchical” system that ought to be replaced, though by what we are never clearly told. In their account, contact with Indian tribes in the seventeenth and eighteenth centuries posed a challenge to European intellectuals. Society, they thought, necessarily rested on hierarchy. The lot of a poor peasant was far worse than that of a nobleman, and this might be regrettable, but a society of near equals in power could not exist. Contact with the Indians suggested, on the contrary, that it could and did exist, and this led intellectuals to question the legitimacy of hierarchy in their own societies. “Just about every major French Enlightenment figure tried their hand at a ... critique of their own society, from the perspective of some imagined outsider.”
Given this criticism, the defenders of hierarchy tried to strike back. Graeber and Wengrow take the great French economist Anne Robert Jacques Turgot to be among these defenders, and they direct much of the argument in the book against a model he developed. According to them, Turgot believed that societies advance through a series of inevitable stages, from savagery to barbarism to civilization. Equality is suitable only for very small societies, and we cannot go back to it. “Turgot would elaborate these same ideas in a series of lectures on world history. He had already been arguing—for some years—for the primacy of technological progress as a driver for overall social improvement. In these lectures, he developed this argument into an explicit theory of stages of economic development; social evolution, he reasoned, always begins with hunters, then moves on to a stage of pastoralism, then farming, and only then finally passes to the contemporary stage of urban commercial civilization. Those who still remain hunters, shepherds or simple farmers are best understood as vestiges of our own previous stages of social development. ... In this way, theories of social evolution ... first came to be articulated in Europe: as a direct response to the power of indigenous critique.”I discuss other aspects of Graeber and Wengrow’s criticism of Turgot in my article“In Defense of Turgot,” Mises Wire, December 10, 2021, https://mises.org/wire/defense-turgot.
The authors give two main arguments against this model. First, the stages aren’t inevitable: rather, societies at the “lower” levels sometimes consciously choose the sort of economic, social, and political system they wish, and their choices often fail to follow the order Turgot set forward. Second, Turgot is wrong to view our own stage of civilization as better than its noncivilized predecessors. I’ll discuss the latter criticism first, as dealing with it is easier.
Graeber and Wengrow say that the higher value ascribed to civilization rests on the false assumption that economic productivity is the highest social good. “By framing the stages of human development largely around the ways people went about acquiring food, men like Adam Smith and Turgot inevitably put work—previously considered a somewhat plebeian concern—centre stage. There was a simple reason for this. It allowed them to claim that their own societies were self-evidently superior, a claim that—at the time—would have been much harder to defend had they used any criterion other than productive labour.”
In putting things this way, they have wrongly framed what is at stake. The issue is not whether one society is “superior” to another judged from some external standpoint. Rather it is that if a society has a very large population, only a market economy will enable most people to survive and prosper. Further, even if Graeber and Wengrow think they shouldn’t, most people nowadays want a high standard of material goods, and it is of little consequence if there have been past societies in which they didn’t. As Ludwig von Mises points out in Human Action: “The immense majority strives after a greater and better supply of food, clothes, homes, and other material amenities. In calling a rise in the masses’ standard of living progress and improvement, economists do not espouse a mean materialism. They simply establish the fact that people are motivated by the urge to improve the material conditions of their existence. They judge policies from the point of view of the aims men want to attain. He who disdains the fall in infant mortality and the gradual disappearance of famines and plagues may cast the first stone upon the materialism of the economists. There is but one yardstick for the appraisal of human action; whether or not it is fit to attain the ends aimed at by acting men.”
We can now address the first criticism given of Turgot’s theory of stages, and I hope it will soon become clear why I started with their second criticism. Once you realize that if Graeber and Wengrow wish to end capitalism as it now exists, they need to consider whether present conditions make this possible, you can see that their first point against Turgot is irrelevant to their political concerns. That said, their first point is a good one. Unless their presentation of the archaeological data is a total misreading, they do successfully show that it isn’t fixed that foragers who have been exposed to an agricultural society will forthwith abandon their former ways for the new dispensation. To the contrary, they often consciously reject agriculture or adopt it only in part. Further, in a process Graeber and Wengrow, following Gregory Bateson, call “schismogenesis,” societies sometimes adopt practices in conscious opposition to neighboring societies. They write: “Schismogenesis ... describes how societies in contact with each other end up joined within a common system of differences, even as they attempt to distinguish themselves from one another.... Each society performs a mirror image of the other. In doing so, it becomes an indispensable alter ego, the necessary and ever-present example of what one should never wish to be.” But if what is at issue is whether a market economy can now be successfully changed to something else, all of this is irrelevant.
Perhaps, though, it is better that Graeber and Wengrow devoted the bulk of their efforts in this book to prehistory, as their forays into the modern leave much to be desired. We learn from them that, “it was only ... in the late nineteenth century, when men like Tom Paine came up with the concept of ‘representative democracy’ that the right to weigh in on spectacular competitions among the political elite came to be seen as the essence of political freedom, rather than its antithesis.” Paine died in 1809, and the term “representative democracy” was in use in England in the 1790s. Contrary to what they say, Louis XIV was not one of “the ‘absolutist’ monarchs of the Renaissance”; he reigned after it. Nor are their mistakes confined to chronology. In his On the Demonmania of Witches (1581), Jean Bodin says that women are fifty times more likely to be witches than men, but it is news to me that “he is further remembered today for his profound hatred of women.” The primary reason that Christian Wolff was expelled from Prussia was not his lectures on Chinese customs, although this was a factor, but Pietist opposition to Gottfried Wilhelm Leibniz’s philosophy, of which Wolff was considered an exponent. It is also misleading to say that “a warrant was issued for his arrest and he was forced to flee for his life.” He was given two days to leave Prussia, on penalty of hanging, but he did not try to run from an arrest warrant, and King Friedrich Wilhelm I a number of years later tried to get Wolff to return to his university position.
Graeber and Wengrow are right to question stage theories of history, but they pass by in silence the laws of economics that show the necessity of the free market for a complex modern society.
The US benefits in no way from a war with Russia. Fortunately, many Americans are less than enthusiastic.
Original Article: "The Usual Suspects Are Pushing War with Russia"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Under PM Mario Draghi, the Italian government has issued new edicts designed to make life even more difficult for anyone who doesn't comply with every aspect of the state's covid regime.
Original Article: "Italy's Covid Despotism Just Got Worse"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
The historical guilds of Europe have long been criticized for cartelizing trade and seizing monopolistic powers. And new research suggests the situation was very similar in Africa as well.
Original Article: "The Problem with Guilds: They're Monopolistic and Wasteful"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Countries must remain free to refuse the edicts of global institutions of "government" like the World Bank or the IMF. This is true even when the stated goal is advancing free markets.
Original Article: "Global Governance versus Freedom and Free Enterprise"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
This is freedom: "That he is independent of the arbitrary power of his fellows … [freedom] arose in the process of social development and its final completion is the work of mature Capitalism.”
Original Article: "Will Artificial Intelligence Create a Socialist Paradise?"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Gabriel Boric is no friend of free trade, low taxes, or markets in general. Yet these policies are what made Chile the most prosperous country in South America.
Original Article: "Chile's New President Threatens the Nation's Market-Driven Prosperity"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Latin America's antiglobalization epoch, from 1913 to 1970, was marked by high regulations and antitrade efforts that have fueled Latin America's economic problems.
Original Article: "Colonialism Isn't the Source of Latin America's High Inequality"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Turkey's President Erdoğan faces a series of crises as the lira collapses and the state's central bank steps in to clean up the mess.
Original Article: "Turkey's Economy Is in Big Trouble"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Lockdowns and school closures will go down as one of the worst peacetime policy disasters of all time. Never again should the well-being of our children be sacrificed to placate the neuroses of adults.
Original Article: "Covid Lockdowns Will Be Remembered as One of the Greatest Policy Failures Ever"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
The evidence indicates that a prevalence of slavery in an economic system is a robust predictor of subpar economic growth and a creativity deficit.
Original Article: "A Slave-Based Economy Is Nothing Like a Dynamic Capitalist One"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
It took many centuries for regimes to secure the sort of prestige and power necessary to claim a monopoly over money. From the state's perspective, it has been worth it.
Original Article: "How Governments Seized Control of Money"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Capitalism is not a "legacy of colonialism" in Africa. In fact, markets and interregional trade have long been practiced on the continent. And markets today are still the answer to raising standards of living.
Original Article: "Africa's Long History of Trade and Markets"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
So oppressive was the Inca regime that it's no wonder the Spaniards found many enemies willing to help topple the empire.
Original Article: "The Inca Empire: An Indigenous Leviathan State"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Vaccine mandates are not a new invention, and states have long pushed a narrative exaggerating the success of mandates in the past.
Original Article: "Smallpox: The Historical Myths behind Mandatory Vaccines"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Abstract: The paper describes the colonization cost theory of anarchic emergence. The theory states that when the state incurs high costs of directly colonizing land, it may be beneficial for it to allow anarchy to emerge and settle distant frontiers. Once enough land is settled by the anarchic community, the state can then use one of the two following strategies: 1) appropriate this land cheaply by a coercive takeover; 2) wait for the anarchic communities to assimilate into the state, given the state’s low time preference. The theory is empirically supported through two cases of Russian religious sects. The first case describes the Old Believers sect that was forced to escape state persecution to the Altai mountains in the 1740s. In 1791 these Old Believers were re-integrated into the Russian state after a series of violent military clashes. The second case describes the Doukhobors sect. This sect was incentivized to immigrate to Canada for the purpose of settling the distant prairies in Saskatchewan. The Canadian government expected the Doukhobors to assimilate after a few years of living under anarchy, but after seeing this approach fail, resorted to a coercive strategy and appropriated the colonized land.
JEL Classification: N41, N42, N43, Z12
Vladimir Maltsev (vmaltsev92@gmail.com) is a senior lecturer at the Financial University under the Government of the Russian Federation.
I want to thank the journal editor and an anonymous referee for providing valuable feedback and comments. I further thank Natasha Purser for helping me with language editing.
Since its inception, the Austrian school of economics stressed the importance of spontaneous order, which originates in human action. This emphasis eventually led to the intertwining of the Austrian research framework and the study of anarchy.In this paper, I define anarchy as “the absence of government,” and not necessarily as a community that employs private defense agencies for its functioning (it may, in fact turn to other means of securing peace, as mentioned by Long (2007, 154–60). In turn, I borrow from Leeson (2014) the definition of government as a “monopoly governing agency that compels persons to abide by the social rules it creates, but which all those persons haven’t explicitly consented to be governed by.” As such, the matter of explicit consent and the ability to exit a governance arrangement is key for distinguishing anarchy from the state in this framework. Both these definitions come with a set of inherent problems, but they are adequate for the purposes of this article. Through the logic of human action as outlined in the works of Carl Menger, Ludwig von Mises, and F. A. Hayek, many prominent Austrian scholars attempted to explain how stateless societies can privately supply law, security, and a plethora of other public goods (see, for instance, Hoppe 1998–99; and Rothbard 2006). Today, the Austrian analysis of anarchy continues and is increasingly empirical, focusing on mechanisms which promote and enforce cooperation (Leeson 2007, 2013; Powell, Ford, and Nowrasteh 2008; and Stringham 2015). This synthesis of the Austrian school approach and the study of anarchy is classified (Boettke 2011) as a “progressive research paradigm” in economic sciences.
Despite the immense progress in the study of anarchy, the question of how to get there receives little attention. The answers given by the scholarship seemingly have not evolved beyond a handful of basic explanations. However, as the Austrian school has constantly stressed the need to examine institutions and their dynamic nature, the lack of progress in such an important field of inquiry as emergence cannot be ignored. In other words, how can a phenomenon be fully understood if the various ways in which it originated are ignored?
This article claims that under particular economic constraints, anarchy can emerge as a result of deliberate effort by the state—a dynamic that has been completely ignored in contemporary studies. This insight might also result in a rather paradoxical situation where spontaneous orders may not exist as a result of deliberate human design but their emergence might very well be fostered deliberately.
When is it beneficial for a state to cause statelessness to emerge? The colonization cost theory presented in this article answers this question. This theory holds that when the costs of directly colonizing new land are high, a state can incentivize the creation of anarchic communities in unsettled stateless regions. Then, once a sufficient amount of territory has been developed by the anarchic colonizers, the state will either subjugate the stateless territories or wait for the colonizers to assimilate into it, receiving new lands at a significantly lower cost as compared to direct expansion.
The research tackling anarchic emergence (see, for instance, Ellickson 1986; Tannehill and Tannehill 1993; Anderson and Hill 2004; Rothbard 2006; Leeson 2007, 2013; Powell, Ford, and Nowrasteh 2008; Scott 2009; Stringham and Miles 2012; Chartier 2013; and Friedman 2014) forms the theoretical foundation of this paper. This study finds empirical support for the colonization cost theory in two examples from Russian history that deal with oppressed religious sects. One such sect, the Old Believers, was forced by the government to flee to Siberia, and after developing a sufficient amount of land in the region, they were reintegrated into the state (see, for instance, Zenkovsky 1957; Michels 1999; and Maltsev 2019). Another example is the anarchic sect of Doukhobors, who fled to Canada motivated by its federal land grants, which were meant to incentivize the colonization of the prairies. The Canadian government expected the Doukhobors to assimilate, but eventually expropriated the sect’s developed lands (Bulgakov 1994; Somin 2004; Androsoff 2011; and Makarova 2013).
The article is structured as follows. First, the literature on anarchic emergence is reviewed. Then, the colonization cost theory of anarchic emergence is presented and empirical support for it is presented. Section five concludes and offers suggestions for new potential areas of my theory’s application.
LITERATURE REVIEW The views on anarchic emergence have varied among scholars but can usually be condensed to the following theories. Rothbard (2006) and Chartier (2013), for instance, stress the importance of education or ideological conversion in the emergence of anarchy. Rothbard (2006, 373) stresses that this may occur through “the persuasion and conversion of large numbers of people to the cause.” Chartier (2013, 321) notes the importance of actively practicing political and cultural anarchism to speed up the emergence of anarchy in general.
Another understanding of anarchic emergence can be classified as “state failure,” where states are unwilling or unable to adequately provide governance or public goods, due to their corruption, overall incompetence, or simple costliness. For David Friedman (2014, 156) the efficiency that private institutions exhibit over state ones is at the core of the path toward anarchy. The development of these alternatives constructs the “skeleton of anarcho-capitalism,” from which anarchy then emerges. Morris and Linda Tannehill (1993, 151–52) present similar views, claiming that anarchy can emerge after the collapse of the state due to its disastrous economic policies. Stringham (2015, 233) further argues that if individuals can recognize the “unreliability of politicians and the inefficacy of the laws they impose,” they will not “so willingly support rules and regulations, and that can aid in replacing government rules and regulations with private ones.” The state inefficiencies can also create what Ellickson (1986) and Leeson (2013) call “pockets” of anarchy within states.
A different explanation for anarchic emergence comes from the “power vacuum” theories. Works on anarchy in Somalia by Peter T. Leeson (2007) and Benjamin Powell, Ryan Ford, and Alex Nowrasteh (2008) show that anarchy can emerge as the population of a country disposes of a predatory state without actively attempting to establish a new one. Moreover, conflicts between states themselves can leave behind unoccupied swathes of land devoid of political rule (Maltsev 2019). Anarchy can take hold in such power vacuums.
Finally, the research of Terry L. Anderson and Peter J. Hill (2004) on the Wild West and James C. Scott (2009) on Zomia shows that anarchy emerges when individuals leave the states that they inhabit, lured by the chance to attain profits outside of the state’s sphere of influence or to simply flee its tyranny.
Murphy (2010, 29) urges us to be cautious however, stating that a path to anarchy will depend on the particular historical conditions in a given society. While one society may transition to anarchy via a “violent overthrow of unjust regimes,” the others may enjoy a “gradual and orderly erosion of the state.”
Since these scholarly efforts, almost no attempts have been made to offer new explanations as to how anarchy can emerge, and in no way did the reviewed literature consider a situation where the state purposefully fosters anarchy. By considering such a possibility, this paper offers a new explanation that ameliorates the stagnancy in the field of anarchic emergence studies.
THE COLONIZATION COST THEORY OF ANARCHIC EMERGENCE The idea that individuals flee the state’s territory and colonize uninhabited lands outside its sphere of influence is not novel by itself. Such processes are well described in the literature on the Wild West (Anderson and Hill 2004; Stringham 2015, 113–33), which describes how individuals moved out of the reach of United States law to the western frontier of North America, lured by the prospects of finding gold. Another case of individuals leaving the state’s sphere of influence is presented in Scott (2009), which showed how people in Southeast Asia fled the despotic regimes into the mountains of a stateless region known these days as Zomia. In both of these cases, the migration of individuals outside the state’s sphere of influence was spontaneous. For the Wild West, the state did not need to provide individuals with incentives to move. For Zomia, the state did not deliberately engineer such movement for its own gain, as the region remains stateless to this day.
However, the idea that the state can purposefully incentivize the migration of individuals out of its sphere of influence to create anarchic communities has not yet been explored. Imagine that an abstract state X wishes to extend its geographical power and increase its revenues. Assume that X wants to achieve that by colonizing a certain amount of land and that it expects to receive a certain amount of income per unit of land that it colonizes. This income can come in the form of taxes, extraction of natural resources from the new land, the increased political prestige from bolstering its territory, and other factors that would be beneficial to the state and its bureaucrats.
However, X will want to colonize new lands only if the revenues from this process exceed the costs. The costs of colonization could be significant. They may consist of exploration, movement of settlers to the new land, establishment of infrastructure, and defense of the region. Edward P. Stringham and Caleb J. Miles (2012, 13) claim that “conditions favorable to state-making include an accessible, concentrated population producing easily appropriable goods that can feasibly be returned to the state centers” and that if “the cost of physically traveling to the taxable population and returning collected taxes to the state center is significantly higher than what it costs the taxable population to move out of the way, the state is cost-prohibitive.” Furthermore, consider that the state can also face significant opportunity costs. For example, the armies and manpower that it diverts to colonization could be instead used to defend itself against a foreign aggressor or initiate aggression against other countries.
In this case, it is easy to imagine that if the costs of direct colonization exceed its benefits, then the state will not engage in the effort. However, this does not mean that X will abandon its ambition altogether. Instead, X may turn to less costly alternatives of colonizing the land. The first of such means is the use of violence. The state may modify the incentives of economic agents, driving them out of its territory and forcing them to migrate to unclaimed lands and create anarchic communities there. This could happen through, for instance, an increase of targeted violence against specific groups within the state.
As a result, individuals flee to the unoccupied regions and bear all the corresponding costs of searching for new land, settling it, and protecting it privately. Until enough land is accumulated, these communities will develop independently of the state, living under conditions of self-governance, and employing relevant mechanisms to secure and enforce peaceful cooperation, be it through private law systems, high social homogeneity, or more exotic means such as traditions or superstitions (see, for instance, Leeson 2013). Once enough land is settled, however, the state can engage in a violent conflict with the anarchic region, appropriate the colonized land, and extract revenues from it. As long as the state carefully monitors the situation and does not allow the anarchic region to grow in power disproportionately, so that the costs of confrontation become excessive, the state can obtain the land at a much lower cost.
A nonviolent approach is also possible. In this case, X does not utilize violence against a self-governing society to claim the land it covets. It may simply allow individuals to colonize the stateless frontiers and govern their communities privately for a time. Yet the state will push for an eventual assimilation of these self-governing communities. The reason for choosing an assimilation approach is that peaceful integration may have lower costs than a violent takeover. To incentivize assimilation, X can, for example, offer generous economic concessions upon integration. However, the decision to assimilate may take some time and the state may need to wait before it can extract incomes from the colonized territories. Then such a strategy will only work if the state does not discount its future payoffs too steeply.
We must also not forget a key Austrian insight, which is that economic systems are dynamic and prone to constant processes of disequilibrium and adjustment. As such, if the state’s time preference changes or the assimilation costs become too high, the state may shift its strategy toward the violent takeover of anarchic regions. A reverse situation, where the conflict between the state and anarchic regions may become prolonged and state may opt for a softer approach, is possible as well. Now this theory will be applied to two historical examples of Russian religious sects.
EMPIRICAL CASES OF STATE-PROMOTED ANARCHIC COLONIZATION Violent Colonization Strategy: The Old Believers in Eastern Russia
The first example of state-incentivized anarchic colonization is the case of the Russian religious sect of Old Believers. Tensions in the Russian religious life accumulated after the Russian Orthodox Church’s Patriarch Nikon initiated sweeping reforms in the 1650–60s. The reform was an attempt to consolidate the authority of the church and further centralize its political power (Zenkovsky 1957, 42–51), essentially depriving regional religious communities of their autonomy. Those who did not accept the reforms and preferred to practice religion in its prereformed state were branded as heretics and mocked as “Old Believers.” Thousands of Old Believers were executed, and many were imprisoned. The situation improved only marginally in the eighteenth century, when Peter the First replaced outright executions of Old Believers with steep taxes, which included fines for their distinct clothing and beards. Later, Russian autocrats such as Elizaveta (r. 1741–62) also subjected the Old Believers to forced labor in mining camps and factories (Beloborodov and Borovik 2017, 47–49).
Facing such repressions, many Old Believers were forced to flee the state, proclaiming it the kingdom of Satan (Zenkovsky 1957, 51). Their groups moved to the eastern and southeastern territories beyond the Ural Mountains, and outside of the Russian state’s jurisdiction. These lands included the Siberian region; areas such as Altai and Tuva; and locations near the Yenisei River (Storozhenko 2015, 23–30). In the Urals, the Old Believers established numerous anarchic settlements in either hilly or dense forest terrain in the 1730s and 1740s.
Having been chased off the territories of the state, the Old Believers were unable to rely on formal systems of governance and had to devise their own rules privately. Due to the small size of their settlements and their religious homogeneity, the Old Believers did not need to devise extensive systems of self-governance. They mostly relied on the general meeting of villagers to resolve crucial disputes, where the “best men” would pass their verdicts (Mamsik 1989, 90–91). While petty criminals could be flogged for their misdeeds, murderers and robbers were exiled from the communities via “rafting,” where the perpetrator was chained to a wooden raft, which was then set to float down a mountain river (Maltsev 2019, 10–11).Of course, entering such a community meant expressing agreement with the rules ex ante, which allows us to classify these settlements as anarchic, based on their voluntary character. As such, technically, the criminal could survive this punishment, but he would then have to either find a new community of Old Believers to join, or return to living under the state, which would probably mean his swift capture and imprisonment for fleeing in the first place.
Historical sources do not mention any for-profit policing firms in these anarchic communities; instead, they resorted to what Long (2007, 156–57) calls “defense via labor economy through an armed populace,” relying on local militias armed with rifles. In the mountainous areas of Bukhtarma, with its narrow bridle paths, even a handful of individuals with firearms could stall a military unit.
These anarchic communities also thrived economically, mainly due to three reasons. Firstly, without the crippling oppression of the state, wealth was much easier to accumulate. Not subjected to executions or excessive taxes, the Old Believers could retain all the proceeds from their economic activities, greatly increase their capital, and continue to develop (Maltsev 2019, 10).
Secondly, the Old Believers rationally reviewed the fundamental tenets of their faith to encourage capital accumulation. Through reinterpreting the Book of Job, the Old Believers arrived at the following conclusion: as long as wealth was obtained through honest labor and trade was performed with honest weights, accumulating riches could not be considered a sin. This position contrasted greatly with the mainstream views of the Orthodox Church, which demonized the accumulation of wealth and promoted altruism and selflessness. Furthermore, similarly to the Protestant faith, Old Believers put great emphasis on honest labor, which not only was akin to a “blessing of God” to them, but also singled the Old Believers out from the mass of heretics and helped to elevate the sense of superiority of their communities (Mogilevskaja and Razumova 2012).
Thirdly, the Old Believer communities greatly depended upon mutual aid. For instance, the kamenschik (stonemason) communities near the river Bukhtarma in the Altai Mountains provided newcomers with shelter, employment, and interest-free loans to promote their starting their own enterprises.
Consequently, the incomes of some Old Believer communities increased by a factor of seventeen in just a few decades. Many of these communities, such as the kamenschiks, existed under anarchy for as long as fifty years. But a logical question arises here: Why did the Russian state allow such anarchic arrangements to exist for such an extended period? The colonization cost theory of anarchic emergence explains this outcome.
While the Old Believers built up their communities in the east, they took upon themselves all the related costs of finding and working the land. At the same time, the Russian state could not devote too many resources to colonizing the eastern frontier. The opportunity costs were high due to the harsh climate, the large distances to cover, and the country’s involvement in numerous wars against Poland, Sweden, and the Ottoman Empire throughout the seventeenth and eighteenth centuries the country. All of these factors contributed to a high cost of direct colonization for the Russian state. Because of this high cost, the Russian state was willing to tolerate the presence of the Old Believers in the east as long as they appropriated and developed enough land.
Accordingly, Victor I. Dyatlov (2010, 7) writes that Old Believer migration played a decisive role in the political and economic formation of Russian territories in the east. Large sections of the Urals, Siberia, and the Far East were settled by the escapees. Nikolai N. Pokrovskiy and Natalya D. Zolnikova (2011, 170) make a key observation that the “old faith [became] one of the most important factors of secret colonization of Siberia.” Further credibility to the intentionality of the state in its colonization efforts is provided by Sapozhnikov (1891, 62–63), who notes that the Russian army was often reluctant to apprehend the fleeing Old Believers and frequently abandoned any efforts at pursuing the adherents of the old faith.
But the state was only willing to tolerate this colonization until it became necessary to bring the anarchic communities into the fold. One of the better-researched cases of such an event concerns the Bukhtarman kamenschik communities to the southeast of the Altai Mountains. The kamenschiks established a chain of anarchic Old Believer settlements that lasted from 1740 up until 1791 (Maltsev 2019). However, the state started to threaten the villages with military advances. After a few clashes, in 1791 the Old Believers petitioned Catherine II for inclusion in the Russian state, along with the territory they had colonized. The integration of the kamenschiks occurred on quite favorable terms for the latter. They joined the state as an allogenous population, and thus, according to the laws of the Russian Empire, could continue practicing their religion without being subjected to high taxes and other discriminatory laws that were usually levied against the Old Believers. The tax that they paid, called yasak, was also very low and could be paid in animal furs and other goods instead of money. The kamenschiks also retained their autonomy and were allowed to keep their weaponry. The only duty that the state demanded of them was to protect the borders of their region (Dolzhikov 2019). It is evident that the Russian state incurred few costs in the process of annexing the Old Believers of Bukhtarma.
Nevertheless, the reintegration into the state did not always go smoothly for Old Believer communities. Pokrovskiy and Zolnikova (2011, 170) note some anarchic “isles” of colonization were met with accidental or outright targeted hostility and instead “died under the blows of state repression.”
The persecution of Old Believers by the tsarist government lasted into the early twentieth century, as shown in historical records of the Tuva region, where Old Believers continued to arrive up until 1915, settling in its most distant regions to escape state oppression.
Assimilation Strategy: The Doukhobors in Canada
The second example touches upon a radical sect called the Doukhobors (Bonch-Bruevich 1918). The sect originated in the beginning of the late eighteenth century and its name is best translated as “spirit wrestlers.” Initially the name was a derogatory term, to label them as fighting against the holy spirit of God; however, the Doukhobors adopted it with a different meaning, namely that they were wrestling alongside the Holy Spirit, to uncover and preserve the voice of God in each of them (Androsoff 2011, 33). The key ideas of the Doukhobor faith were “freedom from superficial rites and from church, adherence to nonviolence, vegetarianism, abstention from alcohol and tobacco, and the rejection of governmental institutions” (Makarova 2013, 132). The Doukhobors rejected the Bible as an archaic document and instead preferred a “living” oral recitation of the main tenets of their faith.
Similarly to the Old Believers, the Doukhobors could not resort to formal governance to resolve disputes or secure peace. They also governed their communities privately, through councils of elders (Androsoff 2011, 47–48). In this way, the sect resembled a private club, which individuals join with their explicit consent to obey its established rules. If any Doukhobors were dissatisfied with the work of the elders, they could exit the sect or form a competing alternative, as evidenced by the later creation of a radical branch called the Sons of Freedom. Since the Doukhobors were pacifists, they did not arm themselves or utilize private protection firms for the purposes of defense, in hopes that their social homogeneity would make their peaceful existence self-enforcing. As a result, the Doukhobors formed “pockets” of anarchy in the territory of the Russian state.A counterargument here would be that these communities existed only by virtue of being in the “shadow” of the state. However, the Russian state did not enable their governance in any way, as attempts at resolving Doukhobor conflicts in Russian courts was frequently ignored (Androsoff 2011, 43).
During the more liberal reign of Alexander I, the Doukhobors enjoyed a fairly stable existence in Crimea, and their faith began to spread throughout the country. However, when Nikolai I came to power, the sect encountered heavy oppression from the state. They had their assets and landholdings confiscated and were forcibly conscripted into military service or exiled to the periphery of the Russian state unless they publicly denounced their faith and returned to Orthodox Christianity (Brokgauz and Evfron 2004, 251).
In 1895, under the growing influence of the ideas of the prolific writer Leo Tolstoy, the Doukhobors have become even more radical in their preaching of pacifism and rejection of the state. This culminated in Doukhobors holding numerous demonstrations across various Russian towns where they demonstrably burnt weapons and conscripted Doukhobors left military service. The state’s wrath followed immediately—some of the Doukhobors were assaulted by state troops at these demonstrations and died, while some women were raped. Ultimately, the state subjected the Doukhobors to another exile, with full confiscation of their property. The situation was becoming dire and Leo Tolstoy had to amass funds for the Doukhobors to escape to another country. Through the efforts of a famous anarchist scholar, Peter Kropotkin, and his connections, Canada was selected as an escape destination. Soon, some eight thousand Doukhobors began their relocation to the West, and by 1899 their journey was complete (Somin 2004).
The Canadian government at that time had ambitions of becoming a more influential player on the world stage, which required more economic and territorial prestige. Furthermore, it needed to secure its northwestern territories from a potential American encroachment (Androsoff 2011, 62–63). However, the costs of colonizing these territories directly were quite high, due to the harsh climate and the lack of an agriculturally skilled populace to cultivate the land in the prairies. As such, the Canadian government decided to attract skillful immigrants to colonize the country’s furthest reaches. The Doukhobors were ultimately selected due to Tolstoy and Kropotkin’s lobbying and due to the fact that the sect had proven itself competent by managing to survive in harsh conditions and under constant oppression from the Russian state. We can see that the anarchic state of the international arena managed to lessen the potential for violence against the Doukhobors by the Russian state as the Canadian government “competed” for them. The problems of Doukhobors however, did not end there.
The Canadians decided to allow the Doukhobors to live under the conditions of anarchy in Saskatchewan, unsupervised by the state. Some four hundred thousand acres of land was allotted to the sect. The government was hoping that the Doukhobors would assimilate into the state in the span of one or two generations. But, the government severely miscalculated the probability of the Doukhobors assimilating. The Doukhobors wanted to continue to live in anarchy as Doukhobors, not as Canadians. Naturally, they continued to resist military conscription, registering their property, paying taxes, sending their children to public schools, and participating in state census. At the same time, their economic well-being was increasing rapidly, despite their communal economic model. Androsoff (2011, 85) writes that by the end of their first year in Canada, the Doukhobors worked 1,114 acres using “336 horses, 205 cows, 180 oxen, 129 ploughs, and 150 wagons.” Such success could be attributed to high social homogeneity of the Doukhobors, which to a degree alleviated envy and the pressures of sharing. Furthermore, the physical strength and endurance of the group allowed them to work hard and thus receive greater marginal returns on their labor. Finally, the Doukhobors were guided by their revered leader Petr Verigin, whose management and oratory skills allowed the sect to retain its cohesion, although some radical factions such as the Sons of Freedom splintered away from the Doukhobor mainstream, discontent with Verigin’s policies.
Realizing the error of their estimates, the Canadian government changed its colonization strategy from assimilation to violence, confiscating around 60 percent of the land and property cultivated by the Doukhobor sect in 1907. The remaining property was to be used by the sect at the government’s “pleasure” (Tugan-Baranovskiy 1919, 26). Instead of accepting that resolution, Verigin decided to use the sect’s savings to purchase land in the British Columbia province and start anew. However, some Doukhobors were no longer willing to follow their leader and preferred to obtain Canadian citizenship. Even though by 1924 the sect held about sixty-seven thousand acres of land in British Columbia and about $6 million in property, it began to slowly fall apart. The final blow was dealt when Verigin was blown apart by a bomb planted on a train that he was riding. The loss of the efficient manager and cultic figure who had held the whole sect together disorientated the Doukhobors and led them to make a series of economic errors. Eventually the sect defaulted on a government loan, leading to their bankruptcy in 1938 and further confiscation of their property by the Canadian government (Somin 2004). This historical example shows that states can dynamically shift from one strategy of anarchic colonization to another. Ultimately for the Doukhobors, this resulted in repeated subjection to the oppression of the state.
CONCLUSION Overall, the colonization cost theory posits that in situations where the cost of colonization is high, states allow or even encourage their subjects to establish self-governed regions. Afterwards the states will absorb these regions, reap the corresponding benefits, and avoid the costs of colonization. This analysis leads to two important conclusions. Firstly, the state may perpetuate its violence against certain social groups to keep them continuously colonizing new lands. Although other states can check this violence by harboring these oppressed communities, these states can also resort to violence in cases where the anarchic community does not want to assimilate.
Secondly, despite the fact that almost all the land in the world is now claimed by states, apart from a few regions such as Zomia (Scott 2009), states could still incentivize the emergence of anarchy in relation to at least two colonization efforts: seasteading and space colonization. There is potential for anarchic arrangements in each of these fields, as shown by Quirk and Friedman (2017) and Salter and Leeson (2014). If individuals want to keep these anarchic arrangements stable in the long run, the state to miss the critical moment in their development or the benefits of appropriating their colonized dwellings will have to decrease significantly. With the novelty of seasteading and space exploration, the state’s capacity to seize the gains of anarchic communities in these arenas remains to be seen.
In an economy where the ruling party controls enormous portions of the economy, attempts to redistribute some of that state-owned wealth isn't necessarily a move against the private sector.
Original Article: "Cronyism, Not Welfare, Is China's Big Problem"
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Thanks to capital accumulation and other innovations in the West, life expectancy grew beyond anything previously imagined. The benefits spread from there.
Original Article: "How the West Pushed back the Frontiers of Death"
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Age-adjusted mortality in the UK rose in 2020 to the same level last experienced in 2008. Yet the government declared no national health crisis in those years.
Original Article: "The UK's National "Crisis": Age-Adjusted Mortality Is at 2008 Levels"
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The story of the Americas as the violent “pacifying” and corralling of free indigenous peoples by white outsiders erases the long history of statism in many areas of the New World.
Original Article: "Pre-Columbian America Wasn't Exactly a Paradise of Freedom"
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Cultural disparities between national, linguistic, or cultural groups can prevent the spread of trade and hamper the adoption of useful economic strategies.
Original Article: "How "Cultural Distance" between Societies Can Hamper Economic Prosperity"
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Justin Trudeau won with a weak "victory" in Canadian elections last week, but he nonetheless claimed a "mandate" for vaccine passports and huge increases in federal spending.
Original Article: "Canada Votes for More of the Same"
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Was Adam Smith the founder of modern economics? Not so, says Murray Rothbard in his staggering two-volume An Austrian Perspective on the History of Economic Thought. Dr. Patrick Newman joins the show for a look at Rothbard's treatment of economics before Smith—from the Ancient Greeks all the way to the Scottish Enlightenment—and his take no prisoners revisionist approach. Jeff Deist and Dr. Newman cover Aristotle and Plato, Aquinas, Protestants and Catholics in the Middle Ages, Spanish Scholastics, Mercantilists, French Physiocrats and Turgot, and the criminally underappreciated Richard Cantillon. If you're a fan of economics and non-bowdlerized history, don't miss this!
Additional Resources Read Rothbard's important work: Mises.org/APHET
Find out more about Dr. Newman's new book: Mises.org/CronyismBook
Just a few years prior to his death, Murray Rothbard started one of his most ambitious writing projects: a full-fledged, three volume history of economic thought from a uniquely Austrian perspective. Unfortunately he never wrote the third volume, intended to span the post-Marx marginal revolution all the way through the mid-20th century. But the two existing volumes, over 1000 pages, start with ancient Greece and make their way to Adam Smith, Bentham, JS Mill, Ricardo, and Marx. As always, Rothbard is both compelling and radically revisionist. Contra most economic historians, he believed the proto-economists before Smith had much to offer. Both the Spanish Scholastics and French Physiocrats, for example, showed an understanding of value and subjectivism well before Smith developed his muddled cost theory.
These two volumes (free here in pdf!) are a must read for any student of economics, and Dr. Patrick Newman is the perfect guest to bring them to life. Don't miss this first in a series of episodes on An Austrian Perspective on the History of Economic Thought.
Additional Resources Read Rothbard's important work: Mises.org/APHET
Find out more about Dr. Newman's upcoming book: Mises.org/CronyismBook
As with economic policy to "cure" recessions, the authorities’ health response is good at crippling markets, but never delivers what is promised.
Original Article: "From Diseases to Recessions, Government Failure Is Endemic"
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The fact that NOTA is not a genuine, nonsymbolic ballot option proves that the political class merely pays lip service to the concepts of integrity and the will of the people.
Original Article: "Canadians Should Be Able to Vote 'None of the Above'"
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Thanks to private property, trade, and the Industrial Revolution, there isn't much to be gained from wars among rich countries anymore. But things are different in the developing world.
Original Article: "War Has Declined in the West Because War Isn't "Worth It" for Rich Countries"
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Many Lithuanian politicians are embracing outright segregation of unvaccinated Lithuanians. Fortunately, many Lithuanians are resisting. This fight is not about opposing vaccines, but about protecting basic freedom of choice.
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Some think that beer's history of regulation begins with hops, but beer has been hemmed in by government red tape for much longer.
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Gold was only included in the plans for the Bretton Woods system because of the veneer of solidity it gave.
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Victor Davis Hanson's cartoonish conception of how foreign states act is not supported by history and contributes to the US government’s insane defense expenditures and destructive crusades around the globe.
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Most Egyptians have lived their whole lives in a country where the government heavily subsidizes bread prices. But now the deeply indebted Egyptian state faces some tough choices, and Egypt's poor may suffer the most.
Original Article: "Egypt's Bread Subsidies May Bring Millions to the Brink of Starvation"
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All the propaganda that whitewashes the Cuban dictatorship is based on two lies: the nonexistent “blockade” and the allegedly excellent “public health.”
Original Article: "Cuba: The Dictatorship and the "Blockade" Lie"
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Republicans put a free market happy face on the latest environmentalist policy prescriptions in DC, but that does not change the fact that centrally planned climate policy is terrible economics.
Original Article: "Unmasking the Latest Bipartisan (and Dangerous) Climate Bill"
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Macron says vaccines are not compulsory for the general public for now, but they are essentially required for anyone who wants to live a normal life.
Original Article: "Forced Vaccinations in France Bring Both Repression and Protest"
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Featuring Joseph Becker, Felicia Jones, Karras Lambert, and David McClain. Recorded at the Mises Institute in Auburn, Alabama, on 24 July 2021.
Fellowships in Residence at the Mises Institute in Auburn, Alabama, are available to graduate students and post-docs interested in scientific research in the Austrian school and libertarian political economy. For more information, visit Mises.org/fellows.
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Featuring Per Bylund, Tom DiLorenzo, Sandy Klein, Patrick Newman, Tim Terrell, and Mark Thornton. Recorded at the Mises Institute in Auburn, Alabama, on 23 July 2021.
Murray Rothbard's seminal 1965 essay "Left and Right: The Prospects for Liberty" reads every bit as well today as it did 50 years ago. Rothbard defines liberalism and conservatism against the backdrop of the European Old Order, and skewers the incoherence of both in their modern forms. This brief work, steeped in history and full of optimism, shows Rothbard as a careful and strategic thinker about ideological and political movements. Mises.org editors Tho Bishop and Ryan McMaken join the show to explain the tremendous descriptive power of this essay, and why we need Rothbard as much as Burnham, Machiavelli, or Sun Tzu when it comes to strategy.
Mentioned in this Episode "Left and Right: The Prospects for Liberty": Mises.org/LeftRight
Biden's plan to give more money to Central American regimes will do nothing to compensate farmers, businessmen, and others still victimized by the US war on drugs.
Original Article: "Guatemala: The Human Rights Nightmare That Is the US Drug War"
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Matt McCaffrey is an Austrian economist who is currently associate professor of entrepreneurship at the University of Manchester. He talks with Bob about American economist Frank Fetter, before moving on to a staple of his research: the connection between Chinese military history and entrepreneurship.
Mentioned in the Episode and Other Links of Interest: Matt McCaffrey’s paper on Chinese military history and on Frank FetterHoppe on economic method For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on Apple Podcasts, Google Podcasts, Stitcher, Spotify, and via RSS.
During the eighteenth century, capitalism in Europe “took off” in a way it had not done before, and as a result the West surpassed all other areas of the world in economic growth. What led to this transformation? Max Weber offers the most famous answer. In The Protestant Ethic and the Spirit of Capitalism (1905), he traces the new system to the Puritans. Before them, though there were rich merchants, substantial savings and investment by private individuals was unusual. The Puritans changed matters. They viewed the self-disciplined pursuit of wealth without indulgence in luxury consumption as a sign that God had predestined them to salvation.
Murray Rothbard rejects this interpretation. In his History of Economic Thought, volume 1, he says,
There has been considerable dispute over the “Weber thesis”, propounded by the early twentieth century German economic historian and sociologist, Max Weber, which attributed the rise of capitalism and the Industrial Revolution to the late Calvinist concept of the calling and the resulting “capitalist spirit”. For all its fruitful insights, the Weber thesis must be rejected on many levels. First, modern capitalism, in any meaningful sense, begins not with the Industrial Revolution of eighteenth and nineteenth centuries but, as we have seen, in the Middle Ages and particularly in the Italian city-states. Such examples of capitalist rationality as double-entry bookkeeping and various financial techniques begin in these Italian city-states as well. All were Catholic. Indeed, it is in a Florentine account book of 1253 that there is first found the classic procapitalist formula: “In the name of God and of profit”. No city was more of a financial and commercial centre than Antwerp in the sixteenth century, a Catholic centre. No man shone as much as financier and banker as Jacob Fugger, a good Catholic from southern Germany. Not only that: Fugger worked all his life, refused to retire, and announced that “he would make money as long as he could”. A prime example of the Weberian “Protestant ethic” from a solid Catholic! And we have seen how the scholastic theologians moved to understand and accommodate the market and market forces. (p. 142)
Rothbard’s point is decisive, but the question still needs to be addressed: Why did capitalism grow so much in the eighteenth century and after, far exceeding in extent the efflorescence to which Rothbard calls attention?
Ludwig von Mises helps answer our question through a reversal. He says that we shouldn’t look for groups of people who, because of special traits, overcame the reluctance of most people to save and invest. There have always been such people, he contends. In Human Action, he doesn’t mention the Weber thesis, but he calls attention to a similar view advanced by Werner Sombart, a leading member of the German historical school.
What generated the “machine age” was not, as Sombart imagined, a specific mentality of acquisitiveness which one day mysteriously got hold of the minds of some people and turned them into “capitalistic men.” There have always been people ready to profit from better adjusting production to the satisfaction of the needs of the public. (p. 837)
Now comes Mises’s reversal. The question we should be asking isn’t “What group of people wanted to acquire money more than other people did?” Instead, we should try to find out how the obstacles to their doing so were overcome. After pointing out that there have always been acquisitive people, he remarks,
But they were paralyzed by the ideology that branded acquisitiveness as immoral and erected institutional barriers to check it. The substitution of the laissez-faire philosophy for the doctrines that approved of the traditional system of restrictions removed these obstacles to material improvement and thus inaugurated the new age.
The liberal philosophy attacked the traditional caste system because its preservation was incompatible with the operation of the market economy. It advocated the abolition of privileges because it wanted to give a free hand to those men who had the ingenuity to produce in the cheapest way the greatest quantity of products of the best quality. (p. 837)
One more piece of the puzzle is needed to understand in full Mises’s account of the origins of capitalism. It wasn’t enough to end the privileges that allowed only elite groups to enter certain trades. One had also to overcome the ideology of equality, which held that it was wrong for some people to possess markedly more money than others. Although at one time China had a more highly developed economy than the West, the Chinese were never able to overcome this egalitarian dogma.
Mises says of the situation:
Let us compare the history of China with that of England. China has developed a very high civilization. Two thousand years ago it was far ahead of England. But at the end of the nineteenth century England was a rich and civilized country while China was poor. Its civilization did not differ much from the stage it had already reached ages before. It was an arrested civilization.
China had tried to realize the principle of income equality to a greater extent than did England. Land holdings were divided and subdivided. There was no numerous class of landless proletarians. But in eighteenth-century England this class was very numerous. For a very long time the restrictive practices of nonagricultural business, sanctified by traditional ideologies, delayed the emergence of modern entrepreneurship. But when the laissez-faire philosophy had opened the way for capitalism by utterly destroying the fallacies of restrictionism, the evolution of industrialism could proceed at an accelerated pace because the labor force needed was already available. (pp. 836–37)
In other words, capitalist development required workers who were willing to work in factories, but they would not have much incentive to do so if they could cultivate their own plots of land. In China, insistence on equality led to a large number of farmers with small plots of land. Demands for equality were less exigent in England than in China, and many workers, lacking land, found working in factories attractive.
Mises thus responds to a disputed topic by changing the question under consideration, and in doing so, he makes a creative advance.
Just as Canada had the right to secede from Britain, so too do the provinces and territories have a right to secede from Canada. Today, secession may be Alberta’s remedy against the Canadian regime's abuses.
Original Article: "Canadian Secession: Then and Now"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
It's too late for American member states to assert real independence from the central government without facing an avalanche of legal, political, and even military opposition. Europeans would be wise to not put themselves in a similar position.
Original Article: "Decentralization: Why the EU May Be Better Than the US"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
The Chinese regime hopes it can use a digital yuan to challenge the supremacy of the US dollar. That brings a host of geopolitical advantages, as well.
Original Article: "Why Beijing Wants a Digital Yuan"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
If you were to browse the economics sections of bookstores here in my home city, Dublin, you would find a wide variety of books by anticapitalist celebrity economists. Books by free market economists? Not so much.
Original Article: "Debunking Piketty and the Left's Celebrity Economists"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Few political follies are more hazardous than presuming that one’s liberties are forever safe. If liberty is God’s gift to humanity, then why were most people who ever lived on Earth denied this divine bequest?
Original Article: "The Never-Ending Battle between Leviathan and Liberty"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Rothbard recognized that money and exchange could not develop without first establishing private property. So Rothbard also recognized that it was important to develop theories of how private property might come about.
Original Article: "To Understand Economics, First Understand Private Property"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Rather than representing “white supremacy,” the evolution of mathematics has been a globe-, race-, and culture-spanning collaboration of advancements, an ongoing development of more effective tools for anyone to use.
Original Article: "Is Math Racist? That Does Not Compute"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
The Swiss state should end antigold regulations, end negative interest rates, and return to zero rates on bank reserves. These are small steps on their own, perhaps, but would be progress away from the brewing mess that is the eurozone.
Original Article: "Gold Could Offer a Way out of Switzerland's Failing Inflationist Experiment"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Both theory and the empirical research shows a competitive marketplace is incongruous with racism, but the Left insists capitalism is "inherently" racist.
Original Article: "The Myths Behind the "Capitalism Is Racist" Claim"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Many observers of international affairs assume that larger, more populous states are necessarily more powerful. But the reality is wealth and economic development are the most critical factors in securing true military power.
Original Article: "When It Comes to National Defense, Bigger Isn't Always Better"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Manent insists that if political leaders don’t lead society, we will have a society that isn’t led by political leaders. So what?
Original Article: "A World without Political Leaders?"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
"These days most people tend to equate freedom with the possession of inalienable individual rights, rights that demarcate a private sphere no government may infringe on. But has this always been the case?"
Original Article: "What Does "Freedom" Mean? There Are Many Different Answers."
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
The Canadian Liberal Party began as a party of classical liberalism, radically supportive of freedom and free markets. But those days are long over.
Original Article: "The Betrayal of the Canadian Liberals"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
The Nuremberg prosecutors wanted to indict the Nazis on trial for crimes, but at the same time they wanted to preserve the dogma that the modern European nation-state is the culmination of moral progress. This created a conundrum.
Original Article: "Double Standards, Reparations, and War Crimes"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
The 1920s featured political détente, debt liquidations by prior consumer price inflation, an introductory stalling of monetary inflation, a German economic miracle, and a broad-based technological revolution. The 2020s have none of these.
Original Article: "Why the 2020s Won't Be like the Roaring 20s"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Machiavelli asserts that civil society can best flourish in the absence of government intrusion.
Original Article: "Feudalism and Cronyism in Machiavelli’s Italy"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
It is popular to assume that colonialism explains most modern-day dynamics in the developing world. But what if precolonial institutions are the real deciding factors?
Original Article: "Colonialism Doesn't Explain the Developing World's Problems".
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
In recent decades, Chile set itself apart from the rest of Latin America with successful market reforms and a stable political system. Average Chileans prospered. But now that's all at risk.
Original Article: "What Chile’s Vote to Change Its Constitution Means for Its Future".
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
The Japanese experience offers valuable lessons for the US and Europe. A loose monetary policy can stabilize a recession for the short term, but a persistent flood of cheap money paralyzes productivity gains and growth.
Original Article: "Japan's Ultraloose Monetary Policy Has Undermined Savings and Prosperity".
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Romanticizing the history of nonwhites to portray them as saints is dehumanizing.
Original Article: "A Brief History of Nonwhite Slave Owners in America".
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
All of a sudden the tweets are gone, the Facebook is gone, the media is gone. Only crazy people are questioning the most pristine — the most perfect — election of all time.
Presented at the Symposium with Ron Paul on Saturday, 7 November 2020, in Angleton, Texas.
The fact that some Americans supported slavery in the eighteenth century is not at all remarkable. Most of the world agreed with them. What is remarkable is that many of them sought to abolish slavery in the new republic.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Original Article: "No, the American Republic Was Not Founded on Slavery".
Historically, Europeans had few qualms about conquering and enslaving other Europeans. This presents some problems for the narrative claiming that injustices committed by Europeans are motivated primarily by racism.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Original Article: "Why Racism Can't Explain Europe's Drive for Conquest and Colonial Power".
GMU economics professor Chris Coyne explains how US militarism abroad ends up violating civil liberties on the home front. They also discuss the contributions of James Buchanan that should interest Austrian economists.
Mentioned in the Episode and Other Links of Interest: The YouTube version of this interviewChris Coyne’s webpage and his book Tyranny Comes HomeThe LSE essays on cost (edited by Buchanan)Tom DiLorenzo article on Public ChoiceRothbard’s essay on reconstructing utility and welfare economics, his reply to Schuller on praxeology, and his essay on Progressivism and WW1.Bob’s booklet on market anarchy and essay on private defense.Bob Murphy Show ep. 102 on the Grievance Studies hoax For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on iTunes, Stitcher, Spotify, and via RSS.
Mises in 1944: "The German and the Russian systems of socialism have in common the fact that the government has full control of the means of production."
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Rand Paul Is Right about the Nazis and Socialism".
In a slave economy, slave owners seek technological innovations that make slave labor more productive. But they also place inefficient and artificial limits on innovations that might change the established social order.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Original Article: "Why Slave Economies Thwart Entrepreneurial Innovation".
The film Black Panther offered an attractive view of an African nation untouched by slavery or colonialism. Unfortunately, the film offers a rather dubious counterfactual.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Original Article: "The Myth of Wakanda: How Hollywood Distorts the Legacy of Colonialism".
Many of the "solutions" peddled by today's experts are more likely to increase wealth inequality than decrease it.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "What "Experts" Miss about Economic Inequality".
The embargo continues, partly because the Cuba situation has indirectly exposed the corrupt sham of the entire Cold War and the corrupt machinery of the US national security establishment.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Trump Continues the Never-Ending War on Cuba".
Police reforms are making it easier to monitor police activities, and even to hold officers personally liable when found guilty of abusing their power. But some officers don't like that at all.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Original Article: "Police Officers Threaten to Quit If the Public Keeps Demanding Accountability".
Thomas Sowell has explained that while "Marx may have explicitly advocated the idea of a democratic workers’ government, his own personal style was dictatorial, manipulative, and intolerant."
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Soviet Terror Was the Natural Evolution of Marx's Communism".
Unfortunately, conquest and subjugation of others is hardly a trait unique to Europeans.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Original Article: "Let's Stop Ignoring the History of Conquests and Atrocities Committed by Non-Europeans".
When Vikings robbed their victims, they often called the booty gjald (debt) as if the stolen goods were repayment for a service provided by the robbers.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Taxation and Theft, Viking Style".
The fact that Yalta can now clearly be seen to have been a betrayal is another reason to be wary when pundits and talk show hosts jump on the bandwagon for the next killing spree abroad.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Roosevelt’s Fraud at Yalta and the Mirage of the 'Good War'".
Europe needs more than ever the principles that made it successful: decentralization, free trade, and sound markets.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "The EU's Drive toward Political Centralization Will Doom Its Economy".
Twenty-first-century socialism, which has been so popular in Latin America for many years, has failed in a way that mirrors the failure of twentieth-century socialism in other parts of the world.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Original Article: "Comparing Latin America's Economic Models: Left vs. Right".
The best way to think about tradition is to view it like capital accumulation. Knowledge is accumulated through countless centuries of trial and error. The state seeks to destroy historical consciousness and old ways of life to secure power.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Why the State Seeks to Abolish Both Tradition and History".
For the foreseeable future, war between Armenia and Azerbaijan will be on the table, occasionally turning hot, just as it has in the last weeks. This conflict has no peaceful solution possible other than the one offered by Ludwig von Mises.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Political Self-Determination and the Nagorno-Karabakh Conflict".
The Black Lives Matter organization explicitly states it seeks to "disrupt" the "nuclear family structure." In this, BLM is no different from countless other Marx-inspired organizations which seek to destroy the family as part of the "patriarchy."
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Why Marxist Organizations Like BLM Seek to Dismantle the 'Western Nuclear Family'".
While collectivism was implied in Sismondi’s idea of a “general interest,” Owen and Fourier offered the first formal expression of full socialist collectivization.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "The First Socialists: The Saint-Simonians and the Utopians".
EU membership is a sort of bait-and-switch for states that were sold on membership as an opportunity to join a free trade bloc and a chance to participate in a more cooperative Europe.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Why the EU Keeps Fighting Brexit".
The enemies of the system of free enterprise paid liberalism an unintended compliment when they applied the name "liberal" to their own creed, historically the opposite of what liberalism stood for from the start.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "The "Old" vs. the "New" Liberalism".
The Republic of Genoa provides an example of how a small "state" managed to defend itself against much larger states using military resources that were overwhelmingly owned and controlled by private parties.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Private Defense in the History of Genoa".
It doesn't take an immense amount of insight to see the relevance of Tocqueville's central concern to our situation today. What are the so-called Twitter mobs if not the "tyranny of the majority" at work?
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "All You Need to Know about Alexis de Tocqueville".
This book is a systematic treatment of the historic transformation of the West from limited monarchy to unlimited democracy. Revisionist in nature, it reaches the conclusion that monarchy, with all its failings, is a lesser evil than mass democracy, but outlines deficiencies in both as systems of guarding liberty.
Narrated by Paul Strikwerda.
Download the complete audiobook (15 MP3 files) in one ZIP file here. This audiobook is also available on Soundcloud and via RSS. Purchase the Audiobook on MP3-CD and Audible/Amazon, or paperback at the Mises Store. © 2001 Taylor and Francis, published 2017 by Routledge, an imprint of the Taylor and Francis Group.
Ribatarianizumu: Amerika wo yurugasu jiyūshijōshugi(Libertarianism: The Ultrafreedomism Shaking Up America, published only in Japanese)Yasushi WatanabeTokyo: Chuokoron-Shinsha, 2019213 pp.
Jason Morgan (jmorgan3@wisc.edu) is associate professor at Reitaku University in Chiba, Japan.
Libertarianism never really caught on in Japan. That is strange when you stop and think about it. For a country that was ruled by a military dictatorship for six hundred years, it might seem that “Freedom!” would be on the lips of every man, woman, and child whose ancestors suffered for centuries under the yoke of martial law.
And yet that’s not at all how things stand here. “Military dictatorship” and “martial law” probably conjure up images of Suharto, Robert Mugabe, and Michael Bloomberg, but the rule of the samurai was not the typical reign of ideological terror. It is a cliché but still true to observe that Japanese society has traditionally placed a premium on wa, variously translated as “harmony,” “concord,” and “getting along well with the neighbors.” Wa is a very nice thing, and as a longtime resident of Japan I have come to value it highly. There is not much need for a tinpot dictator when folks tend to prioritize good order and mutual friendliness on their own. There are just as many opportunities here as anywhere to think of one’s fellowmen in a less-than-charitable way (translation: Japan, too, has dolts and ingrates), but people in Japan are usually very good about putting the long-term wa of the community above the fleeting satisfaction of insisting on having things all one’s own way. Freedom is just not a big factor in the day-to-day social equation.
In fact, “freedom” has traditionally had a somewhat negative connotation in Japan. The word jiyū, which is used to translate “freedom” was coined only as the military dictatorship was crumbling in the latter third of the nineteenth century and Western tracts on liberalism and liberty were beginning to be widely studied in Japan. Jiyū is a very common word today, but if one squints and looks at it with a pinch of historically grounded skepticism it begins to seem quite odd. “Doing whatever you want” is a rough literal translation of jiyū—not at all the ideal in a country where a much older and more common expression goes, “the nail that sticks up gets hammered down.” Far from being an absolute condition of human life, “freedom” in Japan has almost always been, not even an anomaly, but simply off the radar. Duty and honor have traditionally been valued, and “doing whatever you want” was not really anyone’s ideal.
For all these reasons it is a surprise that Watanabe Yasushi’s fine introduction to libertarianism—a phrase which is translated even more provocatively as “ultra-do-whatever-you-want-ism” (jiyūshijōshugi)—has turned out to be one of this year’s steady sellers. Watanabe completed his PhD at Harvard and is a highly respected interpreter of all things American for highbrow Japanese readers. Watanabe also writes regularly for Chūō Kōron, a prestigious big-ideas journal with a storied history in Japan. So, the author’s sterling reputation as a public intellectual surely does not hurt his new book’s numbers on Amazon. But it still takes one aback to find that there is such a big reception to libertarian ideas here.
Perhaps this should not be so surprising, however. In a discussion I had with Watanabe earlier this spring, he told me that the book had found a big audience mainly among Japanese young people. Aha. Now it was starting to make sense. The Japanese economy has been circling the Keynesian drain for more than twenty years, and politicians have tried and tried the only Keynesian method available for plugging a hole: pumping more water into the tub. Needless to say, this has not worked. Young people enter an economy badly bruised by political-economical hijinks and worry that their future is not as bright, the way forward not as secure, as were the prospects which greeted their parents and grandparents a generation or two ago. Libertarianism makes broad sense to those who will now have to pick up the pieces after Keynesianism’s bone mauling of the Japanese economy. In a system that is transparently rigged to benefit the politically connected, “ultra-do-whatever-you-want-ism” does not sound half bad at all.
There is something else, too, one suspects, which may be keeping Watanabe’s latest book on the shelves here. Before the election of Donald Trump—indeed, right up until the hour of his victory over the Faerie Queene of Keynesianism herself—the Japanese press and soi-disant intelligentsia tended to know virtually nothing about America beyond what they could find in the New York Times. The news about my homeland here was pretty thin gruel, long on Washington process and Wall Street speculation but very, very short on the genetic makeup of the American mind: namely liberty. After Donald Trump won the White House, sober journalists (yes, they still have those here—eat your heart out, CNN) began searching for the real America, and honest intellectuals started venturing beyond the East and West Coast elitist enclaves to find out what the rest of the country had to say. Libertarianism has been part of America since before the beginning, and anyone who knows America knows, if not Lysander Spooner, then at least Ted Nugent. But this giant swath of Americana has completely passed the Tokyoite America hands by.
Not Watanabe, though. He has long been a thinker of great integrity and an above-board observer of the US, and all of this made him a perfect candidate to research and report on libertarianism in America. His new book is a model of fairness and in-depth investigation. He visited the various headquarters of libertarianism in the States, including the Mises Institute, and interviewed people working there. There are many misconceptions about libertarianism, both in the US and in Japan, but Watanabe has done his level best to dispel them. For example, he allows Jeff Deist and Mark Thornton to have their own say about what the Mises Institute is and what it does. He also counters the pernicious lies of the Southern Poverty Law Center about “white supremacy” and various other slanders against libertarians in general. Watanabe is an intellectual historian of the first rank and is the ideal person to introduce libertarianism to a country that has not heard much that is good about it in the mainstream press (I refer, of course, to the United States, but I hope Watanabe meets with much success in Japan, too).
As far as Japan goes, perhaps Watanabe’s book will contribute to a revitalization of the Japanese economy and to a rebirth of the country’s vibrant innovative potential and creative thinking. In a strange way, studying libertarianism may also help historians to rethink the Japanese past. The fact that there was no word for freedom in Japan may mean that there was no concept of it—or it could mean that the concept was so embedded that there was no need to make it explicit. After all, whatever the word for freedom might be, everybody wants to be his own man. This is particularly apparent in Japanese aesthetics. The arts and artisans of Japan have always displayed the kind of new-and-old blending that make Japan great in so many ways, both culturally and commercially. An aspiring painter or tea ceremony practitioner might spend decades apprenticed to a master, but when the time is right, voilà, a masterpiece all his own. Likewise, pottery from the Jōmon period may be more than ten thousand years old, but it still conveys a sense of dedicated application of artistic genius and human whimsy that merges perfectly with whatever is coming out of the design studios of the top Japanese firms today. Maybe the Japanese have always been libertarians but just did not know it. Maybe freedom is in the DNA here, too. Indeed, seen in another light, wa implies freedom, presupposes it. (Why go to all the trouble of emphasizing harmony if it comes naturally anyway?) In discovering libertarianism, Japanese young people may be surprised to find that they are rediscovering their own country’s deepest traditions in a new way.
For the time being, the United States remains the world capital of libertarianism, and Yasushi Watanabe’s book on this very Western-toned subject is the absolute must-read first step toward what will hopefully be a long and beautiful friendship between East and West.
Hayek is guilty of pointing out what should be abundantly obvious: both democratic and authoritarian regimes can commit grave crimes against human rights. This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "No, Hayek Didn't Support the Pinochet Regime"
France faces a future of spiraling debt and declining economic growth. So Emmanuel Macron has now embraced economic nationalism as a way out. It's not likely to work.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Facing Economic Disaster, France Turns against Globalism"
With oil prices in likely long-term tailspin, corrupt governments can't count on oil sales to bail them out anymore. But Mexico's government didn't get the memo and still clings to the state oil monopoly.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "As Oil Craters, Mexico's Government Still Bets on Its Oil Monopoly"
Chapter 10 of Democracy: The God That Failed. Narrated by Paul Strikwerda.
© 2001 Taylor and Francis, published 2017 by Routledge, an imprint of the Taylor and Francis Group.
Chapter 5 of Democracy: The God That Failed. Narrated by Paul Strikwerda.
© 2001 Taylor and Francis, published 2017 by Routledge, an imprint of the Taylor and Francis Group.
Chapter 4 of Democracy: The God That Failed. Narrated by Paul Strikwerda.
© 2001 Taylor and Francis, published 2017 by Routledge, an imprint of the Taylor and Francis Group.
Chapter 3 of Democracy: The God That Failed. Narrated by Paul Strikwerda.
© 2001 Taylor and Francis, published 2017 by Routledge, an imprint of the Taylor and Francis Group.
Chapter 8 of Democracy: The God That Failed. Narrated by Paul Strikwerda.
© 2001 Taylor and Francis, published 2017 by Routledge, an imprint of the Taylor and Francis Group.
Chapter 13 of Democracy: The God That Failed. Narrated by Paul Strikwerda.
© 2001 Taylor and Francis, published 2017 by Routledge, an imprint of the Taylor and Francis Group.
Chapter 7 of Democracy: The God That Failed. Narrated by Paul Strikwerda.
© 2001 Taylor and Francis, published 2017 by Routledge, an imprint of the Taylor and Francis Group.
Chapter 6 of Democracy: The God That Failed. Narrated by Paul Strikwerda.
© 2001 Taylor and Francis, published 2017 by Routledge, an imprint of the Taylor and Francis Group.
Chapter 9 of Democracy: The God That Failed. Narrated by Paul Strikwerda.
© 2001 Taylor and Francis, published 2017 by Routledge, an imprint of the Taylor and Francis Group.
Introduction to Democracy: The God That Failed. Narrated by Paul Strikwerda.
© 2001 Taylor and Francis, published 2017 by Routledge, an imprint of the Taylor and Francis Group.
Chapter 11 of Democracy: The God That Failed. Narrated by Paul Strikwerda.
© 2001 Taylor and Francis, published 2017 by Routledge, an imprint of the Taylor and Francis Group.
Chapter 2 of Democracy: The God That Failed. Narrated by Paul Strikwerda.
© 2001 Taylor and Francis, published 2017 by Routledge, an imprint of the Taylor and Francis Group.
Chapter 1 of Democracy: The God That Failed. Narrated by Paul Strikwerda.
© 2001 Taylor and Francis, published 2017 by Routledge, an imprint of the Taylor and Francis Group.
Acknowledgments from Democracy: The God That Failed. Narrated by Paul Strikwerda.
© 2001 Taylor and Francis, published 2017 by Routledge, an imprint of the Taylor and Francis Group.
Chapter 12 of Democracy: The God That Failed. Narrated by Paul Strikwerda.
© 2001 Taylor and Francis, published 2017 by Routledge, an imprint of the Taylor and Francis Group.
Gun Control in Nazi-Occupied France: Tyranny and Resistanceby Stephen P. HalbrookOakland: The Independent Institute, 2018242 pp.
french resistance france pierre laval world war 2 gun control
Abstract: Stephen Halbrook, author of Gun Control in Nazi-Occupied France: Tyranny and Resistance, provides another riveting account of the role of gun control by the Nazis in occupied France in the 1940s. With incredible detail, Halbrook weaves another cautionary tale of the perils of gun prohibition at the hands of a criminal government.
Several years ago, in these pages, I reviewed Stephen Halbrook’s compelling work, Gun Control in the Third Reich: Disarming the Jews and “Enemies of the State” (2013). It should come as no surprise to any reader of that book that Halbrook would provide another riveting account of the role of gun control by the Nazis in occupied France in the 1940s. Relying on original sources, data records kept by the Germans on gun registrations and confiscations, and surveys of French Resistance survivors, Halbrook weaves another cautionary tale of the perils of gun prohibition at the hands of a criminal government such as the Nazi regime. Halbrook, with incredible detail, documents yet again the danger of a totalitarian regime seeking to disarm the citizens in occupied France. With contemporary calls for gun bans of varying degrees as terrorist attacks continue across the globe, Halbrook adds to the cautionary tale in his historical account of the case of Nazi-occupied France and the subsequent liberation.
As in Germany, in 1935, then-French Prime Minister Pierre Laval had enacted a firearms registration requirement in an aim to curb unrest and violence (p. 1). It is important to note that the registration law was a mandate, not one that was voted on by the French politicians. Just as in Germany, the firearms registry soon took on another purpose at the hands of the Nazis following the occupation of France. Halbrook painstakingly details a similar story to what unfolded in Germany as the Nazis followed their same playbook in France, exploiting existing gun laws to terrorize and disarm the French. Halbrook’s book consists of eight chapters covering the period of 1934 through 1945, with attention early on focused on the call for firearms registration by Laval in 1935 to suppress violence and unrest, to the occupation and Laval’s role in aiding the Nazis, to resistance, and ultimately the French Liberation.
In the five years that have followed Halbrook’s first book on the subject of the Nazi’s and gun control, the battle over the Second Amendment in the U.S. has only grown more divided. Recent school shootings and terrorist attacks have led to an increase in calls for gun control, and several states have seen an increase in legislation with firearms restrictions, including defining circumstances that allow for the confiscation of firearms.See https://www.cnn.com/2018/04/09/us/gun-laws-since-parkland/index.html and https://www.washingtonpost.com/national/health-science/five-states-allow-gunsto- be-seized-before-someone-can-commit-violence/2018/02/16/78ee4cc8-128c- 11e8-9570-29c9830535e5_story.html?noredirect=on&utm_term=.dc222a186658. Halbrook notes that the contemporary (and historical) debate between allowing an armed citizenry for self-defense versus disarming the population to prevent terrorism is a debate that might never be solved (p. 6). Gun Control in Nazi-Occupied France provides another cautionary tale of how good intentions can be severely abused when extremists gain control of things such as firearms registries. Nazi-occupied France saw similar tactics employed by the Nazis in Germany and consequent loss of life of French citizens who refused to disarm at the hands of the Nazis.
Halbrook opens his book by documenting the turbulence in 1934 following the Great Depression and political upheaval. A massacre of civilians occurred at the hands of the Radical-Socialist government led by Édouard Daladier and other groups, leading to his resignation (pp. 8–10). This opened the door for a role for Laval once more, as he was appointed minister of colonies, and Philippe Pétain, who had been a national hero for stopping the German advance in 1915, was appointed minister of war. These two appointments would be crucial for the Nazis later on when they became the leaders of Vichy France, the puppet government of the Nazis (p. 11). Following the massacre came the prohibition on carrying firearms in Paris and Seine in early 1935.
In chapter 2, Halbrook documents Laval’s rise, which included securing the power to rule by decree in June, 1935, and how Laval quickly enacted several decrees ranging from increasing the size of the Mobile Guard to hinder protests, requiring registration of people wishing to demonstrate, and requiring registration of individuals who wanted to secure a firearm (pp. 21–22). Laval’s definition of war weapons banned small arms along with military weapons from the citizenry along with other restrictions, including the requirement that firearms owners and their firearms be registered. These same records, as seen in Nazi Germany, became the source for gun confiscation at the hands of the Nazis five years later (pp. 22–24). Despite the threat of the death penalty for non-compliance, compliance with the registration decree was low.
The spread of Hitler’s power (also detailed in Halbrook’s Gun Control in the Third Reich) is documented in Chapter 3, which moved into France with the blitzkrieg attack in May 1940. The invasion resulted in the posting of requirements to surrender all radio transmitters and firearms within 24 hours or face the death penalty, hard labor, or imprisonment (p. 40). Home visits by soldiers armed with a list of registered firearms rounded up weapons or shot those who were non-compliant. Elsewhere, individuals turned in guns without any receipt for their records. Several personal accounts of surrender are documented throughout the chapter; however, some resisted and hid their guns.
When Paris was bombed on June 3, 1940, a majority of the French fled, and a resistance failed to materialize. Hitler’s henchmen took over, and Werner Best, who had instituted the death penalty order for refusal to surrender firearms in Germany, enacted several decrees in France as well, notably including once again the threat of death on the spot for refusal to surrender guns (pp. 55–56). The French police ultimately collaborated with the Germans, making enforcement of the various decrees even easier. The French had no right to a defense under the terms of the armistice, and were now in the same boat as the citizens of Germany since the rise of Hitler.
Details of the occupation and the focus on eradicating weapons from the French is the focus of Chapters 4 and 5. Laval became the main collaborator with the Nazi occupation at the outset of the occupation. Concurrently, the French began to hide their hunting and military weapons for later use, while others stole across the border to the unoccupied Vichy zone. It was decreed that the French could no longer hunt, gun confiscation ramped up, and the registration of Jewish art became required, all under the guise of protecting assets with assurance that these items would be returned after the war.
With the replacement of the military commander in France in late October 1940, Werner Best’s role blossomed and so did the orders for execution of the French who had not surrendered their firearms, though those in non-compliance were primarily jailed through 1941. Similar to the pattern in Germany, efforts to repress “Jews, religious groups, Communists, and other targeted classes,” (p. 75) became the focus of the SS. By now, the registration of Jews was also required. Though death sentences had been issued before, the carrying out of the executions was now increasing. In an announcement on September 12, the sentence for violating the gun prohibitions or having “war materials” was now solely punishable by death, with an October 25 deadline for surrender imposed (p. 105). Many citizens were reported to continue to defy the orders. Concurrent with the escalation of executions, which were now routinely announced and publicized, the Resistance worked with Allies to obtain firearms and funds. The Swiss banks helped, as did the British. As 1941 came to a close, even as executions continued to be carried out, many of the French continued to hide their guns.
1942 saw the rise of the Resistance. Halbrook’s focus in Chapter 6 includes the continued pressure to remove weapons from the French alongside the rising organization of the Resistance. Arms were parachuted in by the British, and some French police tried to hide surrendered firearms. At the same time, executions continued, including the case of a group running the underground Résistance newspaper. They were turned in by an infiltrator and sentenced to death. Ultimately the women were not killed but were sent to the camps in Germany, though the seven men were shot to death (pp. 132–33). As late as March 1942, decrees were still being issued to surrender weapons and war materials. By the time the March decree was published, people had only a few weeks to meet the latest deadline of April 1. In an effort to create uncertainty about enforcement, the Germans stopped publishing reports of executions that had taken place (p. 142). Laval was reinstated as head of the French government by Hitler in April 1942, prompting a rise in Resistance activity. May Day saw up to 100,000 demonstrators rally against Laval (p. 146) while in Berlin, the SS was replacing the military as the policy enforcers along with the French leadership. June saw the arrival of SS General Karl Orberg in France, and the ramping up of the Nazi agenda. Jews were ordered to wear the Star of David, and the deportation of the Jews began (pp. 148–49). Deportation to concentration camps was also used for those caught stealing previously surrendered weapons for the Resistance. It is important to note that enforcement for violations of the Nazi gun control policies varied tremendously at this point (p. 151).
In June, it was announced that the SS would enforce new sentences for anyone related to the Resistance fighters. In addition, Jews were arrested and put on trains to the concentration camps (p. 154). The Resistance fighters did not stop, however, and in May 1943, the United Movements of the Resistance (MUR) brought the many branches of the movement together, armed primarily by airdrops at the risk of facing the death penalty if caught (p. 155). The Vichy cabinet reinforced the death sentence decree for anyone in possession of explosives or stockpiles of weapons. Laval continued to aid the Nazi regime, allowing the formation of the paramilitary outfit, the Milice, to uncover Resistance fighters. Laval maintained to the French that had he not cooperated, things would have been much worse. One Resistance fighter, Gilles Lévy, recounted that most of the firearms used by the Resistance had been airdropped by the British, the Americans, or were recovered from storage depots of the French Army (p. 159). Though helpful, many of the recovered weapons were not sufficient for fighting. How the Resistance secured weapons more appropriate for military warfare is the subject of Chapter 7.
Though the French army was disbanded, it defied the armistice and retained some firearms, which were hidden in Vichy until Laval ordered all weapons be surrendered to the Germans. Laval upped the ante on firearms prohibition, declaring that any “sale, possession, transportation and carrying of firearms of any kind” was punishable by imprisonment or death (p. 165). French military members still in service as of December 1, 1942, government workers, and inoperable firearms were exempt from the new order. However, failure to report any of these gun-related violations was now subject to imprisonment or death as well. Demobilized military officers were required to register their weapons and could only retain weapons in their homes. Failure to register subjected them to the death penalty as well. Still, many French citizens continued to hide weapons and did not obey the decrees to register or surrender their firearms. Ultimately the armed French citizenry was a critical component of the Resistance and liberation of Paris two years later.
Penalties ramped up in 1943, with threats of being shot on the spot for possession of weapons and explosives. Due process was increasingly ignored. Concurrently, the Resistance movement became increasingly active and coordinated. Arms drops from Allies helped the Resistance ramp up activity against the Nazis. The American Office of Strategic Services (OSS) began collaborating with the Resistance, exchanging arms and supplies for intelligence (pp. 169–70). In mid-April, efforts to move stockpiled arms to Germany ramped up, as awareness of the threat of the weapons being stored at depots falling into the hands of Resistance fighters grew. It was also ordered that hunting guns be sold to Wehrmacht troops each day, beginning April 20 (p. 177). A few months later, young men were ordered to leave for Germany for labor. Those defying the order became a supply for the Resistance instead.
Enforcement of all decrees continued to vary, however, as did compliance with orders to surrender arms, even during amnesty windows. The SS was realizing that the French would not comply regardless of the threat of death. As awareness of the possibility of an Allied invasion mounted, so too did the need to distribute any stockpile of weapons so that citizens could be prepared to fight. A shortage of firearms for the Resistance was still a problem, causing the size of the Resistance to fluctuate with variations in the gun supply. Despite the discrepancy in the number of arms surrendered compared to the number of arms supposedly hidden, the Resistance fighters were perpetually claiming a shortage of arms and evidence suggests the majority of arms used did come from Allied airdrops.
Halbrook’s concluding chapter addresses the liberation, along with atrocities committed following D-Day. Estimates of the death toll incurred to liberate Paris near 3,000, including residents of Paris, the Forces Francaises de l’Interieur (FFI) and police, as well as French and American soldiers (p. 201). A new government took over in France, ordering a dissolution of militias in the fall of 1944 as well as requiring the surrender of privately held arms (p. 203). A review of the impact of firearms prohibitions on the French during the war produced some incredible figures—execution of 60,000 people and deportation of 200,000, of which it is estimated that only 25 percent survived. Of course, it was Laval’s executive order in 1935 requiring firearms registration and prohibitions on certain types of firearms that enabled the Nazis to pursue and execute so many by using the firearms registry. In the end, Laval himself was convicted and executed.
Although France did not have a guarantee of the right to bear arms, the occupation in France led America to maintain its right to bear arms. With each terrorist attack, mass shooting, school shooting, or other gun-related tragedy, however, there is always a call for gun registration, bans of high capacity magazines, bans on certain types of firearms, and so on. People on both sides of the issue would do well to read Halbrook’s works on the subject and not turn a blind eye to history.
Quarterly Journal of Austrian Economics 22, no. 2 (Summer 2019) full issue. ABSTRACT: This Lou Church Memorial Lecture given at the AERC in March 2019 focuses on the outcomes of the Enlightenment: reason, the individual, equality, property rights, the separation of church and state, science and politics freed from religious dogma; but also the effort to remove important mediating institutions such as the Church. What is required to be reintroduced that the Enlightenment destroyed?
religion libertarianism enlightenment
The Lou Church Memorial Lecture
It is broadly accepted that out of Enlightenment thinking came many of the “goods” of our society; goods economic, political, and social. Goods ranging from the material wealth and the technology we enjoy to classical liberalism and libertarianism. It is on the latter that I will focus.
An exhaustive discussion of the connection of Enlightenment thought to Classical liberalism and libertarianism is not necessary for this audience, so I will summarize: reason, the individual, equality, property rights, the separation of church and state, and science and politics freed from religious dogma. These pillars underlie the classical liberalism that many point to and exclaim: here, we finally found freedom! Instead, what if these have cost us our freedom?
What is Enlightenment? Immanuel Kant gave his answer:
Enlightenment is man’s release from his self-incurred immaturity. Immaturity is man’s inability to make use of his understanding without direction from another….” Have courage to use your own reason!” That is the motto of enlightenment. (Kant 1784)
There is Diderot’s Encyclopedia, considered “one of the greatest cultural and intellectual achievements of the Enlightenment;” (Champion 2012) a 20 million word man-made blueprint for the creation of a rational, improving and cultivated society.
Theology is kneeling, subordinate to reason. Diderot explained: “in countries enlightened by the light of reason and philosophy… the priest never forgets that he is man, subject and citizen.” (Champion 2012) Or as Steven Pinker proclaims: Enlightenment Now: The Case for Reason, Science, Humanism, and Progress. In other words, the case against tradition and religion—and by “religion,” read “Christianity.”
Yet who can deny the progress? It is easy to identify the many “goods” we attribute to Enlightenment thinking—the acceleration of trade and the drastic improvements in the economic standard of living. Political concepts such as classical liberalism are developed, and therefore—we believe—our freedoms.
Well, maybe. As Hans Hoppe (2018) offers, “According to the proponents of this theory,” of which he mentions Francis Fukuyama and Steven Pinker, “what makes the present age so great and qualifies it as the best of all times is the combination of two factors.” Hoppe offers first, the highest levels of technology and natural science in human history—to which he raises no objection; and second, the highest level of human freedom—which Hoppe considers “a historical myth.”
N. T. Wright offers: “Any movement that gave us… the guillotine as one of its first fruits and the Gulag as one of its finest cannot simply be affirmed as it stands.” (Wright 2008)
The “bads” of the Enlightenment are not so readily admitted by its proponents: communism, eugenics, racial purity, selective breeding, National Socialism, Fabianism, Progressivism, fascism, egalitarianism, modern democracy, freedom from all intermediating governance institutions, the ineffective separation of church and state, the American Revolution, the French Revolution.
Regarding the two revolutions: The America that came out of the Revolution is described by Ralph Raico as “…the model liberal nation, and, after England, the exemplar of liberalism to the world.” This “exemplar of liberalism” didn’t survive four-score-and-seven years, ending in 1861—and if you prefer to make a case for 1846 or even 1812, you will get no argument from me. Whatever one believes regarding liberalism, staying power certainly cannot be considered a meaningful characteristic.
But this example is much more successful than what came shortly thereafter: from his magnum opus, From Dawn to Decadence, Jacques Barzun offers (2000): “…the French Revolution of 1789 must be called the Liberal Revolution.” What does Barzun mean by “liberal”? He offers as an example a law passed two years after the outbreak: there are to be no interests other than the interests of the individual and the general interest of all; no intermediate interests are permitted.
An attack not only on tyrannical authority, but also on guilds, associations, universities, and especially Christianity—every intermediating institution that provided decentralization in governance and stood against the monopoly authority of a centralizing state; every intermediating institution that Robert Nisbet suggests offered the individual room and cover for his freedom.
Simon Schama (1989) offers that such an attack on intermediating institutions was welcomed by the elite; the people—powerless without these intermediating institutions or the king to turn to—saw it another way.
Not all Enlightenment thinkers wished for the guillotine or the gulag, as we certainly know; many sincerely held man’s liberty in their sights. John Gray (2018) offers that the asserted universal truth of the link between the Enlightenment and liberal values is tenuous; it was strongest in Enlightenment monotheists and weakest in those thinkers hostile to monotheism.
Yet a generic “monotheism” offered no sustainable foundation. Our liberties were born well before the Enlightenment in a specific cultural and religious tradition; those who lived in and developed this tradition would not refer to themselves blandly as “monotheists.”
Let’s look at this history. Barzun offers:
The truth is that during the 1,000 years before 1500 a new civilization grew from beginnings that were uncommonly difficult…. showing the world two renaissances before the one that has monopolized the name. …the Germanic invaders brought a type of custom law that some later thinkers have credited with the idea of individual freedom.…no rule was held valid if not approved by those it affected. …Anglo-Saxon law… defined crime literally as breaking the peace.
This era was born after the fall of Rome; Germanic tribes mixed with Christianity to create a culture that valued Christian ethics and German honor, resulting in what Fritz Kern describes as the old and good law; law of custom and good tradition. A man’s oath made his law. Any noble could veto the king if he could demonstrate his right in the old and good law. A law regime about as libertarian as has ever existed for an extended period in the west—and even the world.
Neither the Church nor the king held sovereignty. If anything held “sovereignty,” it was the law. Each of the Church and king competed with the other, in different yet overlapping circles; with one or the other taking a stronger or lessor role over the years. In the space between Church and king, freedom blossomed; in the space between Church and king, numerous meaningful intermediating governance institutions took root, giving the individual both the room and the means to exercise his freedom.
It was a time when the Church could reprimand the king despite having no army and no physically coercive means other than what the king provided. Libertarians speak approvingly about the use of shunning when dealing with non-aggressive trespasses. Well, try the eternal shunning of excommunication.
In Ecclesiastes we read of the meaninglessness of life when weighed against the eternity that God has placed in the hearts of men. In the Europe of the Middle Ages, the noble was concerned with his eternal life and God’s eternal kingdom and this concern shaped his behavior; no longer the case since the Enlightenment. The common motto for today’s enlightened “nobility” is “he who dies with the most toys wins.” This is reflected in our time: corruption, lust, and greed define the new nobility.
During much of the Middle Ages, there was a meaningful and functional separation of Church and king, each superior in its realm, neither with sovereign power or authority. Each offering an avenue for appeal if one felt his liberties were unfairly compromised by the other.
Today we have the subordination of church to state. One recalls the exchange between the Jewish priests and Pilate regarding Jesus’ fate. Pilate asked: “Shall I crucify your king?” and in reply, the priests shouted “We have no king but Caesar.” Sounds like a typical Sunday morning in America.
With the Enlightenment, the idea of leaning on tradition and custom was thrown out. The most important tradition to remove was Christianity. Not necessarily its ethics, just the supernatural history, the theology, and the church—as if the ethics could exist for long without God and an institution behind these. Barzun offers, “The Bible must be shown to be a set of fables invented by ignorant or designing people.”
What was a generally accepted belief in Christianity throughout the population began to dissolve in the eighteenth century. N.T. Wright (2018) points to the earthquake in Lisbon on All Saints Day in 1755 as a key event in this regard. A massive earthquake and calamity that completely shook Christianity; man’s reason could not accept that a good and wise God would allow such terrible tragedies.
Drop the ritual and prayers, ignore the priests and monks. “Wipe out the disgrace!” Voltaire said of the Roman Catholic Church. Voltaire—“the Enlightenment illuminated” according to Schama—did his part to make this so, through a series of four and five page pamphlets, consolidated into A Portable Philosophic Dictionary. Who needs 1700 years of scholarship and tradition to shape your philosophy when you can have a portable dictionary?
No more of this God of the Bible; Deism became the religion of “reasonable” men. God did create the universe, but the story of Genesis is a fable. God did set the rules — the laws of science; He has no reason to interfere thereafter. Jesus? Sure, He was a wise and good man; but out with the Virgin Birth and the Resurrection.
The road from Deism went through a revived Epicureanism and ended in Nietzsche’s infamous “God is dead,” to be found in “The Parable of the Madman,” published toward the end of the nineteenth century. After all, how big a leap is it from Deism’s “watchmaker” to Epicureanism’s gods that don’t care to “God is dead”?
“Where has God gone?” [Nietzsche’s madman] cried. “I shall tell you. We have killed him—you and I. We are his murderers. …Whither are we moving now? …Are we not perpetually falling? Backward, sideward, forward, in all directions? Is there any up or down left? Are we not straying as through an infinite nothing?” (Nietzsche [1974] 1882, 1887; 181–82)
The madman found that no one would listen; he lamented that he came too early. The Great War, the suicide of the west, was still a few years away.
What did Nietzsche see as replacing God and His moral law? Man-made ethics would be at the top of the pyramid; the enlightened elite were happy to comply. They would be the “superman,” establishing a “new ethos”: new standards of right and wrong, replacing Christian virtues.
Each of us using our own reason, making our own compass, creating our own definition of true north. One cannot even claim the “non-aggression principle” in such an environment. On what basis?
Well, we do have Hoppe and his argumentation ethics. But not so fast! From his radio broadcasts during World War Two, C.S. Lewis (1941) offers that two people properly argue on the basis of some standard. Frank van Dun (2018) offered a similar comment at last year’s Property and Freedom Society conference. To summarize: argumentation ethics is constantly appealing to the other person’s conscience—the things we already share; literally, common knowledge.
But the ideas of the Enlightenment—Liberty, Equality, the individual, patriotism, and Progress—are all abstract ideas, large buckets that can be filled with a wide variety of contents. We complain that these terms don’t have the meaning that we intend, or the meaning as originally intended—just as socialists complain the same thing.
Who is to say how and with what these buckets should be filled? Based on what foundation? Based on whose reason? Without a common conscience, who—or what—will arbitrate? Voltaire has said “commonsense is not so common.” Well, without sense that is common, on what basis do we live peacefully—in a state of conviviality, as van Dun puts it?
We can’t, and we have proved it. Barzun describes the Great War as “the blow that hurled the modern world on its course of self-destruction.” Yet this blow was struck in the west at the time we consider to be the most enlightened, peaceful and free. The decades before the outbreak of the war are known as La Belle Époque: “the beautiful era.”
It was an optimistic time, born after the end of the Franco-Prussian War in 1871. Regional peace, political stability, passport-free travel, material prosperity, technological and scientific innovations, literature and music. The height of what we might consider classical liberalism and freedom.
Certainly there was regional peace in Europe. But there was much violence between and among these same actors (and against the native populations) in the battle for colonies around the world. The art of violence was practiced and perfected; arms were developed in order to ensure victory. This art would soon be turned inward.
The Great War—perhaps alone among all substantial human conflicts—remains almost unexplainable. Why and how could such a thing have happened when and where it did—in this “beautiful era,” among the enlightened people? Aleksandr Solzhenitsyn (1983) offered an answer: “Men have forgotten God.” Nietzsche’s madman would agree.
In the Great War’s wake, western culture and society were transformed in speed and magnitude perhaps unknown in history: family life broken, careers ended, government allowance in the place of productive work, and a tide of egalitarianism; in other words, the perfect cultural soil for the expansion of monopoly state power.
War became total war, in large part driven by another gift of the Enlightenment, modern democracy. While Lincoln established the precedent fifty years earlier, it was finally in the Great War when war of all against all became generally accepted throughout and within Europe, an event for the nation and not merely the combatants—an “Advance to Barbarism,” as offered by F.J.P. Veale (1953). Poison gas, air raids over civilian populations, submarines destroying ships regardless of flag or purpose, the blockade of civilian food and supplies, even peace not leading to relief.
And church towers used as observation posts, leading to their destruction; painting a picture of the cost of the Enlightenment far better than my few-thousand words.
The war shattered the utopian visions of these students of Enlightenment, leading to the change from what we now call Classical Liberalism to its modern incarnation. Barzun describes this transition as the Great Switch; a switch from the idea that the best government is one that governs least to the best government is one that will give us liberty, good and hard. The “deplorables” are not capable of liberty; it must be forced upon them. At the time, the transition was barely noted, except by authors such as Chesterton and Belloc.
This new liberal now had nothing standing between him and the individual—all intermediating institutions, especially Christianity and the Church, had been stripped of any meaningful role. Each individual was standing naked, to be molded like clay by these progressive, enlightened, “reasonable” intellectuals. Legislation would solve every problem in life. Every need and want would be met, all bestowed via government largesse.
Barzun describes these naked individuals as impotent: the receivers of benefits, victims, lacking room to breathe, oppressed by his fellows and the state alike. This naked individual now had but one objective: the Unconditioned Life—emancipation from the realities of this world; nothing to stand in the way of every wish; expecting no rebuffs. Life with no conditions; anything goes, and you can’t stop me. My pleasure is my highest priority; the highest goal in life is to be happy.
Enlightened man, like his forefathers after the flood who attempted to build a tower to heaven in order to be like God, found—as Paul VanderKlay says—that when you try to bring heaven down to earth, you bring hell up with it. We need not even look to the “isms” of interwar Russia, Italy, or Germany for examples of this; it is sufficient to look to the social justice liberalism and grievance studies curriculum of America today.
Barzun concludes his magnum opus with a listing of the decadence found in the west over the last century; man’s liberation from all norms, traditions, and customs; nothing left to provide governance except the state—and a state happy to oblige.
What happened to the promise of the Enlightenment? We consider the individual and reason as born in the Enlightenment to be key foundations of liberty. As the meaning of these concepts has been divorced from God, these have actually brought on liberty’s downfall. Without God, the Enlightenment’s liberty is a house built on sand.
The individual was discovered not in the Enlightenment or even in the Renaissance. Anselm of Canterbury offered us the individual in the eleventh century, with roots to be found even centuries before. Anselm’s individual had a sense of self-awareness and personal identity; an individual with a moral responsibility; an individual requiring spirituality.
This was an individual who found his freedom within the cultural and religious context of the time, free to live according to and within this tradition. This individual found and was able to maintain his freedom via the many intermediating institutions of the time—most importantly the Church, which could stand against the king.
The Enlightenment’s guillotine killed all intermediating institutions, thus killing the freedom of this individual. We now have an individual freed from such troublesome burdens as truth, justice, and mercy; an individual freed from any moral responsibility; an individual standing naked and impotent in front of the state; an individual living free… in a gulag.
Meanwhile the state pushes further division—ever-more individualized individuals. The state encourages and subsidizes culture-destroying behavior, as absent governance provided by custom and tradition, governance will be provided by the state.
As the Enlightenment freed our reason from revelation and tradition, the result should be no surprise. Just because your reason has been freed doesn’t mean that the strongman’s reason will leave you alone or that your reason will convince him. As his reason is no longer bound by anything other than his reason, it will not be your reason that governs but his. To what higher authority can you appeal? There is no authority higher than man’s reason, and the strongman’s reason has bigger guns than does your reason.
Recognizing this “strongman’s reason,” John Gray (2018) offers:
What if the Enlightenment’s future is not in the liberal West, now almost ungovernable as a result of the culture wars in which it is mired, but Xi Jinping’s China, where an altogether tougher breed of rationalist is in charge? It is a prospect that Voltaire, Jeremy Bentham and other exponents of enlightened despotism would have heartily welcomed.
Maybe God knew what He was doing when he warned Adam off of the tree of the knowledge of good and evil, with death the consequence of man’s reason without God.
The Hoover Institution’s Peter Berkowitz offered a five-part challenge to Patrick Deneen’s recent book “Why Liberalism Failed.” While suggesting that Deneen has gone too far and attributed too much fault to the concepts of the Enlightenment, in part four he does recognize the detrimental features of contemporary society:
…the scorn for inherited wisdom, the demotion of duty in favor of personal preference, and the obsession with material goods and superficial amusements at the expense of citizenship, friendship, and love—promoted by the individualism and statism that arise from taking the principles of freedom and equality to an extreme. (Berkowitz 2018a)
Jordan Peterson asked regarding the postmodernists: What from the Enlightenment do you toss out the window before things get ugly? Jonathan Goodwin (2018) suggests that this is the wrong question if one’s objective is liberty. The question should be: what is required to be reintroduced that the Enlightenment destroyed?
In part five of his critique of Deneen’s book, Berkowitz aims at answering this question. To this end, he cites Edmund Burke. From Burke’s “Reflections on the Revolution in France,” written in 1790:
History consists, for the greater part, of the miseries brought upon the world by pride, ambition, avarice, revenge, lust, sedition, hypocrisy, ungoverned zeal, and all the train of disorderly appetites…. These vices are the causes of those storms. Religion, morals, laws, prerogatives, privileges, rights of men, are the pretexts. (Berkowitz 2018b)
It is worth noting: none of the vices identified by Burke violate the non-aggression principle—except maybe revenge, depending on how cold the dish is when served. Yet, perhaps, recognizing these vices as dangers to liberty—and incorporating this recognition into their work—is an appropriate task for libertarian thinkers of tomorrow. Continuing with Berkowitz:
[Burke] rebuked the French revolutionaries for supposing that “the rights of men” authorized the blanket repudiation of inherited faith, the established regime, and the country’s settled laws and their replacement with new modes of moral judgment and political order derived from pure reason.
Given the cost to liberty of this repudiation, perhaps libertarian thinkers might incorporate something of the inherited faith and tradition when considering liberty as the objective.
Further, Alexandr Solzhenitsyn, from his Harvard University commencement address in 1978. Having lived under a communist regime his whole life, he understood that a society without an objective legal scale is a terrible one, but a society with only an objective legal scale is as well. In such a society, man has been given freedom for good and evil—and such a society has no defense against the decadent abyss.
He suggests that for a thousand years man had freedom within a framework of his religious responsibility, but no such responsibility attaches today. Solzhenitsyn offers:
This means that the mistake must be at the root, at the very basis of human thinking in the past centuries. I refer to the prevailing Western view of the world which was first born during the Renaissance and found its political expression from the period of the Enlightenment. …the proclaimed and enforced autonomy of man from any higher force above him.
Nietzsche ([1998] 1889) offered the consequences of killing God in Twilight of the Idols: despite the wishes of many Enlightenment thinkers—the “English Flatheads” as he describes them—when one gives up the Christian faith one also loses the right to Christian morality.
What is this moral Christian “right” if not, at minimum, the non-aggression principle? This is what man has given up in the Enlightenment. We have traded Christian morality—and therefore our liberty—for the enlightened super-man’s reasonable right to decide what is moral.
Libertarians point to many Enlightenment thinkers and their theories and concepts that freed the individual and empowered reason; concepts that we believe offer the foundations for liberty. But we knew all of this before the so-called age of reason; we did not need the Enlightenment to become enlightened.
Hans Hoppe has made it acceptable, at least in these circles, for me to cite as foundational for liberty the Decalogue—certainly the portion of it that related to man’s relationship to man: honor your father and mother; do not murder, do not commit adultery, steal, or bear false witness; do not covet your neighbor’s wife or his possessions.
As Hoppe offers, “Some libertarians may argue that not all of these commandments have the same rank or status.” Quite true. In some cases, we see non-violent trespasses. The question for the libertarian as libertarian: does the violation rise to the point of requiring formal, physical punishment?
Jesus answered this question. We read in John chapter 8 of the Pharisees bringing to Jesus a woman caught in adultery—certainly not an offense that libertarians would view as rising to the level deserving of physical punishment. The law commanded stoning for such an offense. The Pharisees asked Jesus what should be done with this woman.
His reply: He that is without sin among you, let him cast the first stone. Yes, it was a sin; but it was not a violation worthy of physical punishment. One by one, the accusers left. Jesus then admonished the woman, “go, and sin no more.” Advice and counsel, not punishment, is the example Jesus gave us regarding what we would describe as non-violent trespasses.
Libertarians lament our inability to convert the masses. “Who can disagree with the logic and purity of the non-aggression principle?” we cry, while pouring ashes on our head. Maybe we should consider this lack of a common conscience; maybe we should consider that for us to move toward liberty, this cultural and religious tradition must be the foundation.
Goodwin recently asked: is libertarianism sufficient for liberty? Is our objective to purify libertarian theory, or is it to find liberty?
Maybe we should consider what it means to have lost the right to Christian morality when it comes to moving toward liberty. If our objective is liberty, maybe we should consider the necessity of regaining this lost right.
Paul offered the consequences of discarding the knowledge of God by the enlightened of his generation in Romans 1, beginning with verse 18 through to the end of the chapter. We read of God’s wrath against those who suppress the truth by their wickedness. From Paul:
…just as they did not think it worthwhile to retain the knowledge of God, so God gave them over to a depraved mind, so that they do what ought not to be done. …Although they know God’s righteous decree that those who do such things deserve death, they not only continue to do these very things but also approve of those who practice them.
Paul could be writing to our generation. From the seventh of his eight-part Gifford Lectures, Wright (2018) offers: “To be an image-bearer is more than just behavior; otherwise we put the knowledge of good and evil before the knowledge of God.”
By not keeping the knowledge of God before individual reason, good stands no chance against evil. As good loses to evil, we most certainly lose our liberty. This, ultimately, is the cost of the Enlightenment.
Bob Murphy uses some samples from Dan Carlin’s amazing podcast, Hardcore History, to illustrate the flaws with state-provided military services. Bob concludes that minarchists have nothing to fear, and they should embrace the full vision of a voluntary society with no institutional coercion.
Mentioned in the episode: Dan Carlin’s Hardcore History series on World War 1. Audio excerpts in this episode came from Parts IV and V in the series.
For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on iTunes, Stitcher, Spotify, and via RSS.
Confucian Capitalism: Shibusawa Eiichi, Business Ethics, and Economic Development in Meiji Japanby John H. SagersCham, Switzerland: Palgrave Macmillan, 2018, xvi + 245 pp.
Jason Morgan (jmorgan@reitaku-u.ac.jp) is an associate professor at Reitaku University in Chiba, Japan.
Quarterly Journal of Austrian Economics 22, no. 1 (Spring 2019), for full issue, click here.
Shibusawa Eiichi (1840–1931) is one of the most respected figures in modern Japanese history. Often referred to as the “father of Japanese capitalism,” Shibusawa rose from humble origins—he was the son of a small-scale indigo farmer and spent his boyhood helping in the family fields and with keeping the books—to become the most powerful business magnate in Japan. He was involved in the founding of hundreds of corporations (many of which are still in operation today), sat on the boards of countless organizations and firms, and was in the Ministry of Finance before being appointed president of the First National Bank of Japan. He was also a devoted philanthropist. The founder and supporter of hospitals, schools, charities, and social service programs, Shibusawa is today remembered mostly for being an “ethical capitalist,” or, more specifically, a “Confucian capitalist.”
Why “Confucian”? From the time he was a boy, Shibusawa, at the behest of his Confucianist father, studied the Chinese classics every day with a scholar in a nearby village, eventually committing much of the Confucian corpus to memory. Later eschewing neo-Confucianism and its metaphysical innovations, Shibusawa was most fond of the Analects, one of the original Confucian texts compiled by Confucius’ followers after his death. Unlike the neo-Confucianists, Confucius had a generally positive view of trade and business, and Shibusawa agreed that commerce ethically practiced could be beneficial for society as a whole. This Confucian grounding was the motif of Shibusawa’s entire career. In his business dealings and charitable activities alike, Shibusawa cited the Analects, and Confucius’ social-mindedness in general, as the guiding principles of his public activities.
So why the renewed interest in a long-deceased Japanese industrialist with a fondness for Spring-and-Autumn Period Chinese philosophy? In the wake of the 2008 financial meltdown and subsequent acceleration of the boom-bust cycle, many in academia and beyond have increased their calls for the taming, if not outright abolition, of capitalism. In Confucian Capitalism: Shibusawa Eiichi, Business Ethics, and Economic Development in Meiji Japan, John H. Sagers—whose other works include Origins of Japanese Wealth and Power: Reconciling Confucianism and Capitalism, 1830–1885—wants to revisit his earlier thinking about Japan, Inc. (the close relationship between government and business that was the secret of Japan’s success until the end of the bubble economy in the early 1990s) in order to emphasize that “the system [Shibusawa helped build] now needs to be dismantled.” (viii–ix) As Sagers puts it:
Shibusawa’s Confucian capitalism was essentially an ideological strategy to create both ethical guidelines and a positive new identity for the commercial classes. First, Shibusawa called himself a business leader or "person of practical affairs" jitsugyoka, which he defined in contrast to several characters of Japanese society: the government official, the military leader, the politician, the scholar, and the old-fashioned merchant. Where government and military officials defended the nation and carried out policies, jitsugyoka produced valuable goods and services that contributed to the people’s well-being. Unlike the newly emerging politicians, jitsugyoka did not pander to public opinion and pursue narrow self-interest. Unlike scholars, jitsugyoka were not concerned with abstractions, but focused on practical affairs. Unlike Tokugawa-era merchants who were greedy for gain for their households, jitsugyoka worked for the good of the whole nation. Furthermore, his Confucianism allowed him to define himself in contrast to foreign and domestic liberals who called for Japan’s wholesale Westernization. (113–14)
Critical of “corruption in high places and an economy mired for decades in seemingly inescapable stagnation” (217), Sagers argues that corporations must practice greater corporate social responsibility (CSR) (4) and posits Shibusawa as the model for his proposed reforms.
Divided into eight chapters, Sagers’ book is a thematic biography of a famous figure in which the theme largely eclipses the biography. Only two of the chapter titles—the introduction and the conclusion—contain the name “Shibusawa Eiichi.” All the rest zoom out to take in the social and economic changes taking place before and during Shibusawa’s long life. Protectionism, business networks, stock exchanges, central banks, labor unions, the gold standard, war financing, infrastructure, bureaucratic involvement in corporate governance, and the influence of technologies and ideas from America and Europe are just some of the big topics Sagers tackles here. This is an ambitious book, and one worth reading if only for the scope of the hundred years or so of modern Japanese history it takes into account.
And yet, as in old Japanese maps, there is a cloud bank obscuring some of what Sagers purports to examine. Indeed, this book, for all of the valuable information it offers the reader, suffers not so much from peripheral blurring as from macular degeneration. There is a big blind spot right in the middle of the book’s field of vision. Namely, one wonders what Sagers means by the term “capitalism.” Sagers uses the word in the title of his book and on page after page in his text, but in the end we never quite know how he understands it.
The closest we get is when Sagers quotes historian of capitalism Joyce Appleby in defining capitalism as a “relentless revolution.” Awkwardly, Sagers then has Shibusawa “answer” Appleby (from more than one hundred years before Appleby wrote her volume) that Confucianism was the key to maintaining old societal values while advancing business in a given polity. (22)Citing Joyce Appleby (2010, 7). But is this purported dichotomy between capitalist and society—framed by Appleby, endorsed by Sagers, and apparently confirmed and then overcome by Shibusawa Eiichi—real? Did Shibusawa “answer” Appleby’s challenge by pursuing a kind of “Confucian capitalism” that took the edge off the Northern European variety? Is the “capitalism” of which Sagers and Appleby write capitalism at all?
Elsewhere in the same book that Sagers quotes above, Appleby writes:
There can be no capitalism, as distinguished from select capitalist practices, without a culture of capitalism, and there is no culture of capitalism until the principal forms of traditional society have been challenged and overcome. (119)
Is Shibusawa Eiichi the exception to the Appleby Rule, then? Was Confucianism really the skeleton key that allowed Shibusawa to unlock the business potential of a traditional society while leaving its traditions largely in place? And is the thing, “capitalism,” that Sagers argues needs reforming really capitalism at all?
The notion of a “Confucian capitalism” is plausible if the premise that “capitalism” is a destructive force, a “relentless revolution” continuously clear-cutting social practices in the quest for more and more money, can be shown to apply in all cases. But if capitalism is not really that at all—that is, if capitalism is just human nature, one of the ways in which human beings attempt to survive and thrive—then “Confucian capitalism” as a heuristic device loses much of its analytic power.
Indeed, if we widen our scope a bit further we can see that the use of the term “capitalist” can be, and has been, applied so willy-nilly to so many different things that it breaks down and is virtually meaningless. Shibusawa Eiichi used technologies such as the joint-stock corporation and the stock exchange to distribute risk and raise money for his various plans. But the Chinese do this, too, and in a way that out-capitalists the very representatives of capitalism themselves. If the Chinese do not have an Applebian “culture of capitalism,” then surely the set phrase can have no ideological purchase, and must be rejected. And if that definition falls, then so, too, does Sagers’ thesis, that some kind of philosophical harness, such as Confucianism, is needed to promote virtue among the industrialist class.
Unfortunately for Sagers, Confucius’ homeland is a buzzing, blooming capitalist Tilt-a-Whirl. As Kai-fu Lee points out in AI Superpowers: China, Silicon Valley, and the New World Order (2018), Stanford-based entrepreneurs once laughed at Chinese startups as cheap knockoffs, but now admit that they cannot keep up with the competitiveness of the Chinese market. American companies routinely fail in China, according to Lee, because they do not take the time to study Chinese culture. If capitalism really does destroy local practices, then China should be indistinguishable from Palo Alto. But as anyone who has ever been to China can attest, China is very much not the Bay Area. In other words, “capitalism” has not destroyed anything. It has amplified existing cultural norms and enriched great swaths of humanity. Is this the thing that Sagers thinks needs reforming?
What about elsewhere? In Debt: The First 5000 Years, David Graeber reminds us that commerce, and the intricate financial practices and social networks that make commerce possible, have long been a central feature of the Islamic world. This may not qualify as Appleby’s “culture of capitalism,” but it hardly matters, because business in the dar al Islam is still firmly rooted in the religious and cultural practices of the region. Whatever capitalism is, it has been very polite to its Muslim hosts—so culturally quiet, in fact, that one hardly notices it’s there. In Africa, too, despite the Orientalist fantasy of the eternally childlike native, men and women prefer to prosper, to thrive materially while improving their social standing. Cheats and con artists always try to turn a quick profit at the expense of morality, but such people are readily sifted out of the market everywhere. (It is only when government intervenes to protect scofflaws, as it does in the United States for the robber barons in Goldman Sachs, that “capitalism” can be said to inflict harm on local societies.) Getting rich, testing schemes, doing good by doing well—these are not somehow proprietary to the West. So, one is left wondering, if “capitalism” is a universal, then how is it modified by Confucianism?
Indeed, even the “Confucian” aspect of Shibusawa’s thought was more complicated than might first appear. For example, in arguing in favor of protectionism after initially supporting English-style liberal trade policies for Japan, Shibusawa cited Adam Smith’s Theory of Moral Sentiments in advocating a business approach oriented to society as a whole, and not beholden solely to the entrepreneur. (138) Adam Smith as reining in “capitalism”? (It might be time to bring in the fainting couch for Mr. Krugman.)
And when Sagers chides Shibusawa for his too-cozy relationship with government bureaucrats and the managerial state, one wonders if this, too, can really be called capitalism. Sagers himself uses what is arguably the correct term—“crony capitalism”—to describe this inherently corrupt arrangement. Drawing on the work of Morikawa Hidemasa, an earlier Shibusawa scholar, Sagers writes:
Morikawa […] noted that Shibusawa Eiichi’s name always comes up when it is fashionable to criticize big business as in the case of the 1970s Lockheed scandal or the oil shock and scholars like Tsuchiya [Takao] say that today’s managers need to look again at Shibusawa Eiichi’s thinking to solve contemporary problems. But for Morikawa, the system of crony capitalism known as ‘Japan, Inc.’ (Nihon Kabushiki Gaisha) that Shibusawa helped create was the root of Japan’s problems. (220)Citing Morikawa Hidemasa (1976, 72–73).
But is “Japan, Inc.” capitalist in any real sense of the term? Shibusawa himself floated back and forth between finance and government (he was the recipient of a coveted amakudari golden parachute from the Finance Ministry into the “private” sector in 1873 [90]), and used his connections transecting the osmotic membrane between economy and state to enrich himself enormously. It is highly debatable, then, that Shibusawa Eiichi was a capitalist at all, unless “capitalist” also means “crony capitalist,” in which case it means nothing at all. If the state picks winners and losers and uses the implied threat of fines and incarceration to enforce bureaucratic fancy, then perhaps Sagers’ and others’ critiques of such a system as a fault of “capitalism” are greatly misplaced.
Lastly, on whether Confucianism is the best leaven for the purported excesses of “capitalism,” even though it is beyond doubt that Shibusawa’s Confucian beliefs inspired him to pour enormous amounts of money into social welfare programs, it can hardly be said that the Analects is the only book to have spurred the wealthy to part with some of their gains for the sake of the commonweal. The Islamic merchants Graeber mentions grounded their business ethics solidly in the Quran, for example, and Christian and Jewish businessmen and -women have done incalculable good for humankind through charitable giving that, quite frankly, puts the Confucianists to shame. Jacob Schiff, Richard DeVos, Howard Ahmanson, Jr., Julius Rosenwald—these tycoons stooped to embrace the forgotten and destitute because the God of Jacob and Abraham, or the Son of Man, said it was good to do so. Even today, Judeo-Christian America remains the most charitable nation on earth. Given all this, one question that might be posed to advocates of Confucian capitalism is, “Why did you pass up capitalism of the Torah, the Hadith, and the New Testament?”
However, these questions for broadening the scope of Sagers’ investigation should not be interpreted as detracting from his work. He has clearly scoured the archives in search of material, and his book is an important stepping-off point for debates about this important topic. At the very least, Sagers is correct in his assessment that Japan, Inc.’s days are probably over. As the recession in Japan racks up birthdays and the government continues to shoot arrows from its Keynesian quiver at the indifferent beast, it must be clear to all candid observers that further intervention in the economy is not the answer to capitalism’s woes. Sagers’ book is a valuable contribution to the deliberations about where to go once—and may the day come quickly—the bureaucrats in Japan and elsewhere grow tired of failure and adopt a more Daoist approach by doing precisely nothing to “help” capitalism recover. It may very well be that a “Confucian capitalism,” wherein philanthropy is couched in Confucian practices, is a viable solution to the two lost decades (and counting). Whatever the eventual outcome, Sagers’ work is very useful in thinking through the answers to the pressing questions Japan faces as crony capitalism dies a very drawn-out death.
For those considering buying and reading Sagers’ book, though, a word about style. Sagers is to be commended for his research, but many of his paragraphs felt like pachinko runs, and there is a cubism to Sagers’ argumentation that frequently mystified your humble correspondent, even after multiple tries at comprehension. The syntax of this book is not for the faint of heart. Sagers darts about from topic to topic, and grasping at the meaning of a given passage can be a bit like trying to catch eels in a pond.
And then there is the glossing trouble. Sagers uses a lot of Japanese terms, which is a good thing, but he glosses them, well, diversely. For example, on the very same page (75), Sagers glosses shokusan fukyo (Sagers must mean shokusan kōgyō (殖産興業)) as “promoting production and building wealth and strength” and then, about two dozen lines later, as “promoting production for a wealthy country.” On page 62, Sagers gives the exact same phrase as “promote production, encourage industry.” Which is it? Other terms are similarly kaleidoscopic, but gapponshugi wins the prize. Gapponshugi is a Shibusawa neologism referring to the ‘pooling of monetary capital, managerial talent, and labor to serve the public interest.’45, citing Shimada Masakazu (2011, 30–34). Sagers glosses this term repeatedly, and with substantial variation. Sometimes it is just ‘pooled resources,’ but elsewhere Sagers adds a political valence: “resources united to build enterprises that served the nation.” (69; see similar gloss on 97) Important terms like these should be made consistent, especially when much of the argument hangs upon how they are translated.
As Shibusawa himself might have said, though, if you want something, you’ll have to work for it. This dictum applies in full force for anyone who is about to wade through the tall grass of this often challenging book. Confucian Capitalism is a welcome return to the life and philosophy of one of the greatest Japanese magnates of the past two hundred years. It is also an opportunity to set the record straight on whether Shibusawa Eiichi—or Japan, Inc.—was, or is, “capitalist” at all.
The Bill of Rights doesn't mention that freedom of speech is restricted to a special class of establishment journalists. Freedom of speech is a universal property right, regardless of what the establishment-media gatekeepers say.
Original Article: "Yes, Julian Assange Is a Journalist — But That Shouldn't Matter".
The true aim of these “scholar activists,” as many academics have begun calling themselves, is to propagate socialism by redefining capitalism to encompass every evil of human history. Which means they're mostly attacking straw men.
Original Article: "How College Profs Push Students to Socialism".
[Editor's note: our immigration roundtable is a series of articles presenting the views of prominent Austrian and libertarian thinkers. By necessity these articles provide only a basic overview of their various views, with links to original sources.]
An audio version of this article is available here.
Immigration remains a contentious issue in the US and across the West. Libertarians have not been immune. While the reflexive tendency favors freedom of movement, this reflex is not dispositive wherever private property exists. The right to leave a place — the right not to be imprisoned or enslaved — is different than the right to enter a place, at least in a society with any degree of private-property norms.
The Mises Institute offers more intellectual diversity on the topic than most organizations, although our writers and scholars generally do not favor "open borders" in the current sense of the term. Their views range from complete elimination of borders and open homesteading of unowned land (Block) to fully private property societies permitting access only according to covenants (Hoppe). Others focus on reducing welfare state inducements, decentralizing immigration policy and border controls, exploring market-based sponsorship programs and alternatives to current lottery systems, and decoupling immigration from naturalization, citizenship, and voting.
Any discussion of immigration benefits from the following caveats:
No truly libertarian approach to immigration is possible when governments at all levels own (i.e., control) vast amounts of "public" land, including coastlines and ports, highways, airports, roads, military installations, parks, and common spaces.Thus the debate, at present, centers around the question of what government should do under current conditions with regard to immigration.There are no easy answers to how government agents should control government property such as roads and other "public" commons. Real economic calculation is impossible when the state controls resources, and "non-economic" considerations are impossibly subjective. "Welfare," in the form of various taxpayer-provided goods and services, makes the issue more complex.Democratic voting, coupled with high-time-preference politicians, makes the issue more complex. Our goal is to present each thinker's views on immigration by excerpting his or her writing on the subject.
We begin with Ludwig von Mises. Mises first addressed the topic of human migration at length in Liberalism, published in 1927 during the interwar period and influenced by the death and destruction he witnessed a decade earlier as an officer in the Austro-Hungarian Army.
In a section from Liberalism titled Freedom of Movement, Mises approaches immigration from both economic and social perspectives: "First, as a policy of trade unions, and then as a policy of national protectionism":
Attempts to justify on economic grounds the policy of restricting immigration are therefore doomed from the outset. There cannot be the slightest doubt that migration barriers diminish the productivity of human labor. When the trade unions of the United States or Australia hinder immigration, they are fighting not only against the interests of the workers of the rest of the countries of the world, but also against the interests of everyone else in order to secure a special privilege for themselves. For all that, it still remains quite uncertain whether the increase in the general productivity of human labor which could be brought about by the establishment of complete freedom of migration would not be so great as to compensate entirely the members of the American and Australian trade unions for the losses that they could suffer from the immigration of foreign workers.
Immigration restrictions, then, are un-economic impediments on labor in the same manner as restrictions on goods. They operate to keep wages artificially high, just like protective tariffs.
But Mises was not blind to the cultural concerns surrounding mass immigration:
The workers of the United States and Australia could not succeed in having restrictions imposed on immigration if they did not have still another argument to fall back upon in support of their policy. After all, even today the power of certain liberal principles and ideas is so great that one cannot combat them if one does not place allegedly higher and more important considerations above the interest in the attainment of maximum productivity. We have already seen how "national interests" are cited in justification of protective tariffs. The same considerations are also invoked in favor of restrictions on immigration.
In the absence of any migration barriers whatsoever, vast hordes of immigrants from the comparatively overpopulated areas of Europe would, it is maintained, inundate Australia and America. They would come in such great numbers that it would no longer be possible to count on their assimilation. If in the past immigrants to America soon adopted the English language and American ways and customs, this was in part due to the fact that they did not come over all at once in such great numbers. The small groups of immigrants who distributed themselves over a wide land quickly integrated themselves into the great body of the American people. The individual immigrant was already half assimilated when the next immigrants landed on American soil. One of the most important reasons for this rapid national assimilation was the fact that the immigrants from foreign countries did not come in too great numbers. This, it is believed, would now change, and there is real danger that the ascendancy, or more correctly, the exclusive dominion of the Anglo-Saxons in the United States would be destroyed. This is especially to be feared in the case of heavy immigration on the part of the Mongolian peoples of Asia.
These fears may perhaps be exaggerated in regard to the United States. As regards Australia, they certainly are not. Australia has approximately the same number of inhabitants as Austria; its area, however, is a hundred times greater than Austria's, and its natural resources are certainly incomparably richer. If Australia were thrown open to immigration, it can be assumed with great probability that its population would in a few years consist mostly of Japanese, Chinese, and Malayans.
Despite being a strong anti-nationalist and anti-colonialist, Mises understood the natural fears of those who worried about "inundation" while also acknowledging a Lockean settlement argument:
The aversion that most people feel today towards the members of foreign nationalities and especially towards those of other races is evidently too great to admit of any peaceful settlement of such antagonisms. It is scarcely to be expected that the Australians will voluntarily permit the immigration of Europeans not of English nationality, and it is completely out of the question that they should permit Asiatics too to seek work and a permanent home in their continent. The Australians of English descent insist that the fact that it was the English who first opened up this land for settlement has given the English people a special right to the exclusive possession of the entire continent for all time to come.
But Mises, a son of the former patchwork Austro-Hungarian Empire, also clearly understood the value of self-determination as something very different from jingoist or insular natavism. The concerns of ethnic or linguistic minorities could not be dismissed:
The present inhabitants of these favored lands fear that some day they could be reduced to a minority in their own country and that they would then have to suffer all the horrors of national persecution to which, for instance, the Germans are today exposed in Czechoslovakia, Italy, and Poland.
It cannot be denied that these fears are justified. Because of the enormous power that today stands at the command of the state, a national minority must expect the worst from a majority of a different nationality. As long as the state is granted the vast powers which it has today and which public opinion considers to be its right, the thought of having to live in a state whose government is in the hands of members of a foreign nationality is positively terrifying. It is frightful to live in a state in which at every turn one is exposed to persecution — masquerading under the guise of justice — by a ruling majority. It is dreadful to be handicapped even as a child in school on account of one's nationality and to be in the wrong before every judicial and administrative authority because one belongs to a national minority.
As Dr. Joe Salerno points out in his seminal article "Mises on Nationalism, the Right of Self-Determination, and the Problem of Immigration," Mises was exceedingly careful to distinguish between "militant" or "aggressive" nationalism and a peaceful, liberal nationalism that did not seek to subjugate at home or expand abroad:
Thus for Mises, the choice was never between nationalism and a bland, atomistic “globalism”; the real choice was either nationalism that was cosmopolitan and embraced universal individual rights and free trade or militant nationalism intent on subjugating and oppressing other nations. He attributed the rise of anti-liberal nationalism to the failure to apply the right of self-determination and the nationality principle consistently and to the utmost degree possible in the formation of new political entities in the wake of the overthrow of royal despotism by war or revolution. The consequence was peoples differentiated by language, heritage, religion, etc. artificially and involuntarily bound together by arbitrary political ties. The inevitable outcome of these polyglot, mixed-nation-states was the suppression of minorities by the majority nationality, a bitter struggle for control of the state apparatus, and the creation of mutual and deep-seated distrust and hatred.
Salerno also points out Mises's strong view that only liberal, laissez-faire governments could accept the notion of completely free immigration:
Thus, Mises views immigration as always and everywhere a “problem” to which there is “no solution,” as long as interventionist political regimes are the norm. Only when the crossing of state borders by members of a different nation portend no political dangers for the indigenous nationality will the “problem of immigration” disappear and be replaced by the benign migration of labor that creates unalloyed and mutual economic advantages for all individuals and peoples. From Mises’s perspective, then, the solution to the immigration problem is not to legislate some vague, ad hoc right to the “freedom of movement” between existing fixed-boundary states. Rather, it is to complete the laissez-faire liberal revolution and secure private property rights by providing for the continual redrawing of state boundaries in accordance with the right of self-determination and the nationality principle. Then — and only then — can the continual and wealth-creating reallocation of labor throughout the world required by a dynamic capitalist economy be peacefully accommodated without precipitating political conflict.
As Lew Rockwell states, in these important senses Mises cannot be claimed by advocates for "open borders" today. He believed in a form of liberal nationhood, but nationhood nonetheless-- and advocated for political subdivisions along cultural, linguistic, and historical lines. He was a democrat, a utilitarian, and a realist; his cosmopolitanism did not extend to a vision of a borderless and stateless world. But it's safe to assume his experiences in the Great War, and the freedom he enjoyed taking trains from Vienna to London without showing a passport, strongly affected his views on immigration.
For further reading from Mises on immigration, see Nation, State, and Economy from 1919 and this article by Matt McCaffrey highlighting selected readings. Surprisingly, his magnum opus Human Action contains few direct references to the immigration issue, save for his observations that migration barriers could not be removed for aggressors during wartime.
[Next: Rothbard]
Perhaps no lesson from history better illustrates the dangers of credit expansion-fuelled business cycles than the story of the imaginary country of Poyais. Original article: How A Central Bank Caused One of History's Biggest Cons.
Keynes’s General Theory was, at least in the short run, one of the most dazzlingly successful books of all time. In a few short years, his “revolutionary” theory had conquered the economics profession and soon had transformed public policy, while old-fashioned economics was swept, unhonored and unsung, into the dustbin of history.
How was this deed accomplished? Keynes and his followers would answer, of course, that the profession simply accepted a starkly self-evident truth. And yet The General Theory was not truly revolutionary at all but merely old and oft -refuted mercantilist and inflationist fallacies dressed up in shiny new garb, replete with newly constructed and largely incomprehensible jargon. How, then, the swift success?
Part of the reason, as Schumpeter has pointed out, is that governments as well as the intellectual climate of the l930s were ripe for such conversion. Governments are always seeking new sources of revenue and new ways to spend money, often with no little desperation; yet economic science, for over a century, had sourly warned against inflation and deficit spending, even in times of recession.
Economists— whom Keynes was to lump into one category and sneeringly disparage as “classical’ in The General Theory — were the grouches at the picnic, throwing a damper of gloom over attempts by governments to increase their spending. Now along came Keynes, with his modern “scientific” economics, saying that the old “classical” economists had it all wrong: that, on the contrary , it was the government’s moral and scientific duty to spend, spend, and spend; to incur deficit upon deficit, in order to save the economy from such vices as thrift and balanced budgets and unfettered capitalism; and to generate recovery from the depression. How welcome Keynesian economics was to the governments of the world!
In addition, intellectuals throughout the world were becoming convinced that laissez-faire capitalism could not work and that it was responsible for the Great Depression. Communism, fascism, and various forms of socialism and controlled economy became popular for that reason during the 1930s. Keynesianism was perfectly suited to this intellectual climate.
But there were also strong internal reasons for the success of The General Theory. By dressing up his new theory in impenetrable jargon, Keynes created an atmosphere in which only brave young economists could possibly understand the new science; no economist over the age of thirty could grasp the New Economics. Older economists, who, understandably, had no patience for the new complexities, tended to dismiss The General Theory as nonsense and refused to tackle the formidably incomprehensible work. On the other hand, young economists and graduate students, socialistically inclined, seized on the new opportunities and bent themselves to the rewarding task of figuring out what The General Theory was all about.Harry Johnson put the strategy perceptively: “In this process, it helps greatly to give old concepts new and confusing names. … [T]he new theory had to have the appropriate degree of diffi culty to understand. Th is is a complex problem in the design of new theories. Th e new theory had to be so diffi cult to understand that senior academic colleagues would fi nd it neither easy nor worthwhile to study, so that they would waste their eff orts on peripheral theoretical issues, and so off er themselves as easy market for criticism and dismissal by their younger and hungrier colleagues. At the same time, the new theory had to appear both diffi cult enough to challenge the intellectual interest of young colleagues and students, but actually easy enough for them to master adequately with a suffi cient investment of intellectual endeavor. Th ese objectives Keynes’s General Th eory managed to achieve: it neatly shelves the old and established scholars, like Pigou and Robertson, enabled the most enterprising middle-and lower-middle-aged like Hansen, Hicks, and Joan Robinson to jump on and drive the bandwagon, and permitted a whole generation of students … to escape from the slow and soul-destroying process of acquiring wisdom by osmosis from their elders and the literature into an intellectual realm in which youthful iconoclasm could quickly earn its just reward (in its own eyes at least) by the demolition of the intellectual pretensions of its academic seniors and predecessors. Economics, delightfully, could be reconstructed from scratch on the basis of a little Keynesian understanding and a loft y contempt for the existing literature—and so it was” (1978, pp. 188–89).
Paul Samuelson has written of the joy of being under 30 when The General Theory was published in 1936, exulting, with Wordsworth, “Bliss was it in that dawn to be alive, but to be young was very heaven.” Yet this same Samuelson who enthusiastically accepted the new revelation also admitted that The General Theory
is a badly written book; poorly organized. … It abounds in mares’ nests of confusions. … I think I am giving away no secrets when I solemnly aver—upon the basis of vivid personal recollection—that no one else in Cambridge, Massachusetts, really knew what it was all about for some twelve to eighteen months aft er publication. Samuelson, Paul A. 1948 [1946]. “Lord Keynes and the General Theory,” in Harris 1948. Orig inally appeared in Econometrica (July 1946).Hodge, Ian. 1986. Baptized Infl ation. Tyler, Tex.: Institute for Christian Economics.
It must be remembered that the now-familiar Keynesian cross, IS-LM diagrams, and the system of equations were not available to those trying desperately to understand The General Theory when the book was published; indeed, it took 10 to 15 years of countless hours of manpower to figure out the Keynesian system. Oft en, as in the case of both Ricardo and Keynes, the more obscure the content, the more successful the book, as younger scholars flock to it, becoming acolytes.
Also important to the success of The General Theory was the fact that, just as a major war creates a large number of generals, so did the Keynesian revolution and its rude thrusting aside of the older generation of economists create a greater number of openings for younger Keynesians in both the profession and the government.
Another crucial factor in the sudden and overwhelming success of The General Theory was its origin in the most insular university of the most dominant economic national center in the world. For a century and a half, Great Britain had arrogated to itself the role of dominance in economics, with Smith, Ricardo, and Mill all aggrandizing this tradition. We have seen how Marshall established his dominance at Cambridge and that the economics he developed was essentially a return to the classical Ricardo/Mill tradition.
As a prominent Cambridge economist and student of Marshall, Keynes had an important advantage in furthering the success of the ideas in The General Theory. It is safe to say that if Keynes had been an obscure economics teacher at a small, Midwestern American college, his work, in the unlikely event that it even found a publisher, would have been totally ignored.
In those days before World War II, Britain, not the United States, was the most prestigious world center for economic thought. While Austrian economics had flourished in the United States before World War I (in the works of David Green, Frank A. Fetter, and Herbert J. Davenport), the 1920s to early 1930s was largely a barren period for economic theory. Anti-theoretical institutionalists dominated American economics during this period, leaving a vacuum that was easy for Keynes to fill.
Also important to his success was Keynes’s tremendous stature as an intellectual and politicoeconomic leader in Britain, including his prominent role as a participant in, and then severe critic of, the Versailles treaty. As a Bloomsbury member, he was also important in British cultural and artistic circles.
Moreover, we must realize that in pre-World War II days only a small minority in each country went to college and that the number of universities was both small and geographically concentrated in Great Britain. As a result, there were very few British economists or economics teachers, and they all knew each other. This created considerable room for personality and charisma to help convert the profession to Keynesian doctrine.
The importance of such external factors as personal charisma, politics, and career opportunism was particularly strong among the disciples of F.A. Hayek at the London School of Economics. During the early 1930s, Hayek at the LSE and Keynes at Cambridge were the polar antipodes in British economics, with Hayek converting many of Britain’s leading young economists to Austrian (that is, Misesian) monetary, capital, and business-cycle theory.
Additionally, Hayek, in a series of articles, had brilliantly demolished Keynes’s earlier work, his two-volume Treatise on Money, and many of the fallacies Hayek exposed applied equally well to The General TheoryHayek, Friedrich A. 1931a. “Reflections on the Pure Theory of Money of Mr. J. M. Keynes.” Economica 11. ,Hayek, Friedrich A. 1931b. “A Rejoinder to Mr. Keynes.” Economica 11. ,Hayek, Friedrich A. 1932. “Reflections on the Pure Theory of Money of Mr. J.M. Keynes (continued).” Economica 12. For Hayek’s students and followers, then, it must be said that they knew better. In the realm of theory, they had already been inoculated against The General Theory. And yet, by the end of the 1930s, every one of Hayek’s followers had jumped on the Keynesian bandwagon, including Lionel Robbins, John R. Hicks, Abba P. Lerner, Nicholas Kaldor, G.L.S. Shackle, and Kenneth E. Boulding.
Perhaps the most astonishing conversion was that of Lionel Robbins. Not only had Robbins been a convert to Misesian methodology as well as to monetary and business-cycle theory, but he had also been a diehard pro-Austrian activist. A convert since his attendance at the Mises privatseminar in Vienna in the 1920s, Robbins, highly infl uential in the economics department at LSE, had succeeded in bringing Hayek to LSE in 1931 and in translating and publishing Hayek’s and Mises’s works.
Despite being a longtime critic of Keynesian doctrine before The General Theory, Robbins’s conversion to Keynesianism was apparently solidifi ed when he served as Keynes’s colleague in wartime economic planning. There is in Robbins’s diary a decided note of ecstatic rapture that perhaps accounts for his astonishing abasement in repudiating his Misesian work, The Great Depression (1934).
Robbins’s repudiation was published in his 1971 Autobiography: “I shall always regard this aspect of my dispute with Keynes as the greatest mistake of my professional career, and the book, The Great Depression, which I subsequently wrote, partly in justification of this attitude, as something which I would willingly see forgotten”Robbins, Lionel, Autobiography of an Economist. London: Macmillan. . Robbins’s diary entries on Keynes during World War II can only be considered an absurdly rapturous personal view. Here is Robbins at a June 1944 pre–Bretton Woods draft conference in Atlantic City:
Keynes was in his most lucid and persuasive mood: and the effect was irresistible… . Keynes must be one of the most remarkable men that have ever lived—the quick logic, the wide vision, above all the incomparable sense of the fitness of words, all combine to make something several degrees beyond the limit of ordinary human achievement. Only Churchill, Robbins goes on to say, is of comparable stature. But Keynes is greater, for he uses the classical style of our life and language, it is true, but it is shot through with something which is not traditional, a unique unearthly quality of which one can only say that it’s pure genius. The Americans sat entranced as the godlike visitor sang and the golden light played all around.Hession, Charles H. 1984. John Maynard Keynes. New York: Macmillan.
This sort of fawning can only mean that Keynes possessed some sort of strong personal magnetism to which Robbins was susceptible.Robbin’s biographer, D.P. O’Brien, labors hard to maintain that, despite what he admits is Robbins’s “elaborate” and “exaggerated contrition,” Robbins never really, deep down, converted to Keynesianism. But O’Brien is unconvincing, even aft er he tries to show how Robbins waffl ed on some issues. Moreover, O’Brien admits that Robbins dropped his Misesian macro approach, and he fails to mention Robbins’s astonishing treatment of Keynes as “godlike” (O’Brien 1988, pp. 14–16, 117–20).
Central to Keynes’s strategy in putting The General Theory over were two claims: first, that he was revolutionizing economic theory, and second, that he was the first economist—aside from a few “underworld” characters, such as Silvio Gesell—to concentrate on the problem of unemployment. All previous economists, whom he lumped together as “classical,” he said, assumed full employment and insisted that money was but a “veil” for real processes and was therefore not a truly disturbing presence in the economy.
One of Keynes’s most unfortunate effects was his misconceiving of the history of economic thought, since his devoted legion of followers accepted Keynes’s faulty views in The General Theory as the last word on the subject. Some of Keynes’s highly influential errors may be attributed to ignorance, since he was little trained in the subject and mostly read work by his fellow Cantabrigians. For example, in his grossly distorted summary of Say’s law (“supply creates its own demand”), he sets up a straw man and proceeds to demolish it with ease.
This erroneous and misleading restatement of Say’s law was subsequently repeated (without quoting Say or any of the other champions of the law) by Joseph Schumpeter, Mark Blaug, Axel Leijonhufvud, Thomas Sowell, and others. A better formulation o fthe law is that the supply of one good constitutes demand for one or more other goods.Hutt, William H. 1974. A Rehabilitation of Say’s Law. Columbus: Ohio State University Press.
But ignorance cannot account for Keynes’s claim that he was the first economist to try to explain unemployment or to transcend the assumption that money is a mere veil exerting no important influence on the business cycle or the economy. Here we must ascribe to Keynes a deliberate campaign of mendacity and deception—what would now be called euphemistically “disinformation.”
Keynes knew all too well of the existence of the Austrian and LSE Schools, which had flourished in London as early as the 1920s and more obviously since 1931. He himself had personally debated Hayek, the chief Austrian at LSE, in the pages of Economica, the LSE journal. The Austrians in London attributed continuing large scale unemployment to wage rates kept above the free-market wage by combining union and government action (e.g., in extraordinarily generous unemployment-insurance payments).
Recessions and business cycles were ascribed to bank credit and monetary expansion, as fueled by the central bank, which pushed interest rates below genuine time-preference levels and created overinvestment in higher-order capital goods. These then had to be liquidated by a recession, which in turn would emerge as soon as the credit expansion stopped. Even if he had not agreed with this analysis, it was unconscionable for Keynes to ignore the very existence of this school of thought then prominent in Great Britain, a school which could never be construed as ignoring the impact of monetary expansion on the real state of the economy.
In order to conquer the world of economics with his new theory, it was critical for Keynes to destroy his rivals within Cambridge itself. In his mind, he who controlled Cambridge controlled the world. His most dangerous rival was Marshall’s handpicked successor and Keynes’s former teacher, Arthur C. Pigou. Keynes began his systematic campaign of destruction against Pigou when Pigou rejected his previous approach in the Treatise on Money, at which point Keynes also broke with his former student and close friend, Dennis H. Robertson, for refusing to join the lineup against Pigou.
The most glaring misstatement in The General Theory, and one which his disciples accepted without question, is the outrageous presentation of Pigou’s views on money and unemployment in Keynes’s identification of Pigou as the major contemporary “classical” economist who allegedly believed that there is always full employment and that money is merely a veil causing no disruptions in the economy—this about a man who wrote Industrial Fluctuations in 1927 and Theory of Unemployment in 1933, which discuss at length the problem of unemployment! Moreover, in the latter book, Pigou explicitly repudiates the money veil theory and stresses the crucial centrality of money in economic activity.
Thus, Keynes lambasted Pigou for allegedly holding the “conviction…that money makes no real difference except frictionally and that the theory of unemployment can be worked out…as being based on ‘real’ exchanges.” An entire appendix to chapter 19 of The General Theory is devoted to an assault on Pigou, including the claim that he wrote only in terms of real exchanges and real wages, not money wages, and that he assumed only flexible wage rates.
But, as Andrew Rutten notes, Pigou conducted a “real” analysis only in the first part of his book; in the second part, he not only brought money in, but pointed out that any abstraction from money distorts the analysis and that money is crucial to any analysis of the exchange system. Money, he says, cannot be abstracted away and cannot act in a neutral manner, so “the task of the present part must be to determine in what way the monetary factor causes the average amount of, and the fluctuation in, employment to be different from what they otherwise would have been.”
Therefore, added Pigou, “it is illegitimate to abstract money away [and] leave everything else the same. The abstraction proposed is of the same type that would be involved in thinking away oxygen from the earth and supposing that human life continues to exist”Pigou, A.C. 1933. The Theory of Unemployment. London: Macmillan. . Pigou extensively analyzed the interaction of monetary expansion and interest rates along with changes in expectations, and he explicitly discussed the problem of money wages and “sticky” prices and wages.
Thus, it is clear that Keynes seriously misrepresented Pigou’s position and that this misrepresentation was deliberate, since, if Keynes read any economists carefully, he certainly read such prominent Cantabrigians as Pigou. Yet, as Rutten writes, “These conclusions should not come as a surprise, since there is plenty of evidence that Keynes and his followers misrepresented their predecessors”Rutten, Andrew. 1989. “Mr. Keynes on the Classics: A Suggestive Misinterpretation?” Unpublished manuscript. . The fact that Keynes engaged in this systematic deception and that his followers continue to repeat the fairy tale about Pigou’s blind “classicism” shows that there is a deeper reason for the popularity of this legend in Keynesian circles. As Rutten writes,
There is one plausible explanation for the repetition of the story of Keynes and the classics.…This is that the standard account is popular because it offers simultaneously an explanation of, and a justification for, Keynes’s success: without the General Theory, we would still be in the economic dark ages. In other words, the story of Keynes and the Classics is evidence for the General Theory. Indeed, its use suggests that it may be the most compelling evidence available. In this case, proof that Pigou did not hold the position attributed to him is … evidence against Keynes. … [This conclusion] raises the … serious question of the methodological status of a theory that relies so heavily on falsified evidence.
In his review of The General Theory, Pigou was properly scornful of Keynes’s “macédoine of misrepresentations,” and yet such was the power of the tide of opinion (or of the charisma of Keynes) that, by 1950, aft er Keynes’s death, Pigou had engaged in the sort of abject recantation indulged in by Lionel Robbins, which Keynes had long tried to wrest from himPigou, A.C. 1950. Keynes’s General Theory: A Retrospective View. London: Macmillan.,Johnson, Elizabeth, and Harry G. Johnson. 1978. Th e Shadow of Keynes. Oxford: Basil Blackwell. ,Corry, Bernard. 1986. “Keynes’s Economics: A Revolution in Economic Th eory or Economic Policy?” in R.D. Collison Black, ed., Ideas in Economics. Totowa, N.J.: Barnes and Noble.
But Keynes used tactics in the selling of The Genera Theory other than reliance on his charisma and on systematic deception. He curried favor with his students by praising them extravagantly, and he set them deliberately against non-Keynesians on the Cambridge faculty by ridiculing his colleagues in front of these students and by encouraging them to harass his faculty colleagues. For example, Keynes incited his students with particular viciousness against Dennis Robertson, his former close friend.
As Keynes knew all too well, Robertson was painfully and extraordinarily shy, even to the point of communicating with his faithful, longtime secretary, whose office was next to his own, only by written memoranda. Robertson’s lectures were completely written out in advance, and because of his shyness he refused to answer any questions or engage in any discussion with either his students or his colleagues. And so it was a particularly diabolic torture for Keynes’s radical disciples, led by Joan Robinson and Richard Kahn, to have baited and taunted Robertson, harassing him with spiteful questions and challenging him to debate.Johnson, Elizabeth, and Harry G. Johnson. 1978. Th e Shadow of Keynes. Oxford: Basil Blackwell.
[Chapter "Selling the General Theory" in Keynes, the Man.]
Dr. Yuri Maltsev is a Soviet expatriate who worked as an economist in the Gorbachev era of "reforms." He makes the strong case against what he terms "Crony Socialism," detailing how politics, bureaucracy, and self-dealing monetary planners work against the cause of greater peace and prosperity. Recorded in Fort Worth, Texas, on 2 June 2018. Includes an introduction by Jeff Deist.
[Excerpted from Chapter VII of Principles of Political Economy and Taxation (1817). Ricardo, an economist of the "Classical School," deserves credit for having been among the first to point out the advantages of specialization and trade, even if one party to the transaction could produce everything better and cheaper than the other. Reprinted from Free Market Economics: A Basic Reader, compiled by Bettina G. Greaves.]
Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each. This pursuit of individual advantage is admirably connected with the universal good of the whole. By stimulating industry, by rewarding ingenuity, and by using most efficaciously the peculiar powers bestowed by nature, it distributes labour most effectively and most economically: while, by in creasing the general mass of productions, it diffuses general benefit, and binds together, by one common tie of interest and intercourse, the universal society of nations throughout the civilised world. It is this principle which determines that wine shall be made in France and Portugal, that com shall be grown in America and Poland, and that hardware and other goods shall be manufactured in England.
In one and the same country, profits are, generally speaking, always on the same level; or differ only as the employment of capital may be more or less secure and agreeable. It is not so between different countries. If the profits of capital employed in Yorkshire should exceed those of capital employed in London, capital would speedily move from London to Yorkshire, and an equality of profits would be effected; but if in consequence of the diminished rate of production in the lands of England, from the increase of capital and population, wages should rise and profits fall, it would not follow that capital and population would necessarily move from England to Holland, or Spain, or Russia, where profits might be higher.
If Portugal had no commercial connection with other countries, instead of employing a great part of her capital and industry in the production of wines, with which she purchases for her own use the cloth and hardware of other countries, she would be obliged to devote a part of that capital to the manufacture of those commodities, which she would thus obtain probably inferior in quality as well as quantity.
The quantity of wine which she shall give in exchange for the cloth of England is not determined by the respective quantities of labour devoted to the production of each, as it would be if both commodities were manufactured in England, or both in Portugal.
England may be so circumstanced that to produce the cloth may require the labour of 100 men for one year; and if she attempted to make the wine, it might require the labour of 120 men for the same time. England would therefore find it her interest to import wine, and to purchase it by the exportation of cloth.
To produce the wine in Portugal might require only the labour of 80 men for one year, and to produce the cloth in the same country might require the labour of 90 men for the same time. It would therefore be advantageous for her to export wine in exchange for cloth. This exchange might even take place notwithstanding that the commodity imported by Portugal could be produced there with less labour than in England. Though she could make the cloth with the labour of 90 men, she would import it from a country where it required the labour of 100 men to produce it, because it would be advantageous to her rather to employ her capital in the production of wine, for which she would obtain more cloth from England, than she could produce by diverting a portion of her capital from the cultivation of vines to the manufacture of cloth.
Thus England would give the produce of the labour of 100 men for the produce of the labour of 80. Such an exchange could not take place between the individuals of the same country. The labour of 100 Englishmen cannot be given for that of 80 Englishmen, but the produce of the labour of 100 Englishmen may be given for the produce of the labour of 80 Portuguese, 60 Russians, or 120 East Indians. The difference in this respect, between a single country and many, is easily accounted for, by considering the difficulty with which capital moves from one country to another, to seek a more profitable employment, and the activity with which it invariably passes from one province to another in the same country.It will appear, then, that a country possessing very considerable advantages in machinery and skill, and which may therefore be enabled to manufacture commodities with much less labour than her neighbours, may, in return for such commodities, import a portion of the com required for its consumption, even if its land were more fertile and com could be grown with less labour than in the country from which it was imported. Two men can both make shoes and hats, and one is superior to the other in both employments; but in making hats he can only exceed his competitor by one-fifth or 20 per cent, and in making shoes he can excel him by one-third or 33 per cent — will it not be for the interest of both that the superior man should employ himself exclusively in making shoes, and the inferior man in making hats?
It would undoubtedly be advantageous to the capitalists of England, and to the consumers in both countries, that under such circumstances the wine and the cloth should both be made in Portugal, and therefore that the capital and labour of England employed in making cloth should be removed to Portugal for that purpose. In that case, the relative value of these commodities would be regulated by the same principle as if one were the produce of Yorkshire and the other of London: and in every other case, if capital freely flowed towards those countries where it could be most profitably employed, there could be no difference in the rate of profit, and no other difference in the real or labour price of commodities than the additional quantity of labour required to convey them to the various markets where they were to be sold.
Experience, however, shows that the fancied or real insecurity of capital, when not under the immediate control of its owner, together with the natural disinclination which every man has to quit the country of his birth and connections, and intrust himself, with all his habits fixed, to a strange government and new laws, check the emigration of capital ...
The spectacle of anti-gun marches this past weekend, at times both sinister and maudlin, provides yet another example that “democracy” does not yield some kind of livable compromise on any given issue. Text version: Incrementalism and Gun Control. Narrated by Jeff Deist.
Season 2, Episode 19. As William Walker struggles to maintain his control of Nicaragua, the Latin American Allies working with Cornelius Vanderbilt are finally able to dethrone the self-appointed “President of Nicaragua,” finally ending the American endeavor at conquering Nicaragua and the surrounding countries. This episode is Part 6 of 6 in the story of William Walker’s attempt at establishing his own Republic of Nicaragua.
Clarification: I claim that the Sharps rifle had a range of "twenty football fields". A listener pointed out that Wikipedia lists an effective firing range of only 500 yards, and a maximum range of 1,000 yards. In Tycoon’s War, Stephen Dando-Collins writes, "The Hondurans thought they were out of range, but the Sharps rifle had a range of two thousand yards." Neither Wikipedia nor Dando-Collins offer a citation for their range estimates, so I don’t know which one is correct, but I was referencing Dando-Collins for my claim.
Season 2, Episode 18. After thwarting a conspiracy with by his Nicaraguan allies who turned against him, William Walker sets up a new government and installs himself as the President. While embroiled in a war, he issues decrees that he hopes will encourage American volunteers, including opening the country to slavery. This episode is Part 5 of 6 in the story of William Walker’s attempt at establishing his own Republic of Nicaragua.
Ryan McMaken discusses the rising homicide rate in Mexico, and addresses the argument that most illegal guns in Mexico are from the United States. Text version: Stop Blaming Mexican Violence on American Guns
Season 2, Episode 17. William Walker and his American filibusters find themselves in the middle of an even greater conflict in Latin America as the countries of Costa Rica, Honduras, El Salvador, and Guatemala form an alliance with Walker’s opposition in Nicaragua to defeat him. This episode is Part 4 of 6 in the story of William Walker’s attempt at establishing his own Republic of Nicaragua.
Season 2, Episode 16. After ending the Nicaraguan civil war, William Walker sets up the provisional government for his new "Republic of Nicaragua". The peace is short-lived as the surrounding Latin American countries join forces—with financial support provided by Cornelius Vanderbilt—to remove William Walker from power. This episode is Part 3 of 6 in the story of William Walker’s attempt at establishing his own Republic of Nicaragua.
[This essay, written in October 1941, in one of Mises's lesser-known works and explores the use of a union of Eastern European states in addressing geopolitical threats in the region. Readers may be struck by how far Mises goes in supporting a strong central government in this case. We post it here for purposes of prompting discussion.]In his biography of Mises, Last Knight of Liberalism, Guido Hulsmann describes the essay:"Planning for after the war still occupied a prominent place in Mises’s work. On May 20, 1941, he reported ... that he had made good progress on his research project: a study of the social and economic problems of Central and Eastern Europe, which Mises hoped could serve as a basis for postwar reconstruction in this region. He said he would start writing it soon, and he must have finished it by mid-July, when he sent out copies to friends and colleagues. In this 43-page memorandum, Mises restated the political and economic case for the establishment of an East-European Union with a strong central government: growth through free trade and laissez-faire, response to the problems of linguistic minorities, and protection against the three mighty neighbors." -Ed.
I. Peace Within a World of Nationalism In a world of free trade and democracy no special institutions and provisions are needed in order to ensure undisturbed peaceful cooperation among all nations. In such a world, where there are neither trade barriers nor migration barriers; where the activities of governments are limited to the protection of the lives, the health and the property of individuals against violent or fraudulent aggression; and where neither the laws nor the administration nor the tribunals discriminate between different groups of citizens or between citizens and foreigners; it is without any importance for the individual, where the frontiers of his country are drawn. Every individual has the opportunity to live and to work where it suits him best. Nobody can derive any advantage from a change in the political distribution of the earth's surface. No citizen can be enriched by a victorious war, which makes his country larger at the expense of other countries. War does not pay. The nations become peaceful because they consider warfare as a useless waste both of blood and of wealth.
Our world is very different from this liberal free-trade utopia. We are living in an age when the governments are eager to further the short-run interests of some groups of their citizens at the expense of other groups of citizens and of foreigners. Ours is an age of economic nationalism. Economic nationalism is a policy which intends to improve the lot of greater or smaller groups of citizens by putting impediments in the way of foreigners. Foreign products are withheld from the domestic markets; foreign labor is banned from the competition on the domestic labor market. Whether these measures can really attain the ends which the governments want to attain or whether they do not in the long run hurt, in some way or other, the citizens whom they want to benefit is immaterial. The decisive point is that the great majority of our contemporaries firmly believe in the efficacy of these measures of economic nationalism. There is therefore no hope that the world will in the near future try to embark upon a policy of free trade.
Such is the stark reality we have to face. We should not deceive ourselves by false illusions. All the arguments brought forward in order to demonstrate the disadvantages of warfare and the benefits of undisturbed peace are vain in an age of economic nationalism. Under present conditions the pacifists are mistaken when they declare that a victorious war does not pay. It is true that the individual citizens of Germany did not gain anything in 1871 by the conquest of Alsace-Lorraine. This was in the days of a more or less free-trade Europe. But today it is different. For instance, a conquest of Australia by the Japanese would, under present circumstances, improve the lot of every individual Japanese wage earner. It would give a great number of Japanese the opportunity to work in Australia where the natural opportunities for production are much more favorable than in the overpopulated Japanese isles. It would therefore raise the level of wages and the standard of living for all Japanese wage earners, both for those who could emigrate to Australia and for those who remain in their old country.
Whereas in a world of universal absolute free trade every nation is eager to maintain peace, in a world of economic nationalism those nations which believe themselves strong enough are ready to profit from every opportunity to attack weaker nations. In such a world there is no solidarity of interests but a permanent latent conflict of interests which becomes manifest as soon as a good chance for prey appears. It is useless to fight this militarist bellicosity by mere moral condemnation. Both the Covenant of the League of Nations and the Briand-Kellog Pact failed, because the warlike nations considered them as nothing else than, an insincere protection of the unfair privileges of the weak. The principle of collective security could not work in a milieu where every nation waged a permanent economic war against all other nations.
We may hope that this unsatisfactory state of things will one day be replaced by a mentality of free-trade and good-will. But we have to realize that it would be foolish to believe that trade-barriers and migration-barriers will be abolished directly after this war. We therefore have to try to discover means which could make peace durable even in this age of radical nationalism.
Nations inspired by the spirit of nationalism recognize only one argument in favor of peace, namely, that there is but little hope of success for their armed forces in waging war. What is wanted, therefore, is some way to build up a political structure which would prevent the nations calling themselves "dynamic" from use of their powers for aggression.
It is very probable that the British Empire, the American Republics and some of the democracies of Western Europe will after the war arrange for permanent political and military cooperation in order to assure themselves security against German and Japanese aggressions. Whether constructed according to the pattern laid out by Mr. Clarence Streit or in another way, such a union could peacefully settle conflicts in all countries from the left bank of the Rhine westward to the western boundaries of the British sphere of influence in Asia. But just that part of the earth whence both world wars originated would remain outside. A special scheme for a durable peace in Eastern Europe is a necessary condition for the satisfactory working of all plans to make the world safe for peace.
II. The German Problem The following proposals for a new political constitution of Eastern Europe are based on two assumptions.
The first assumption is a total defeat of Nazism. We do not have to worry about what will happen if the Nazis could end their total war by a total victory. They will exterminate some of the vanquished nations, expel others from Europe and enslave the remaining ones. In the "New Order" the members of the Nazi party will rule over slaves.
The second assumption is that the victorious British Empire and its allies will not use their total success to exterminate the German nation. We assume that the victors will neither kill all Germans nor expel them to the Arctic Circle; of course, they do not even consider such a barbaric plan. But then the German problem remains unsolved.
This German problem consists in the firm conviction of the German nationalists that the German nation is the strongest military power on earth. The German philosophers, historians and would-be economists who have expounded these doctrines for more than eighty years base their statements on the following arguments:
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The Germans are the most numerous among the white nations. It is a mistake to believe that the Russians or the Americans are more numerous than the Germans are. From the total figures of the inhabitants of European Russia the non-Russians (Ukrainians, White Russians, Mongolians and others) have to be deducted; the remaining numbers of the Great-Russians are inferior to those of the Germans. The Americans are not a homogeneous nation, but a minority of Nordics amidst Negroes, Jews, Slavs, Italians and other "inferior" races.A 1941 typed and scanned version of the essay omits the quotation marks around "inferior." The version appearing in Richard Ebeling's collection of essays Selected Writings of Ludwig von Mises Vol. 3, includes the quotation marks. See Matthew McCaffrey on Mises's views on race: "Mises on the Battle between Liberalism and Racism" -Ed.
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The Germans own that country which dominates strategically the whole of Europe and some parts of the two adjacent continents. They enjoy in warring the advantages of standing on interior lines.
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The Germans are a warlike nation; they are heroes, whereas the other white nations are peddlars (Händler), who stick to pacifism and cowardice.
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The genuine Germans have always been socialists in their soul and have, under the guidance first of the Hohenzollerns, later of Adolf Hitler freed themselves from the domination of Western and Jewish ideas; their mind has only superficially or temporarily been infected by Christianism, Humanitarianism, Capitalism, Utilitarianism, Liberalism, Democracy and Bolshevism.
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Strong, as they are, the Germans have therefore the sacred duty to conquer and to rule the world. As supermen they will tame the underdogs, to whom the appellation "human" should be denied. Such is the will of the German God, who gave power to his chosen people, the Germans.
The main accent lies on the first of these five points. "We are a nation of 100 millions; therefore we are chosen to own the earth." It is necessary to realize that German nationalism differs from the nationalism of other nations only in the fact that the Germans believe themselves to be the strongest of all nations. They are not prepared to endure the disadvantages which the economic nationalism of other nations imposes on them, because they feel themselves strong enough to do away with these discriminatory measures. They say: "Smaller nations may acquiesce in the actual distribution of the resources of the earth; we, the big German nation, cannot tolerate this state of things." The Nazis are full of contempt for the Norwegians and the Danes, because they themselves are many and these "Nordic" nations are small.
As long as the world is on the line of economic nationalism and as long as there are 80 million Germans living in Europe and 20 million in non-European countries the spirit of aggression will dominate the political thought of Germany. Nazism is not a new doctrine. It has a long history. Fichte, List, Lassalle, Lasson, Lagarde, Langbehn, Richard Wagner, Treitschke, Schmoller and Houston Stuart Chamberlain, were its sponsors. The doctrine was completely laid out in the course of the 19th century. Spengler, Spann, Sombart, Hitler and Rosenberg did not add any new ideas; they only repeated and emphasized the old slogans.
Nothing can prevent a new German aggression but an organization of Europe which makes it hopeless for Germany to embark on a new war of conquest. The political and military union of the Western democracies will stop Germany at its western and northern frontiers. Special provisions are needed to stop it at its eastern and southern frontiers.
The German danger has to be seen not in the spirit of aggression which inspires most of the Germans of our time, but in the military strength of Germany, which makes such an aggression a dreadful menace. The other nations which share today a similar mentality of aggression are less dangerous. They all would be innocuous but for the constellation created by nazified Germany's "dynamism."
To carry out a scheme for a durable peace is not the outcome of hostility or hatred against Germany, Italy or Japan, the three aggressor nations of our times. The blessings of peace will benefit these nations in the same way they will favor the rest of mankind. The purpose of all plans for a lasting peace which involve the existence of these three nations is exactly this: to give to the vanquished nations after the war the opportunity to become again incorporated into the great human society of free nations. Germans and Italians were from time immemorial foremost among the shapers of our civilization. We may hope that they will one day remember that this civilization, which they despise today, was to a great extent an achievement of sons of their own peoples.
It is the aim of the following plan to make it unnecessary for the victorious Allies to consider any proposal which intends to treat the vanquished peoples in the same way in which the Nazis wish to treat the conquered in case of their total victory.
III. The Clash of Linguistic Groups The term "Eastern Europe" as used in this paper includes the whole territory between the eastern boundaries of Germany, Switzerland and Italy and the western borders of Russia. It reaches from the shores of the Baltic to those of the Black, of the Adriatic and of the Aegean Sea. We shall revert later to the problem of the precise delimitation of this territory.
This vast territory was in the Europe of the Congress of Vienna divided among Russia, the Hapsburg Empire, Prussia and Turkey. With the dissolution of the Ottoman power in Europe, with the disintegration of the Austro-Hungarian Empire and with the curtailment of the Russian power the peoples of this part of the world obtained autonomy and self-government. But this independence resulted in anarchy and finally in a new partition of the territory involved among the three mighty neighbors, Germany, Russia and Italy. The order established by the treaties of 1856, 1878 and 1919 collapsed catastrophically.
Eastern Europe is the central-seat of trouble and unrest. Both world wars arose in this territory. The units or groups which are bitterly fighting one another in Eastern Europe apply to themselves in their own languages terms which correspond to the English words nation, nationality or people. They consider a community of language as the characteristic feature of a nation. The issue in these fights is always the right to use the national idiom. The terms Germanization, Polanization, Magyarization, etc. always mean: to induce people, by violence or other methods of pressure, to replace their mother tongue by German, Polish, Hungarian, etc.
These are not struggles among races. No distinct bodily features which the anthropologist could establish with the aid of the scientific methods of his branch of knowledge separate the men belonging to different groups. If you present one of these men to an anthropologist he will not be able to decide whether the man is a German, a Czech, a Pole or a Hungarian.
Neither have the men belonging to one of these groups a common descent. The right banks of the Elbe river were 800 years ago inhabited by Slavs and Baltic tribes only. They became German in the course of the processes which the German historians call the colonization of the East. There was an immigration of Germans from the West and from the Southwest into this area; but the main stock of its present population are the descendants of the indigenous Slavs and Baltic peoples who under the influence of the church and the school turned to the use of the German language. Prussian chauvinists, of course, assert that the native Slavs were radically exterminated and that the whole present population are the descendants of German settlers. There is not the slightest proof for this doctrine, which some Prussian historians developed in order to justify the Prussian claim for hegemony in Germany. But even they never dared to deny that the purely Slav ancestry of the princely families and of most of the aristocratic families is beyond doubt. Queen Louisa of Prussia, whom all German nationalists consider as the paragon of German womanhood, was a scion of the ruling house of Mecklenburg, whose originally Slav character has never been contested. Many noble families of the German Northeast can be traced back to Slav ancestors. The genealogical trees of the families of the middle classes and of the peasantry cannot be established as far back as those of the nobility; this alone explains why the proof of Slav origin cannot be provided for them.
Shifting from one of these linguistic groups to another occurred not only in earlier days. It happened in the 19th century and today is so frequent that nobody ever remarks upon it. Many outstanding personalities in the Nazi movement in Germany and Austria and in the Czechoslovakian, Polish and Hungarian districts claimed by Nazism were the sons of parents whose language was not the German one." Similar conditions prevail in the nationalist parties of all East European linguistic groups. In many cases the change of loyalties was accompanied by a change of the family name. But many radical nationalists have retained their foreign sounding family names which clearly show their alien origin.
Whenever the question is raised whether a group has to be considered as a distinct nation and should therefore as such be entitled to claim political autonomy; the issue is whether the idiom involved has to be considered as a distinct language or as a dialect only. The Russians maintain that the Ukrainian idiom is a dialect only, like the Plattdeutsch in Northern Germany or the Provencal of the felibrists in Southern France. The Czechs propose the same argument against the political aspirations of the Slovaks and the Italians against the Rhaeto-Romanic idiom. (Only a few years ago the Swiss government gave to the Romansh the legal status of a national language.)
There is only one case in Eastern Europe where the characteristic feature which separates two nations is not language but religion and the alphabetical types used in writing and printing. The Serbs and the Croats speak the same language, but whereas the Serbs use the Cyrillic alphabet, the Croats use the Roman. The Serbs adhere to the orthodox creed of the Oriental Church, the Croats are Catholics.
Religious issues, moreover, play only a subordinate role in these struggles of linguistic groups. It is, on the contrary, the linguistic issue which dominates religion. As soon as a linguistic group of the Oriental Church succeeded in obtaining some degree of political or cultural autonomy it freed itself from the religious rule of the patriarch of Constantinople and founded an autonomous church. No dogmatical differences motivated these changes; they were purely political.
At the turn of the 16th and 17th centuries Ukrainian bishops acknowledged the Pope's supremacy. This Uniat Oriental Church was the main instrument in the poor Ukrainian serfs' fight against their oppressors. When Russia conquered the greater part of the Ukraine it violently persecuted this church in order to break the Ukrainian resistance against Russification. Finally the Czars succeeded in exterminating the Uniat Church on Russian soil. This church survived only in those parts of the country which were under the rule of the Hapsburgs.
All those parts of Eastern Europe, which in the middle ages acknowledged the supremacy of the Pope, were some hundreds of years ago terribily shaken by religious struggles. But times have changed. Today Catholics and Protestants of different denominations jointly cooperate within each linguistic group. Loyalty to the nation means for them more than the community or religion.
Only a few words have to be devoted to the Panslavist idea. The Russian governments — both that of the Czars and that of the Soviets — favored, at different times, a doctrine which assigned to the Russians, as the most numerous Slav nation, the task of freeing all Slav brethren from the yoke of the Germans, the Turks, the Italians and the Hungarians. As far as Panslavism means more — namely, the establishment of a unitary state including all Slav peoples under Russian hegemony — it was nothing else than a poor disguise for Russian imperialism. The Poles and the Ukrainians, who both knew what Russian rule meant, always opposed it bitterly. Neither are the other Slav peoples ready to surrender to Russia.
Nowadays some authors recommend a Union of all Slavs as the best solution of the problems of Eastern Europe. Such a union would mean an alliance of the Slavs for the sake of the oppression of the Germans, Lithuanians, Estonians, Letts, Hungarians, Rumanians, Italians and Greeks living in Eastern Europe. It would not abolish, but perpetuate the struggles.
IV. Present-day Conditions in Eastern Europe If you ask representatives of the nations of the European East what they consider would be a fair determination of the boundaries of their own countries and if you mark these boundaries on a map, then you will discover that the greater part of this territory is claimed by two nations and that a not negligible part is claimed by three nations. Every nation knows how to justify its claims with linguistic, racial, historical, geographical, economic, social or religious arguments. No nation is prepared to renounce the least of its claims for reasons of expediency. Every nation is ready to resort to arms in order to satisfy its pretensions. Every nation, therefore, considers its immediate neighbors as mortal enemies and relies on its neighbors' neighbors for armed support of its own territorial claims against the common foe. Every nation tries to profit from every opportunity to satisfy its claims at the expense of its neighbors. The history of the last twenty years proves the correctness of this description.
These claims are not claims of the governments or of "ruling" and "exploiting" classes, as current opinion would have us believe; these are claims of the whole nations and of every member of the respective linguistic groups. The governments are sometimes prepared to renounce some of these claims temporarily, in order to adjust the conduct of foreign policy to immediate political necessity.
The wealthy classes are peace loving, because they do not want to suffer material losses. The radical nationalists, supported by the general consent of the large majorities, rebuke the governments for their cowardice and moderation and the capitalists and entrepreneurs for their selfish materialism. Extreme nationalism is not the work of bribed propagandists; it is a mentality created by the teachings and writings of sincere poets, writers and scholars. The teachers and the youth are the most enthusiastic supporters of chauvinism and nationalism. The nationalism of public opinion is intractable and intransigent and eliminates from the public scene every politician and every party suspected of being lenient in "national" concerns. The most radical nationalists terrorize the moderate men, because everybody knows that the voters favor the most radical program.
Years ago it could be asserted that only the intellectuals were nationalists, whereas the uneducated masses were more or less indifferent. This is no longer true since the spread of education has caused the disappearance of illiteracy. Besides in our age of economic interventionism and its consequence — economic nationalism — every citizen has a personal interest in the result of these struggles between linguistic groups. Every peasant and every worker wishes that the area in which no discrimination is applied against him should be broadened. Every Czech shoe worker derived an immediate advantage from the fact that shoes manufactured in Czech plants could easily be sold in the sheltered markets of Slovakia and Carpatho-Russia. Every Croat peasant was injured by the fact that the Yugoslavian government's export agency discriminated against the Croats in purchasing cereals for sale to Germany. Austrian immigration barriers worked harm on all Czechs, Hungarians and Yugoslavs, who were barred from the Austrian labor market, where wages were higher than in their countries.
It is impossible to draw boundaries in Eastern Europe which would clearly separate linguistic groups. A great part of this territory is linguistically mixed, i.e., inhabited, by men of different languages. Every territorial division would therefore necessarily leave minorities under foreign rule. These minorities are the bearers of permanent unrest, of Irredentism and hatred.
To dispose of the problem of minorities in a peaceful way two methods had been suggested.
One method was the protection of minority rights by international law and its enforcement by international tribunals. The method failed. The economist has to recognize that such a system could be successfully applied only in a world of free trade and unhampered market economy. It must needs fail and it did fail in our age of economic interventionism. A law cannot protect anybody against measures dictated by alleged considerations of economic expediency. All measures of government interference in business can be and are used in countries inhabited by different linguistic groups for the sake of injuring the minorities. Customs tariffs, foreign exchange regulations, taxation, subsidies, labor legislation, and so on, may be utilized for discrimination although this cannot be proved in court procedure. The government can always explain such measures as being dictated by purely economic considerations. If licenses are denied to members of the minority but on the other hand are granted to the members of the privileged group the interference of an international tribunal is in vain. A system of foreign exchange regulation can be used to struggle all business activities of the minority. By means of subsidies the minority has to contribute to the bounties paid to its competitors who belong to the ruling linguistic group. Where the export trade of agricultural produce is nationalized and a government agency is the only buyer on the export market, discrimination in making purchases and in prices paid is practiced against the minority. With the aid of government interference in business, life for the minorities without formal violation of legal equality can be made unbearable. In our age of interventionism there is no legal protection available against an ill-intentioned government.
The impracticability of protecting minorities by international tribunals led to the proposal of another solution — the transplantation of minorities. This method could work only in a world in which all parts offered the same natural opportunities for production. In our actual world where the natural conditions for production are unequally distributed, the execution of such a plan would only aggravate existing inequalities and therefore intensify the desire for territorial expansion. When Hitler withdrew some German minorities from the East, he did so because he believes that he has much more fertile land to offer them.
The reform most commonly suggested recommends to these nations the formation of an economic union. An economic union would, under present conditions of government interference in business, have to include a complete unification of all branches of economic policy. It would shift the political center of gravity to the executive office of the union and reduce the national governments to the level of provincial and local auxiliaries. We may witness today how in all federations the power of the member states is gradually shrinking and that of the federal authorities increasing. This is not an accident. It is rather the unavoidable consequence of economic interventionism.
The western nations are unjust when they ridicule the anarchic conditions in Eastern Europe and the inability of their rulers to find a way for peaceful neighborliness. These eastern nations do nothing else than imitate the economic policies of the western democracies. They apply the measures of economic nationalism. This means they discriminate against foreigners because they believe that in this way they can further the welfare of their own citizens. They have invented nothing; they have only taken over. It is not their fault that the contradictions and deficiencies of economic nationalism are more glaring under the conditions in which they have to live.
There is general agreement today that the principle of unlimited sovereignty cannot be maintained in a world where the international division of labor results in a mutual dependence of every nation on all other nations. Notwithstanding this consensus nothing was done to limit the power of each nation, even the smallest one, to behave as if it were alone in the world. This contradiction is to be explained by the confusion which the term "limited sovereignty" involves. The concept of sovereignty, i.e., supreme power, does not allow for any limitation. A power may be supreme only if unlimited. If the power of a nation is limited so as to exclude some measures only, the remaining power can be used for the annihilation of this restriction. If, for instance, customs tariffs are excluded or limited it is possible to use other powers to render this limitation meaningless. It is possible, for example, to use the measures of veterinarian policy or measures for fighting plant diseases in a protectionist way, not to mention foreign exchange control and other methods. A pure limitation of sovereignty is not enough when the spirit of economic nationalism is allowed to survive. A total suppression of local sovereignty is necessary in order to insure good will and cooperation. To make Eastern Europe peaceful it is indispensable to vest the whole sovereignty in one democratic body ruling the entire area, which for more than 25 years has been a theatre of continual warfare and destruction.
The world as a whole is not yet prepared to renounce national sovereignty in favor of a world government. The commonwealth of free nations and free men is today an utopian concept only. Great ideological changes have to take place until a mentality of universal peace and world-wide cooperation will have replaced the present-day spirit of conquest and mutual hatred.
But Eastern Europe cannot wait any longer. Here something has to be done immediately. A return to the conditions of 1933 is out of the question. Conditions in which every sovereign state is looking for an opportunity to annex some territories belonging to its neighbors and every government considers a large number of its citizens as pariahs cannot be maintained.
We may assume that every linguistic group is honest in believing that its own claims are better founded than those of the competing groups. But we cannot agree with the repeated assertions of some linguistic groups, that the yoke which they impose on other groups is more fair and reasonable and less hard than the yoke imposed on them by other linguistic groups. The judgment of the oppressed has not less weight than that of the oppressors. No linguistic group should be permitted to inflict harm on members of other groups. No "protectorate" can be considered as justified, if the "protected" do not want the alleged protection.
We have to realize that the principle of nationality, as developed in Western Europe, is simply inapplicable in Eastern Europe where the linguistic groups are inextricably mingled. The political system of Eastern Europe cannot therefore be built up as a replica of that in the West. New standards have to be applied.
The foremost aim of a new order in Eastern Europe is to eliminate the problem of linguistic minorities. To be a member of such a linguistic minority means to be an outlaw. Every Slovak will say that this was the status of Slovaks in Hungary (before 1918) and in Czechoslovakia. (from 1918 to 1939); every Hungarian will say that this was the status of Hungarians in Czechoslovakia and is today in Slovakia; every Czech will say that this is today the status of Czechs both in those territories which the Reich has annexed since 1939 and in the Protectorate. It is the same with all similar cases all over Eastern Europe. There were and are autonomy and democracy only for the members of the ruling linguistic majorities; the members of the minorities have the disadvantages but not the privileges of citizenship.
It is immaterial to enter into a discussion of the claims of all these linguistic groups concerning their respective cultural values. It is of no concern whether or not the Hungarian civilization is higher than that of the Rumanians or of the Croats. The fact that Goethe, Kant and Beethoven were Germans does not justify the methods applied by the Nazis against the Czechs and the Poles; Mussolini may be right or wrong that Dante means more for humanity than Walter von der Vogelweide; but what relationship has this comparison of two poets to the problem of the oppression of the German-speaking inhabitants of Bozen and Brixen? It is grotesque that both Germans and Poles claim Copernicus for their own nation. It is beyond doubt that Copernicus wrote in Latin. There were in his time neither German nor Polish books on mathematics and astronomy; all the lectures which were delivered at the Italian, German and Polish universities were delivered in Latin.
We do not have to discuss the question whether it is of any value for mankind that the Czech, the Polish, the Ukrainian or the Serb civilizations should survive. The only fact which we have to face is this: there are people who wish to use freely the language which their parents have taught them. This legitimate desire has to be satisfied.
It is not true that in order to develop its own civilization a linguistic group needs a government whose sovereignty can be used to inflict harm on other linguistic groups. No Hungarian can derive any advantage from the fact that to a Slovak or a Rumanian the right to use his native tongue is denied.
The treaties of 1919 brought large minorities of Germans, Russians and Ukrainians under the rule of Czech and Polish majorities. This state of things could not be maintained except by a power strong enough to prevent both the Reich and the Soviet Union from interfering. It was based on the readiness of the French and the British to fight for the Czechs and the Poles.
Of course, neither Germany nor Russia has a right to oppress the Poles or the Czechs. But their title is no worse than the title of the Czechs against the Germans in the districts of Eger and Reichenberg or of the Poles against the Ukrainians in Eastern Galicia.
We do not mention these deplorable events of the past in order to blame anybody or in order to discover some nation's guilt. It is immaterial to establish who the first aggressors were. It is without any consequence whether Bohemia in the early Middle Ages was inhabited by Germans or Slavs or whether the Germans came to Bohemia only in the late Middle Ages as colonists. An argument like that between Hungarian and Rumanian scholars concerning the question of whether the Rumanian settlement in Transylvania took place earlier or later is futile. It is useless to inquire whether the century-old hatred between Poles and Russians was inaugurated by Polish or by Russian aggression. Let bygones be bygones. We do not have to revenge crimes of the past, but to build up a future, where people can enjoy the blessings both of peace and freedom.
V. The Requisites for a Permanent Settlement of the East European Problem In order to make Eastern Europe safe for peace it is necessary to establish a state of things where war does not pay. The average citizen should not expect any profit from a war in which his own linguistic group would be victorious over one of the other linguistic groups. Within this area borderlines must lose their present meaning. They must not have more importance, in the future, than the frontiers between the 48 states of the United States of America or between the counties of England.
The whole territory of Eastern Europe has to be organized as a political unit under a strictly unitary government. Within this whole area every individual has to have the right to choose the place where he wishes to live and to work. The laws and the authorities have to treat all natives — i.e., all citizens of Eastern Europe — in the same way on an equal footing without privileges or discrimination against individuals or groups.
Within the frame of this new political structure — let us call it the Eastern Democratic Union (EDU) — the old political units may continue to function. A dislocation of the historically developed entities is not required. Once the problem of borders has been deprived of its disastrous political implications most of the existing national bodies can remain intact. Having lost their power to inflict evils on their neighbors and on their minorities, they may prove very useful for the progress of civilization and welfare.
There will be, for instance, a Kingdom of Rumania and a Polish Republic. But these former sovereign states will now have to comply strictly with the laws and with the administrative provisions of the EDU. There will be no constitutional limit to the power of the EDU which could be used by an ill-intentioned local government to frustrate the laws and regulations issued by the EDU.
This shows us why the aims of the EDU cannot be realized in the constitutional form of a federation (Bundes-staat). Under a federative system the constitution assigns some branches of government activity to the federal government and other branches to the local governments of the member states. As long as the constitution remains unchanged the federal government does not have the power to interfere with questions which are in the jurisdiction of the member states. Such a system can succeed and has succeeded only with homogeneous peoples, where there exists a strong feeling of national unity and where no linguistic, religious, or racial discrepancies divide the population.
Let us assume that the constitution of a supposed East European Federation grants to every linguistic group the right to establish schools, where its own language is taught. Then it would be illegal for a member state to hinder directly and openly the establishment of such schools. But if the building code and the administration of public health and firefighting are in the exclusive jurisdiction of the member states, a local government could use its powers to close the school on the ground that the building does not comply with the requirements fixed by these regulations. The federal authorities would be helpless because they would not have the right to interfere, even if the grounds given prove to be only a subterfuge. Every kind of constitutional prerogative granted to the member states could be abused by a local government. If the fight against crime should be assigned to the member states, they could be slow in protecting the members of a minority group. If they should have the right to establish foreign exchange control they could discriminate against the members of the minority groups in complying with the demands for foreign exchange.
If we want to abolish all discrimination against minority groups, if we want to give to all citizens actual and not only formal equality, we have to vest all powers in the central government only. This would not cripple the right of a loyal local government eager to use its powers in a fair way. But it would hinder the return to methods whereby the whole administrative apparatus of the government is used to inflict harm on minorities.
A federation in Eastern Europe could never succeed in abolishing the political implications of the frontiers. In every member state there would remain the problem of minorities. There would be oppression of minorities, hatred and irrenditism. The government of every member state would continue to consider its neighbors as adversaries. The diplomatic and consular agents of the three big adjacent powers would try to profit from these quarrels and rivalries and might succeed in disrupting the whole system.
The main objectives of the new political order which has to be established in Eastern Europe are:
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This new system of government has to grant to every citizen full opportunity to live and to work freely without being molested by the hostility of any linguistic group inside or outside the boundaries of Eastern Europe. Nobody should be prosecuted or disqualified on account of his mother tongue or his creed. Every linguistic group should have the right to use its own language. No discrimination should be tolerated against minority groups and its members. Every citizen should be treated in such a way that he will call the country without any reservation "my country" and the government "our government."
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No linguistic group should expect any improvement of its political status by a change in the territorial organization. The difference between a ruling linguistic group and oppressed linguistic minorities has to disappear. There must not be any "Irrendenta."
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The system has to be strong enough to defend its independence against aggression on the part of its neighbors. Its armed forces have to be able to repel without foreign assistance an isolated aggression of either Germany or Italy or Russia. It should rely on the help of the Western democracies only against a common aggression by at least two of these neighbors.
VI. The Abandonment of Economic Nationalism The EDU will have to renounce all hostility against any linguistic group. This includes the elimination of all measures of economic nationalism. Economic nationalism is, as already mentioned, a policy which intends to improve the conditions of some groups of citizens by inflicting evils on foreigners; it is a policy of discrimination against foreigners. Foreign goods are excluded from the domestic market or only permitted after having paid an import duty. Foreign labor is disbarred from competition on the domestic labor market. Foreign capital is liable to confiscation. But all these measures hurt at the same time the economic interests of some groups of citizens. An import duty for shoes, for instance, may benefit the people interested in this particular branch of industry, but it injures all consumers of shoes.
It was feasible in linguistically homogeneous nations to justify import duties in the eyes of the consumers. The German protectionists, for instance, succeeded in convincing the majority of the German voters that it is expedient for them to pay a much higher price than the world market price for wheat in order to increase the revenue of the German wheat producers. But in a country inhabited by different linguistic groups such a justification would not be considered as satisfactory. Those linguistic groups whose industrial production is backward will never acquiesce to an import duty for shoes which would benefit the shoe production of those linguistic groups whose industrial production has reached a higher stage of development. They will call such foreign trade policy an exploitation of their own group. The history of the Austro-Hungarian customs union provides us with ample evidence for the correctness of this statement. Sometimes even within linguistically homogeneous nations the discussion concerning the foreign trade policy favors the spirit of disintegration. Both in the Dominion of Canada and in the Commonwealth of Australia the purely agricultural western parts oppose the protectionist policy of the more industrialized sections and even ventured to propose a dissolution of the customs union.
If the EDU would embark on a policy of protectionism its existence would be doomed.
The EDU will therefore be a country of free trade. There will be no protective tariffs nor other measures for the protection of home industries against foreign competition. There will be neither foreign exchange control nor inflationary measures. There will be neither subsidies nor bounties and no migration barriers. There will be a stable currency system with stable rates of foreign exchange.
All objections raised against such a policy of free trade on the part of a single country within a world of economic nationalism and protectionism are futile. It would be a waste of time to refute again the popular fallacy that such a country would not be able to continue any domestic production and only import from abroad.
The far greater part of Eastern Europe is mostly interested in the export of food and raw material. These agricultural, forest, and mining interests cannot suffer any disadvantage from a policy of free trade. On the other hand, it is obvious that none of the industrial interests of this territory can assume that the excessive protectionism of the past could be continued even if the EDU should not be formed.
Let us consider the two types of foreign trade policy applied in this territory before 1938 in referring to Austria as an instance of agricultural protectionism and to Hungary as an instance of industrial protectionism.
In Austria the non-agricultural section of the population was exploited for the benefit of agriculture. Food prices in Austria were maintained at a level of much more than 200 percent of world market prices. The peasants got from the treasury much more as bounties than they had to pay as taxes. In the mountain districts the peasants got a premium for tilling the land regardless of whether climatic conditions will allow the corn to ripen. For butter the government, paradoxically enough, paid export subsidies, which were much higher than the world market price of butter. It will be impossible to continue these methods after the war to the disadvantage of the impoverished non-agricultural population.
Hungary on the other hand exploited the agricultural population for the benefit of industrial production. The prices of manufactured goods were much higher than in the world market and in the countries of Western Europe and America. A system of more or less concealed export premiums and tax exemptions furthered the export of manufactured goods which were unavailable to the masses of peasants and poor agricultural workers. It is obvious that such a policy will have to be abandoned sooner or later.
The main economic problem which the peoples of Eastern Europe have to face is relative overpopulation. In respect to the natural conditions which this territory offers for production and in respect to the density of population in areas much better endowed by nature all these countries are overpopulated. The abolition of migration barriers in other parts of the world would result in an emigration of scores of millions from Eastern Europe and would create a tendency towards an equalization of the marginal productivity of labor; wages and farmers' income in Eastern Europe would rise. (Of course, the tilling of the poorer soil would be discontinued.) Migration barriers force these peoples to stay at home and put a check on the improvement of their standard of living. But this problem cannot be solved by any scheme limited to the domestic organization of Eastern Europe. It is a world problem.
The second economic problem of these countries is scarcity of capital. It is unlikely that foreign capital will be available for them. Private investors will have more promising offers for the employment of their funds; foreign governments will consider domestic investment as more useful than the export of capital to Eastern Europe.
Even with a smoothly functioning political organization Eastern Europe will remain a poor country with a standard of life which Americans and Britons will judge as a very low one.
But all these sad facts cannot be considered as valid objections against the scheme proposed. There is no other method left for Eastern Europe to improve its economic conditions than the establishment of a durable peace and the abandonment of the policies which wasted the economic resources and the capital accumulated in previous years.
VII. Outlines of the New Order 1. The Area of the EDU
The EDU has to include the territories which in 1933 formed the sovereign states of Albania, Austria, Bulgaria, Czechoslovakia, Danzig, Estonia, Greece, Hungary, Latvia, Lithuania, Poland, Rumania and Jugoslavia.
It has to include the whole territory which in 1913 belonged to the Prussian provinces — Eastern Prussia, Western Prussia, Posen and Silesia. The three first-named provinces were once parts of Poland. They were appropriated by the princes of the House of Hohenzollern, but this conquest did not make them a part of the Holy Roman Empire. The fact that the rulers of these countries were at the same time Electors of Brandenburg had legally and constitutionally no other significance than the fact that the kings of England were Electors (and later kings) of Hanover. Neither did these provinces belong to the German Confederation from 1815–1866. They remained "private property" of the Hohenzollern family. Only after the battle of Koniggrätz in 1866 the king of Prussia incorporated them by his own sovereign decision into the Norddeutscher Bund and later in 1871 into the Deutsches Reich.
Silesia was a part of the Holy Roman Empire only as an adjunct of the Kingdom of Bohemia. In the Sixteenth and Seventeenth Centuries it was ruled by dukes who belonged to a branch of the Piasts, the old royal family of Poland. When Frederick the Great in 1740 embarked on the conquest of Silesia he tried to justify his claims by pointing out that he was the legitimate heir of the Piast family.
All these four provinces are inhabited by a linguistically mixed population. They returned many Polish members to the old German Reichstag. In Eastern Prussia there is a not negligible Lithuanian minority.
Italy has to cede to the EDU all the European countries which it has occupied since 1913, the Dodecanese Islands and the eastern part of the province of Venice, Friuli, a district inhabited by people speaking a Rhaeto-Romanic idiom.
Thus the EDU will include about 700,000 square miles with about 120,000,000 people using 17 different languages. Such a country when united will be strong enough to defend its independence against the three mighty neighbors, Russia, Germany and Italy.
- The Constitution
Every adult will have the right to vote. The parliament — one chamber only, with about 600 members — has to be a fair representation of all citizens. The cabinet has to be responsible to the parliament.
The parliament's first task will be to make a constitution. It will decide whether the head of the EDU should be a President or a hereditary ruler.
The parliament will be the only legislative body. All local and provincial councils will be advisory boards only. Every attempt to give more power to provincial institutions and to local boards would necessarily revive the problems of borders and of minorities.
- Local Government
The former independent states will in the framework of the EDU be nothing else than provinces. Retaining all their honorary forms they will have to comply strictly with the laws and with the administrative provisions of the EDU. But so long as they do not try to violate these laws and regulations they will be free. The loyal and law-abiding government of each state will not be hindered, but strongly supported by the central government.
Special commissaries of the EDU will have to oversee the functioning of every local government. Against all administrative acts of the local authorities the parties will have the right to appeal to this commissary, and to the central government, provided that such acts are not liable to be appealed to a tribunal. All disagreements between the commissary and the local government or between different local governments will be ultimately adjudicated by the central government, which is responsible to the central parliament only. The supremacy of the central government will not be limited by any constitutional prerogatives of local authorities. Disagreements will be settled by the central government and by the central parliament, which will judge and decide every problem in the light of its implications for the smooth working of the total system. If, for instance, there arises a dispute concerning questions of the City of Wilno — one of the innumerable neuralgic points of the East — the solution will be sought not only between the Polish and the Lithuanian local governments or between the Polish and Lithuanian members of the central parliament; the central government and the central parliament will try to find a solution which will do justice to similar cases arising in Budweis, in Temesvar or in Salonica.
In this way it may be possible to have a unitary government with a high degree of administrative decentralization.
- The Budget and the Power to Tax
All financial powers will be vested in the central government and in the central parliament.
The parliament will allocate to every local government for its expenditures a lump sun according to the population of its area. It will, in addition, supervise the spending of this money.
It is further advisable to give to every local government the revenue derived from taxes on real estate situated in its jurisdiction. But in any case the laws regulating these taxes have to be enacted by the central parliament.
With regard to provisions for government bonds issued prior to the establishment of the new order an international agreement between the EDU and the representatives of the foreign bondholders will be necessary. New loans will be floated only by the central government or, with its permission, by the bigger cities.
- The Linguistic Problem
The most delicate problem of the EDU will be the linguistic problem.
All the 17 languages will be treated in an equal way. In every district, county, or community the tribunals, the government agencies and the municipalities will have to use all languages which in their district, county or community are the languages of more than 20 percent of the population.
English has to be used as an international subsidiary language for the dealings between the members of different linguistic groups. All laws have to be published in English and in all 17 national idioms. This system may seem strange and very complicated. But we have to realize that it worked rather satisfactorily in old Austria with 8 languages. Contrary to a widespread error the German language had no constitutional preeminence in imperial Austria.
- Religion
The peaceful coexistence of different denominations can easily be secured by the adoption of the system which has succeeded in the United States of America.
- Education
The governments of Eastern Europe abused the system of compulsory education in order to force the minorities to give up their own languages and to adopt the language of the majority. The EDU will have to be strictly neutral in this respect.
There will be private schools only. Every citizen and every group of citizens will have the right to run educational institutions. If these schools comply with the standards fixed by the central government they are subsidized by a lump sum for every pupil.
The curriculum of the secondary education will include the teaching of English.
The local governments will have the right to take over the administration of some schools. But even in this case the budget of these schools has to be kept independent of the general budget of the local government and no public funds but those allocated by the central government as subsidies for these schools may be used.
- Economic Policy
It is necessary to deny to the government the power to benefit one linguistic group at the expense of others. There will be neither subsidies nor licenses which can be granted or denied ad libitum.
To the general principle that no measures of protectionism should be applied one exception only should be permitted. The importation of commodities from countries which do not treat the imports from the EDU according to the most favored nation standard or do not allow any imports at all may be prohibited or taxed.
- Measure for the Period of Transition
The first president and the members of the first cabinet have to be appointed by the League of Nations. They will have to hand over their functions to the parliament as soon as it is constituted.
For a period of transition foreign citizens — with the exception of Germans, Italians, Russians and the subjects of totalitarian states will be eligible for all public and judiciary offices and functions.
- Working of the System
A foreign visitor, more interested in sightseeing than in the study of constitutional and economic problems, will notice the disappearance of the customs barriers and of the variety of national currency systems, but in all other respects it will be impossible for him to observe any change. He will say, "Now I have visited Hungary and I want to go to Rumania." He will not see the EDU; he will not have the opportunity to meet the agents of the EDU.
There will be the old national flags and anthems. Every member state will have its own postage stamps issued by the unitary postal system of the EDU. There will be coins of every member state, coined with the national emblems and — in monarchies — with the portrait of the king (as in the German Reich from 1873 until 1914). Of course all these coins will be minted by order of the EDU's government and will be legal tender in the whole territory of the EDU. Every member state and every linguistic group will be free to cultivate intellectual relations with foreign countries and to represent its own civilization abroad.
The individual citizen will have to renounce all claims for privileges which could harm other individuals or groups. But he will be free to use his own mother tongue and to bring up his children with the aid of schools where this language is taught. He will not have to consider himself as a citizen of minor status, because all authorities and tribunals will treat him in a fair way.
VIII. The Political Chances of the Proposed Plan
We have to realize that the politicians and the statesmen of these eastern nations are united today on only one point: the rejection of such a proposal. They do not see that the only other alternative is the partition of their territories among Germany, Russia and Italy. They do not see it because they firmly rely on the invincibility of the British and the American forces. They do not imagine that the Americans and the British have any other task in this world than to fight for them an endless sequence of world wars.
It would be merely an evasion of reality if the refugee representatives of these nations would try to convince us that they have the intention of peacefully disposing of their mutual claims in the future. It is true that the Polish and the Czech refugees have made an agreement concerning the delimitation of the boundaries and a future political cooperation. But this scheme will not work when actually put into practice. We have ample experience that all agreements of this type fail because the radical nationalists never accept them. All endeavors at an understanding between Germans and Czechs in old Austria met with disaster because the fanatical youth rejected what the more realistic older leaders had proposed. Refugees are, of course, more ready to compromise than men in power. During the First World War the Czechs and the Slovaks and likewise the Serbs, the Croats and the Slovenes came to an understanding in exile. History has proved the futility of these alleged agreements.
Besides that, we have to realize that the area which is claimed both by the Czechs and by the Poles is comparatively small and of minor importance for each group. There is no hope that a similar agreement ever could be effected between the Poles on the one hand and the Germans, the Lithuanians, the Russians or the Ukrainians on the other hand — or between the Czechs on the one hand and the Germans or the Hungarians or the Slovaks on the other hand.
What is needed is not delimitation of specific borderlines between two groups but a system where the drawing of borderlines no longer creates disaffection among minorities, unrest and irredentism.
Democracy can be maintained in the East only by an impartial government. Within the EDU no single linguistic group will be sufficiently numerous to dominate the rest. The most numerous linguistic group will be the Poles; they will comprise about 20 percent of its whole population.
It is not unlikely that some critics will call the EDU a reconstruction of the old Austrian empire on a broader scale. This is true as far as old Austria (but not Hungary!) was the only power among those ruling in this area which tried to treat all citizens on an equal footing. In the Turkish empire all Christians were pariahs. In Russia, Prussia, and Hungary the governments were eager to force all subjects to give up their mother-tongues and to become Russians, German-speaking Prussians, or Magyars. In Austria the constitution of 1867 granted to every citizen the right to use his own language and provided equality in the use of all languages in court procedure, in the administration, and in educational institutions. The system failed, because the striving for full national independence of every linguistic group hindered its success. Some details of the suggested constitution for the EDU are based on precisely the lessons which this Austrian failure teaches us and at the same time on the shortcomings of the League of Nations minority protection.
There is no other precedent which we could use in framing a new political system for Eastern Europe. The Swiss Confederation cannot be considered as a useful pattern. In Switzerland the cooperation of the three (or four) linguistic groups was undisturbed as long as its economic policy was based on free trade. With the trend towards economic interventionism conditions changed. Today there is a not negligible Nazi party in the German-speaking cantons and a powerful pro-Fascist group in the Ticino. The French-speaking cantons strongly oppose what they call the policy of Berne. Switzerland will have to face serious problems in a not too distant future.
There was still another linguistically mixed democratic country in Europe, Belgium. Here too the linguistic diversion disrupted the political unity. The military defeat of Belgium was to a great extent due to the irrendentism of the Vlames. Belgium will have to solve its linguistic problem in the future.
We do not have to discuss in this context the general problem of government interference with business. It suffices to realize the fact that the system of interventionism can never work satisfactorily where different linguistic groups are determined to use it as a weapon in their wars aiming at mutual extermination.
More serious would be the objection that the territory assigned to the EDU is too large and that the different linguistic groups involved have nothing in common. It seems indeed strange that the Lithuanians should have to cooperate with the Greeks although they never before had had any other mutual relations than those diplomatic ones existing among all nations of the world.
But we have to realize that the EDU has to create peace in a part of the world ridden by age-old struggles among linguistic groups. Within the whole area assigned to the EDU there cannot be discovered any undisputed borderline. If the EDU has to include both the Lithuanians and the Poles, because there is a large area where Poles and Lithuanians live inextricably mixed and which both nations vigorously claim for themselves, it has to include the Czechs and the Ukrainians too because the same conditions as between the Poles and the Lithuanians prevail between the Poles and the Czechs and between the Poles and the Ukrainians. Then the Hungarians have to be included for the same reasons, next the Serbs and consequently all other nations which claim parts of the territory known as Macedonia, i.e., the Bulgarians, the Albanians and the Greeks.
For the smooth functioning of the EDU it is not required that the Greeks should consider the Lithuanians as friends and brothers. (Although it seems probable that they would have more friendly feelings for them than for their immediate neighbors.) What is needed is nothing else than the conviction of the politicians of all these peoples that it is no longer possible to oppress men who happen to speak a foreign language. They do not have to love one another but to stop inflicting harm on one another.
The EDU will include many millions of German-speaking citizens and some hundreds of thousands of Italian-speaking citizens. It cannot be denied that the hatred engendered by the methods used by the Nazis and the Fascists during the present war will not disappear at once. It will be difficult for Poles and Czechs to meet for collaboration with Germans.
But none of these objections can be considered as valid. There is no other solution for the East European problem which could give to these nations a life of peace and political independence.
Conclusion The third point of the Atlantic Declaration establishes as a common principle in the national policies both of the United States and of the British Empire that "they respect the right of all peoples to choose the form of government under which they will live; and they wish to see sovereign rights and self-government restored to those who have been forcibly deprived of them." The sixth point expresses the "hope to see established a peace which will afford to all nations the means of dwelling safely within their own boundaries, and which will afford assurance that all the men in all the lands may live out their lives in freedom from fear and want."
These principles are incompatible with the conditions which have prevailed for ages in Eastern Europe. There were many millions of people who were forced to live under governments which they had not chosen. There were countries where 20 percent, 30 percent or even 40 percent of the population were irredentists and expected to be redeemed by the armed interference of foreign powers. These millions considered themselves as having been forcibly deprived of their sovereign rights and self-government. They believed that they were prevented from living out their lives in freedom from fear and want.
The proposed scheme for an Eastern Democratic Union is the only plan which could adjust political and economic conditions in Eastern Europe to the requirements of the Atlantic Declaration. Its execution would impose on no nation any other sacrifice than the renunciation of the power to inflict harm on other linguistic groups. But it would on the other hand secure them against the risk of falling victim to oppression by other nations. It would make Eastern Europe safe both for peace and democracy.
Season 2, Episode 15. Despite the bitter defeat in the First Battle of Rivas, William Walker and his small army of American filibusters successfully take control of the Democratico capital of Nicaragua, ending the Nicaraguan civil war. This episode is Part 2 of 6 of the story of William Walker’s attempt to establish his own Republic of Nicaragua.
Season 2, Episode 14. Looking for adventure and glory, William Walker leads a group of Americans into Nicaragua to join the country’s civil war, with the hope of “Americanizing” Latin America. This episode is the Part 1 of 6 of the story of William Walker’s attempt at establishing his own Republic of Nicaragua.
Correction: I refer to John C. Calhoun as the vice-president, but this was well after the time Calhoun was vice-president, and he was a US Senator during the majority of the period referenced. I believe this mistake has been removed from every version except for the YouTube version.
Season 2, Episode 13. After Narciso López’s first attempt at overthrowing Spanish rule in Cuba, he found more support from American southerners and returned for a second try. Although he would fail, the idea of expanding slavery into new territories was now in the minds of a number of southern expansionists.
Correction: I refer to William Crittenden as both the son and nephew of Attorney General John J. Crittenden at different points in the episode. He was the nephew.
Season 2, Episode 12. When Cuban slave owners started to worry that Spain was going to emancipate their slaves, Narciso López thought that the time was ripe to start a revolution to overthrow Spanish rule. American expansionists hoping for the annexation of Cuba volunteered to help López, and many of these expansionists wanted to see Cuba turned into a new slave state.
Our guest Scott Horton just released an important new book—Fools Errand: Time to End the War in Afghanistan. This is the definitive treatment of the war itself, the history and factions involved, and the disturbing policy mindset that keeps this deeply unpopular conflict churning. Don't miss this interview with one of the leading antiwar libertarians of our time.
Season 1, Episode 3. Chris Calton looks at the history of opium use around the world. The tale takes us to baby farms in Victorian England, 19th Century China, and even one of the most prominent examples of fake news from the Washington Post.
For further reading, see Opium: A History edited by Martin Booth (St. Martin's Griffin, 1996).
The Populist Explosion: How the Great Recession Transformed American and European Politicsby John B. JudisColumbia Global Reports, 2016
Donald Trump’s victory in the November 2016 election for president of the United States astonished the world. Though he had never held political office, he won the Republican nomination. The leading polls predicted his loss to Hillary Clinton in the general election, but he prevailed. How was this possible? John Judis’s book was written before Trump’s ultimate triumph, but it offers an important account of the reasons for Trump’s rise to prominence. Unfortunately, this account rests on bad economics.
Judis sets the Trump movement within the broad context of populism. “There is a kind of populist politics that originated in the United States in the nineteenth century, has recurred in the twentieth and twenty-first centuries, and in the 1970s began to appear in Western Europe. Whereas populist parties and movements in Latin America have sometimes tried to subvert the competition for power, the populist campaigns and movements in the United States have embraced it. In the last decades, these parties and movements have converged in their concerns, and in the wake of the Great Recession [of 2008], they have surged. That’s the subject of this book.”
The type of populism Judis considers comes in two varieties. “Leftwing populists champion the people against an elite or establishment. Theirs is a vertical politics of the bottom and middle arrayed against the top. Rightwing populists champion the people against an elite they accuse of coddling a third group, which can consist of Islamists or African American militants. Leftwing populism is dyadic. Rightwing populism is triadic. It looks upward, but also down upon an out group.”
Judis is right to see populism as a revolt against the elite, but his answer to the obvious question that next arises suffers from a fundamental flaw. If populists are against the elite, why do they think the elite has failed? As Judis sees matters, the capitalist economy periodically breaks down. It proves unable to provide adequately for large groups of the population, hence people rise up against the elites until government limits the market to deal with their concerns. But he fails to show that the difficulties result from defects in the free market but instead takes for granted that government intervention is needed.
This pattern began with what Judis sees as the origins of populism. American farmers near the end of the nineteenth century were being crushed by the unregulated market that both the Democrats and Republicans favored. “The populists were the first to call for the government to regulate and even nationalize industries that were integral to the economy, like the railroads; they wanted government to reduce the economic inequality that capitalism, left to its own devices, was creating. … Eventually, much of the populists’ agenda … was incorporated into the New Deal and the outlook of New Deal liberalism.”
Capitalism, according to Judis, again needed the guiding hand of government to cope with the Great Depression. Once more, he holds, populism led the way. Judis’s unlikely hero is Louisiana governor Huey Long, whose “Share Our Wealth” nostrum worried Franklin Roosevelt. He had been elected on a conservative platform; but unless he could move in Long’s direction, he would face popular discontent. “That fear was an important factor in Roosevelt and the Democrats joining forces to pass what was called the “second New Deal.” Unlike the first, it dealt directly with the issue of economic inequality that Long had repeatedly raised.”
Judis views with approval the New Deal policies that prevailed from the 1940s to the 1960s; unfortunately, in his view, after that a dire new policy challenged the established order. The menace was “neoliberalism.” “This meant, in the United States, the modification, but not the wholesale abandonment, of New Deal liberalism — support for the New Deal safety net, but beyond that, priority to market imperatives.”
The new policy led to trouble, and free trade bore a substantial amount of the blame. “[M]any Americans were troubled by the continuing loss of manufacturing jobs to Japan and Western Europe.” Dissatisfaction with the economy led to the Ross Perot movement, but this soon fizzled out. “Neoliberalism,” which Judis considers the chief economic error of modern times, prevailed; and inequality and loss of manufacturing jobs continued apace. “With the economy booming in the late 1990s, neoliberalism seemed to be working. The gap between the very rich and everyone else was growing, legal and illegal immigration was soaring, and America’s trade deficit was increasing, but neither Perot … nor [Pat] Buchanan … could get any traction.”
Matters changed dramatically after the 2008 recession, and these changes in Judis’s view account for Trump’s rise. Of course Judis blames neoliberalism for the economic crisis. “When the housing bubble burst in 2007, millions lost their jobs and financial institutions were put at risk. … But the crash was also precipitated by the politics of neoliberalism — by financial deregulation … by trade and investment policies that led to unwieldy dollar surpluses in the hands of China and other Asian nations; and by tax policies and anti-union business policies that widened economic inequality and led to the need to prop up consumer demand through the accumulation of debt.”
The economy never fully recovered, and Trump’s campaign took full advantage of this. “Trump’s political base was among the [Republican] party’s white working and middle-class voters. … He had become the voice of middle American radicalism and more broadly of the white Americans who felt left behind by globalization and the shift to a post-industrial economy.”
The revulsion against neoliberalism was worldwide. In Spain and Greece, for example, the “sovereign debt crisis” threatened to bring about economic ruin. “As the debts mounted, the bond rating agencies lowered the countries’ ratings, and interest rates on their payments rose, enlarging, in effect, the debts themselves.” In normal circumstances, these nations would have devalued their currencies; but the heartless neoliberals in control of the Eurozone’s main banks would not permit this. Instead, they demanded austerity measures. Small wonder that populist movements, wishing to end interest slavery, gained power and influence.
What is one to make of all this? Readers of The Austrian will be in little doubt that Judis is economically illiterate. Why is a trade deficit bad? What is the evidence that trade destroys more jobs than it creates? Why must a prosperous economy avert a relative decline in manufacturing jobs? No doubt people whose income fails to increase will be dissatisfied, but do people really care that the very rich make much more than they do? Why do high wages depend on strong labor unions? Is extensive government spending required to boost consumer demand during a recession? I cannot here examine Judis’s reasons for these various contentions, because he offers none. One illustration of his dubious thinking must here suffice. He presents the “sovereign debt crisis” as a failure of unfettered capitalism. But the situation is one in which governments seek new loans to pay debts. Even if the debts arose through government efforts to bail out failing banks, how is any of this a failure of the market, rather than an illustration of the dangers of government meddling in the economy?
Where has Judis gotten all this nonsense? Besides the usual suspects, such as Paul Krugman, he has a more exotic source, the Argentine populist Marxist Ernesto Laclau, and his wife, Chantal Mouffe. “In analyzing how it [populism] works, I was influenced by the late Ernesto Laclau’s book on Populist Reason (Verso, 2005). Laclau portrays populism as a logic that can be used by the left as well as the right, and he explains how the demands that populists make are different from those of other parties and candidates.” I venture to suggest that Judis would have found Mises a better guide to economics than this dissident Marxist.
My remarks on Judis must meet an obvious objection. If, from the Austrian point of view, he makes mistakes about economics, why does this matter? Could he not respond that he is trying to present the opinions of the populists themselves, and here what matters is what they believe, true or not?
I do not think this objection succeeds. Judis’s mistakes about economics lead him to miss key aspects of the populist movement that culminated in Trump. Much of this was motivated by opposition to a powerful and intrusive state. Judis recognizes populist opposition to high taxes, but he downplays this. Opposition to taxes was in fact basic not only to populism in America but in Europe as well, as the 1950s Poujadist movement in France well illustrates. (On this, see the important article by Murray Rothbard, “Poujade: Menace or Promise?”) In his discussion of the 2008 recession, Judis says nothing about the heroic campaign of Ron Paul to end the Fed, despite the great interest in this of many of Trump’s supporters. Judis has devoted much study to the populists, but his unexamined assumptions about economics limit his book’s usefulness.
David Gordon is Senior Fellow at the Mises Institute, and editor of The Mises Review.
T. Hunt Tooley is chairman of the department of history at Austin College and an Associated Scholar of the Mises Institute. In this interview with The Austrian, Dr. Tooley examines what we can learn today from the First World War.
THE AUSTRIAN: It has now been 100 years since the United States entered the First World War. Was getting involved in foreign wars in this way a break from past policy, or was the US already going in this direction?
HUNT TOOLEY: I used to think of American intervention more in terms of a break from the past. The Spanish-American War episode seemed a precursor for international interventionism, and perhaps even an aberration. But looking objectively at various events in modern American and world history, I came to realize that the germs of interventionism were there from the beginning. In this light, the ”Farewell Address” becomes Washington’s warning against tendencies already present. The Mexican War becomes an even bolder aggression than it is often considered. The American state at war from 1861 to 1865 developing notions of invasions as crusades, of inflationary financing that made war so much easier to engage in, of centralizing the executive control and ramping up war powers of the executive.
And after 1865 the United States launched several expansionary initiatives above and beyond the ongoing wars against American Indians. Most of these initiatives concerned the Pacific. The United States engaged in a short, sharp, intentional invasion of Korea in 1871, a venture euphemistically remembered, if at all, as ”the United States Expedition to Korea.” The ”acquisition” of Hawaii in the 1890s was in essence a foreign intervention against a functioning kingdom. These and other episodes reinforce the interpretation of interventionism as a continuum. As do the multiple interventions following the Spanish-American War, invasions of many Latin American countries and the Philippines under Roosevelt, Taft, and Wilson.
But if American intervention in the European war in 1917 represented continuity, it was still a departure, both in size and extent and in being unattached completely from any geographically based vision. For America, the Great War introduced the project of intervening anywhere, not just in our (admittedly enormous) backyard.
TA: What do you see as some of the most damaging effects of the war on the home front, and do any of these developments affect us today?
HT: I see the home front as the main front for each of the belligerents. In some countries, it resulted in the birth of totalitarianism. In some countries dictatorships of one variety or another.
In our country and others the Progressive, control-oriented state emerged. Wilson had longed for this. John Dewey had longed for this. Many Progressives, both Democrat and Republican, longed for a managerial state that could dispense with the rights of individuals and constitutional limitations. Progressive Woodrow Wilson had for years chafed at the inefficiency of constitutional government, above all the functions of Congress. The war gave him latitude to intervene in many, many economic, social, and intellectual interactions. Just days before the Declaration of War, Wilson asked his closest advisor whether he should bother eliciting a war declaration from Congress or whether he should just start the hostilities and then present the country (and Congress) with a fait accompli. By that time, federal agents were already going through the mails. Opponents of the war were soon to be jailed for sedition. Conscientious objectors would receive brutal punishment, as would pacifists and various other nay-sayers.
Meanwhile, the war government restructured the economy, favoring huge corporations and helping them to gobble up smaller local businesses. Federal income tax rates for the lowest wage earners shot up during the nineteen months of the war by a factor of six. For the wealthy, ”progressive” tax rates rose from 10 percent at the opening of the war to 70 percent at its end. At the same time, ”boards” governing fuel, food, transportation, and other aspects of life formerly based on relatively free market calculations, disrupted the freedoms and efficiencies of the market drastically.
Many of these measures were scaled back in the twenties, but almost never all the way. In any case, the Pandora’s box had been opened, and most of the Federal measures designed to control aspects of life which had previously been private and voluntary gained footholds which have never been dislodged.
TA: Austrian critics of the war have also noted the role of central banking in the war. Is this one way we might say the war was the first truly “modern” war?
HT: In my opinion, yes. Since the seventeenth century, central banks have tended to help keep the state on a war footing, whether at war or not, and this goal included shaping of national debt and more. Inflation has likewise helped finance war since well before Henry VIII carried out the ”Great Debasement” of English coinage. I would say that ”modern” aspect of the role of central banks in World War I was the combination of two activities: the central banks’ older tradition of keeping the state on a permanent war alert and the new potential for monetary manipulation introduced in Europe and the United States before the war. In the case of the United States, I am thinking of the Federal Reserve System. So the older mercantilist tendencies combined with more modern manipulation of currency and credit to unleash unimagined possibilities for protracted, massive war.
TA: World War II is still spoken of today as “the good war.” It does not seem World War I gets the same treatment when we speak of the war — assuming we ever speak of it at all. What is the common view of the war today and how has this changed over time?
HT: First, it seems to me this contradiction has several causes. For one thing, WWII and the Cold War to some extent erased the public memory of the First World War. When I was a kid, the World War I memorial in my hometown represented to me a past so remote I could hardly imagine it — even though my grandparents’ generation had been marked by it. But so much had happened since then! As I grew up, World War II was all around us: I knew veterans of POW camps, survivors of grisly battles, men who told hair-raising stories of dive-bombing Japanese ships. And unlike the fairly stolid and formal Great War generation, the second war vets were open, relaxed, ironic, and usually funny. They were easy to admire, and those writers who coined the ”good war” phrase had an easy job transferring these feelings of personal admiration to the American war effort.
But of course the second war is also the ”good war” for many because of the Nazis. For all the first war propaganda, the Kaiser was no Hitler.
Of course the popular narrative of the Second World War failed to mention that Hitler and Stalin started the conflict as a team or that of these two colossal killers, Stalin was the more prolific. Much of the seamier side of the Allied Cause has remained unknown to the majority and was for a long time simply not discussed in the triumphal histories of the Second World War.
The First World War had been impugned within the decade following it by revisionist analysis and soldiers’ memoirs. The 1960s saw a small wave of renewed interest in the First World War, but much of this was in the form of technical diplomatic history. Some state-friendly historians tried to rehabilitate leaders who had been discredited — British Field Marshal Haig, for example. But even these re-evaluations were part of the technical historical literature.
General interest in World War I in the United States and Western Europe revived beginning in the 1980s because of two powerful historical works: the monumental book by Paul Fussell, The Great War and Modern Memory, and the elegant early book by John Keegan, The Face of Battle, both published in the mid-seventies. Other historians followed suit. British government schools adopted special study of the war focusing on ”the war poets.” By the 1990s, histories of the first war had a large audience.
So much of the new material from the eighties onward has been focused on individual soldiers that it has been hard for the writers of popular history in the former Allied countries to go back to the triumphalist versions of the twenties. Still, I do get the feeling that within the English-speaking world, many of the recent works on the occasion of the centennial sit on a kind of neocon subtext, justifying brutal war measures for the sake of power and national greatness. The equivalent histories in Germany and Austria (and to some extent France) are quite different, in many ways based on a more sober assessment of the conflict.
TA: In the past, you’ve written of the role of Murray Rothbard in WWI revisionism. What role should that play in the minds of revisionists of the war today?
HT: Rothbard was writing in the direct tradition of the revisionists of the twenties and thirties, of course as very much a part of that tradition. But his technical understanding of and brilliant insights into economics, finance, banking, and other aspects of modern war-making, really extend the work of Tansill, Millis, H. C. Peterson and Engelbrecht/Hanighen. On a number of issues, Rothbard filled in the blanks on issues which the earlier revisionists had raised. In my own understanding of the origins of the war, Rothbard’s view of American economic and political planning for ”world power” is really crucially important.
TA: When WWI begins, Europe had just experienced nearly a century without any large-scale wars. Did this long period of peace somehow make the Great War worse? Is there a problem of complacency when there is a long period of peace, and could we find ourselves in a similar situation today?
HT: In answer to each of these questions, probably so. Historian Gordon Craig once quoted the words of an older German woman overheard among the jubilant crowds in Berlin at the outbreak of the war in 1914. Her complaint amidst the cheering: ”War? But what about the vacation I was about to take?!” Both the cheering and the complaint go to illustrate your point.
Another aspect of the same problem is that there had been a good bit of warfare in nineteenth-century Europe, fought mostly in faraway places against ”evil” and corrupt rulers attempting to stand in the way of Western empire. Or against violent popular opposition to colonial control. These foreign clashes were great fodder for escapism in calm belle époque Europe. In the sensationalist newspapers, massacres of Hereros, Chinese, Filipinos, and Sudanese in the period before World War I were always seen as famous victories, dangerous and exciting! Conrad’s Heart of Darkness and Mark Twain’s denunciations of imperial cruelties were the exception, not the rule. And much of the early war journalism and even war fiction up to 1916 partook of this escapist tradition.
So there was a long peace, yes, and many thought it would last. But this normalization of violence through empire also played a role in the mood of Europeans as the war broke out. It is easier to glamorize and sell war than to glamorize and sell negotiation and compromise.
When you hear public outcries for risking large-scale war against North Korea or Russia, or when you listen to the breathless rhetoric on the necessity of bombing some foreign population in some faraway quarter of the globe for some noble purpose — yes, I think there are many parallels to the history of World War I.
Quarterly Journal of Austrian Economics 19, no. 2 (Summer 2016)
If it’s true that Wayne Booth inspired Deirdre McCloskey’s interest in the study of rhetoric, then it’s also true—happily, in my view—that McCloskey has refused to mimic Booth’s programmatic, formulaic methods and boorish insistence on prosaic succinctness. Bourgeois Equality is McCloskey’s third volume in a monumental trilogy that began with The Bourgeois Virtues (2006) and Bourgeois Dignity (2010), each published by the University of Chicago Press. This latest volume is a Big Book, alike in kind but not in theme to Jacques Barzun’s From Dawn to Decadence (2000), Camille Paglia’s Sexual Personae (1990), or Herald Berman’s Law and Revolution (1983) and Law and Revolution II (2006). It’s meandering and personal, blending scholarship with an essayistic style that recalls Montaigne or Emerson.
McCloskey’s elastic arguments are shaped by informal narrative and enlivened by her plain and playful voice. At times humorous, rambling, and deliberately erratic, she gives the distinct impression that she’s simply telling a story, one that happens to validate a thesis. She’s having fun. Imagine Phillip Lopate articulating economic history. McCloskey is, in this regard, a latter-day Edward Gibbon, adopting a mode and persona that’s currently unfashionable among mainstream historians, except that she’s more lighthearted than Gibbon, and unashamedly optimistic.
The Quarterly Journal of Austrian Economics
Vol. 19 | No. 2 | 214–222Summer 2016
Book Review
Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World
Deirdre McCloskeyChicago: University of Chicago Press, 2016, 787 pp.
Allen MendenhallAllen Mendenhall (allenmendenhall.com) is Associate Dean and the Director of the Blackstone Center for Law and Liberty at Faulkner University’s Thomas Goode Jones School of Law.
If it’s true that Wayne Booth inspired Deirdre McCloskey’s interest in the study of rhetoric, then it’s also true—happily, in my view—that McCloskey has refused to mimic Booth’s programmatic, formulaic methods and boorish insistence on prosaic succinctness. Bourgeois Equality is McCloskey’s third volume in a monumental trilogy that began with The Bourgeois Virtues (2006) and Bourgeois Dignity (2010), each published by the University of Chicago Press. This latest volume is a Big Book, alike in kind but not in theme to Jacques Barzun’s From Dawn to Decadence (2000), Camille Paglia’s Sexual Personae (1990), or Herald Berman’s Law and Revolution (1983) and Law and Revolution II (2006). It’s meandering and personal, blending scholarship with an essayistic style that recalls Montaigne or Emerson.
McCloskey’s elastic arguments are shaped by informal narrative and enlivened by her plain and playful voice. At times humorous, rambling, and deliberately erratic, she gives the distinct impression that she’s simply telling a story, one that happens to validate a thesis. She’s having fun. Imagine Phillip Lopate articulating economic history. McCloskey is, in this regard, a latter-day Edward Gibbon, adopting a mode and persona that’s currently unfashionable among mainstream historians, except that she’s more lighthearted than Gibbon, and unashamedly optimistic.
Writing with an air of confidence, McCloskey submits, contra Thomas Piketty, that ideas and ideology—not capital accumulation or material resources—have caused widespread economic development. Since 1800, worldwide material wealth has increased and proliferated; the quality of life in poor countries has risen—even if it remains unequal to that of more prosperous countries—and the typical human being now enjoys access to the food, goods, services, medicine, and healthcare that, in earlier centuries, were available to only a select few in the richest parts of the globe. The transition from poverty to wealth was occasioned by shifting rhetoric that reflected an emerging ethical consensus. The rhetorical-ethical change involved people’s “attitudes toward other humans” (p. xxiii), namely, the recognition of shared experience and “sympathy,” as Adam Smith stated in The Theory of Moral Sentiments. Attributing human progress to ideas enables McCloskey to advocate the norms and principles that facilitated economic growth and social improvement (e.g., class mobility and fluidity) while generating extensive prosperity. Thus, her project is at once scholarly and tendentious: a study of the conditions and principles that, in turn, she promotes.
She argues that commercialism flourished in the eighteenth century under the influence of ideas—such as “human equality of liberty in law and of dignity and esteem” (p. xxix)—that were packaged in memorable rhetoric and aesthetics. “Not matter, mainly, but ideas” caused the Great Enrichment (p. 643). In other words, “[t]he original and sustaining causes of the modern world […] were ethical, not material,” and they included “the new and liberal economic idea of liberty for ordinary people and the new and democratic social idea of dignity for them” (p. xxxi). This thesis about liberty and dignity is clear and unmistakable if only because it is repetitive. McCloskey has a habit of reminding readers—in case you missed her point the first, second, or fifty-seventh time around—that the causes of the Industrial Revolution and the Great Enrichment were ideas, not “narrowly economic or political or legal changes” (p. 470). She maintains, to this end, that the Scottish Enlightenment succeeded in combining the concepts of liberty and dignity into a desirable form of equality—not equality of outcomes, of course, but of opportunity and treatment under the law. And the Scottish model, to her mind, stands in contradistinction to the French example of centralized, top-down codification, command, planning, and design.
A perennial villain lurks in the pages of her history: the “clerisy,” which is an “appendage of the bourgeoisie” (p. 597) and often dubbed “the elite” in regular parlance. McCloskey calls the clerisy “the sons of bourgeois fathers” (p. xvii) and “neo-aristocratic” (p. 440). The clerisy includes those “artists, intellectuals, journalists, professionals, and bureaucrats” who resent “the commercial and bettering bourgeoisie” (p. xvi). The clerisy seeks, in different ways at different times, to extinguish unfettered competition with exclusive, illiberal, irrevocable grants and privileges that are odious to free society and offensive to the rights of average consumers. “Early on,” says McCloskey, referring to the period in Europe after the revolutionary year 1848, “the clerisy began to declare that ordinary people are misled in trading, and so require expert protection and supervision” (p. 609). The clerisy since then has been characterized by paternalism and a sense of superiority.
Because the clerisy is shape-shifting, assuming various forms from time to time and place to place, it’s a tough concept to pin down. The word “clerisy” does not appear in the book’s index to permit further scrutiny. By contrast, McCloskey’s general arguments are easy to follow because the book is separated into parts with questions as their titles; subparts consisting of one-sentence headings answer those questions.
In a massive tour de force such as this, readers are bound to take issue with certain interpretive claims. Historians will find McCloskey’s summaries to be too breezy. Even libertarians will accuse her of overlooking manifest wrongs that occurred during the periods she surveys. My complaints are few but severe. For instance, McCloskey is, I believe, either careless or mistaken to announce that, during the nineteenth and early twentieth century,McCloskey is vague about the period to which she refers, but the reader may infer, based on surrounding references to the nineteenth and twentieth centuries, that she is locating this trend in the period I have identified. “under the influence of a version of science,” in a territory that’s never specifically identified, “the right seized upon social Darwinism and eugenics to devalue the liberty and dignity of ordinary people, and to elevate the nation’s mission above the mere individual person, recommending, for example, colonialism and compulsory sterilization and the cleansing power of war” (p. xviii).
Let’s hope that it’s innocent negligence rather than willful distortion that underlies this odd, unqualified, categorical assertion. Adam Cohen’s Imbeciles (2016) and Thomas C. Leonard’s Illiberal Reformers (2016) describe how, in the United States, social Darwinism and eugenics were adopted primarily, though not exclusively, by the Left, not the Right. These recent books come on the heels of several scholarly treatments of this subject: Thomas M. Shapiro’s Population Control Politics (1985), Philip R. Reilly’s The Surgical Solution (1991), Joel Braslow’s Mental Ills and Bodily Cures (1997), Wendy Kline’s Building a Better Race (2001), Stefan Kuhl’s The Nazi Connection (2002), Nancy Ordover’s American Eugenics (2003), Christine Rosen’s Preaching Eugenics (2004), Christina Cogdell’s Eugenic Design (2004), Gregory Michael Dorr’s Segregation’s Science (2008), Paul A. Lombardo’s edition A Century of Eugenics in America (2011), and Alexander Minna Stern’s Eugenic Nation (2016). These represent only a small sampling.
Is McCloskey unware of these texts? Probably not: she reviewed Leonard’s book for Reason, although she did so after her own book reached press. At any rate, would she have us believe that Emma Goldman, George Bernard Shaw, Eugene Debs, Marie Stopes, Margaret Sanger, John Maynard Keynes, Lester Ward, and W. E. B. Du Bois were eugenicist agitators for the political Right? If so, she should supply her definition of “Right,” since it would go against commonly accepted meanings. On the matter of colonialism and war, self-identified members of the Old Right such as Albert Jay Nock, John Flynn, and Senator Robert Taft advocated precisely the opposite of what McCloskey characterizes as “Right.” These men opposed, among other things, military interventionism and adventurism. The trouble is that McCloskey’s muddying of the signifiers “Left” and “Right” comes so early in the book—in the “Exordium”—that readers may lose trust in her, question her credibility, and begin to suspect the labels and arguments in her later chapters.
Other undefined terms only make matters worse, ensuring that McCloskey will alienate many academics, who, as a class, are already inclined to reject her libertarian premises. She throws around the term “Romanticism” as if its referent were eminently clear and uncontested: “a conservative and Romantic vision” (p. xviii); “science fiction and horror fiction [are] … offshoots of Romanticism” (p. 30); “[Jane Austen] is not a Romantic novelist … [because] [s]he does not take Art as a model for life, and does not elevate the Artist to a lonely pinnacle of heroism, or worship of the Middle Ages, or adopt any of the other, antibourgeois themes of Novalis, [Franz] Brentano, Sir Walter Scott, and later Romantics” (p. 170); “Romanticism around 1800 revived talk of hope and faith and a love for Art or Nature or the Revolution as a necessary transcendent in people’s lives” (p. 171); “Romantic candor” (p. 242); “the late eighteenth-century Romantic literary critics in England had no idea what John Milton was on about [sic], because they had set aside the rigorously Calvinist theology that structured his poetry” (p. 334); “the nationalist tradition of Romantic writing of history” (p. 353); “Romantic … hostilities to … democratic rhetoric” (p. 510); “[i]n the eighteenth century … the idea of autonomy triumphed, at any rate among the progressive clerisy, and then became a leading Romantic idea, á la Victor Hugo” (p. 636); and “the Romantic conservative Thomas Carlyle” (p. 643).
To allege that the clerisy was “thrilled by the Romantic radicalism of books like Mein Kampf or What Is to Be Done” (p. xviii) is also recklessly to associate the philosophies of, say, Keats or Coleridge or Wordsworth with the exterminatory fantasies of Hitler and Lenin. McCloskey might have guarded against this misleading conflation by distinguishing German idealism or contextualizing Hegel or by being more vigilant with diction and definition. Her loose language will leave some experts (I do not profess to be one) scratching or shaking their heads and, more problematic, some non-experts with misconceptions and misplaced targets of enmity. One imagines the overeager and well-meaning undergraduate, having read Bourgeois Equality, setting out to demonize William Blake or destroy the reputation of Percy Shelly, about whom Paul Cantor has written judiciously.See, e.g., Paul Cantor (1997). It is both surprising and disappointing that McCloskey never references Paul Cantor in her book, not even in her chapters on Shakespeare. Cantor might have added some interesting nuance to McCloskey’s treatment of Dickens. See, e.g., McCloskey at pp. 156, 165, 274, 557, 591–592, 600, 626, and Cantor and Cox (2009) at pp. 50–52, 54–56, 61–62, 85–87, 90, 92–93. Wouldn’t originality, imagination, creativity, and individualism—widely accepted markers of Romanticism—appeal to McCloskey? Yet her unconditionally derogatory treatment of Romanticism—which she portrays as a fixed, monolithic, self-evident thing—undermines aspects of that fluctuating movement, period, style, culture, and attitude that are, or seem to be, consistent with her Weltanschauung.
But I protest too much. These complaints should not diminish what McCloskey has accomplished. Would that we had more grand studies that mapped ideas and traced influences across cultures, communities, and eras. McCloskey takes the long view, as we all should. Her focus on rhetoric is crucial to the future of liberty if, given the technological advances we have made, the “work we do will be more and more about decisions and persuading others to agree, changing minds, and less and less about implementation by hand” (p. 498). Equally significant is her embrace of humanomics—defined as “the story [of] a complete human being, with her ethics and language and upbringing” (p. xx)—which materializes in casual references to Henrik Ibsen’s plays, challenges to the depiction of John Milton “as a lonely poet in a garret writing merely to the starry heavens” (p. 393), analyses of Jane Austen’s novels, and portrayals of Elizabethan England. Her historical and narrative arc enables us to contextualize our own moment, with all of its troubles and possibilities.
Best of all, her book is inspiring and exhilarating and brimming with rousing imperatives and moving calls to action. “Let us, then,” she says at one point, “not reject the blessings of economic growth on account of planning or pessimism, the busybody if well-intentioned rationalism of some voices of the French Enlightenment or the adolescent if charming doubts of some voices of the German Romantic movement, fashionable though both attitudes have long been among the clerisy. As rational optimists, let us celebrate the Great Enrichment, and the rhetorical changes in freer societies that caused it” (p. 146). At another point she encourages her audience to guard against “both cynicism and utopianism” (p. 540), and elsewhere to heed “trade-tested cooperation, competition, and conservation in the right mix” (p. 523). These little nudges lend her credibility insofar as they reveal her true colors, as it were, and demonstrate that she is not attempting—as is the academic wont—to hide her prejudices and conceal her beliefs behind pretended objectivities.
Poverty is relative and, hence, permanent and ineradicable, despite McCloskey’s claim that we can “end poverty” (p. 8). If, tomorrow, we woke up and the wealth of each living person were magically to multiply twentyfold—even fiftyfold—there would still be people at the bottom. The quality of life at the bottom, however, would be vastly improved. The current manifestation of global poverty shows how far we as a species have advanced in the last few centuries. McCloskey is right: We should pursue the ideas that accelerated and achieved human flourishing, that demonstrably brought people out of distress and destitution. Hard sciences and mathematical models are insufficient in themselves to convey the magnitude and splendor of these ideas and their accomplishments. Hence we should welcome and produce more books like McCloskey’s that undertake a “rhetorical-ethical Revaluation” to both examine and celebrate “a society of open inquiry,” one which not only “depends on rhetoric in its politics and in its science and in its economy,” but which also yields intellectual creativity and political freedom (p. 650). In McCloskey’s approach, economics and the humanities are not mutually exclusive; rather, they are mutually illuminating and, in fact, indispensably and inextricably tied. An economics that forsakes the dignity of the human person and his capacity for creativity and aesthetics does so at its own peril and to its own disgrace. All economics is, at its core, humanomics. We could do without the latter term if we understood the former.
REFERENCES
Barzun, Jacques. 2000. From Dawn to Decadence: 500 Years of Western Cultural Life, 1500 to the Present. New York: HarperCollins.
Berman, Harold J. 1983. Law and Revolution: The Formation of the Western Legal Tradition. Cambridge, Mass.: Harvard University Press, 2003.
——. 2006. Law and Revolution II: The Impact of the Protestant Reformations on the Western Legal Tradition. Cambridge, Mass.: Harvard University Press.
Braslow, Joel. 1997. Mental Ills and Bodily Cures: Psychiatric Treatment in the First Half of the Twentieth Century. Berkeley and Los Angeles: University of California Press.
Cantor, Paul. 1997. “The Poet as Economist: Shelley’s Critique of Paper Money and the British National Debt,” Journal of Libertarian Studies 13, no. 1: 21–44.
Cantor, Paul, and Stephen Cox, eds. 2009. Literature and the Economics of Liberty. Auburn, Ala.: Ludwig von Mises Institute.
Cogdell, Christina. 2004. Eugenic Design. Philadelphia: University of Pennsylvania Press.
Cohen, Adam. 2016. Imbeciles. London: Penguin Press.
Dorr, Gregory M. 2008. Segregation’s Science. Charlottesville, Va.: University of Virginia Press.
Kline, Wendy. 2001. Building a Better Race. Berkeley and Los Angeles: University of California Press.
Kuhl, Stefan. 2002. The Nazi Connection. Oxford: Oxford University Press.
Leonard, Thomas C. 2016. Illiberal Reformers. Princeton: Princeton University Press.
Lombardo, Paul A. 2011. A Century of Eugenics in America. Bloomington, Ind.: Indiana University Press.
McCloskey, Deirdre. 2006. The Bourgeois Virtues. Chicago: University of Chicago Press.
——. 2010. Bourgeois Dignity. Chicago: University of Chicago Press.
Ordover, Nancy. 2003. American Eugenics. Minneapolis: University of Minnesota Press.
Paglia, Camille. 1990. Sexual Personae: Art and Decadence from Nefertiti to Emily Dickinson. New Haven, Conn.: Yale University Press.
Reilly, Philip R. 1991. The Surgical Solution. Baltimore: Johns Hopkins University Press.
Rosen, Christine. 2004. Preaching Eugenics. Oxford: Oxford University Press.
Shapiro, Thomas M. 1985. Population Control Politics. Philadelphia: Temple University Press.
Stern, Alexander Minna. 2016. Eugenic Nation. Berkeley and Los Angeles: University of California Press.
[From a memo to Mr. Kenneth Templeton at the William Volker Fund, April 18, 1962.]
It is not often that one is privileged to review a book of monumental import, a truly significant "breakthrough" from obscurantism to historical knowledge and insight. But such a book is the magnificent work by A.J .P. Taylor, The Origins of the Second World War (London: Hamish Hamilton, 1961 — now New York: Athenaeum, 1962). As Taylor points out and explains at the beginning of this book, Revisionism of World War II, in every country of the world, has been virtually non-existent. In the United States Pearl Harbor revisionism has progressed a long way, and built up a successful body of historical literature, so that its opponents have had to beat one retreat after another. But, in vivid contrast to the situation after World War I, the origins of the ''1939 war in Europe have been a locked door," and the historical profession, as well as all the general public and official opinion, in all the countries involved, have clung grimly and tenaciously to almost the same views that were held at the height of the conflict itself. While there has been a substantial shift in the wartime view that all Germany is and was forever guilty of war there has been no shift in the wartime view of Hitler and his Administration, and of the supposedly sole guilt which they incurred. The extent of the stifling atmosphere is indicated by the automatic disreputability, the shock, and shame, which any deviation from this propaganda line incurs if expressed verbally or in print. Any raising of the semblance of a doubt over the official line that (a) Hitler was bent on conquering the world, and (b) the only way to meet the situation was to take a "firm" line and stop him, is to incur the automatic charge of being "pro-Hitler" or "pro-Nazi." In the same way, the "historical blackout" operates today in the Cold War; any intimation that the Soviet is not solely responsible for the Cold War is met with the charge of being "pro-Communist" or "soft on Communism." All this is immeasurably aided by the old propaganda trick of identifying a State's domestic with its foreign policy; paint a government's domestic policy as wicked enough (e.g., Hitler, Communism), and the ignorant and the superficial will automatically agree that this wicked government must be guilty, and uniquely guilty, of any wars or threats of war that might arise, and that conversely the "good" United States (or Britain or France) will be uniquely innocent and virtuous. In the United States, even Pearl Harbor revisionism could only fight its way against heavy and oppressive odds, and its champions could be written off by the Establishment as either "mere journalists" (Morgenstern, Chamberlin) or as former isolationists and opponents of U.S. entry into the war (Barnes, Tansill, et al.) — although this was hardly a disqualification for the most enthusiastic praise lavished on such renegade ex-isolationists as Langer, Commager, et al. And, Pearl Harbor revisionism has faced no difficulties compared to revisionism on Hitler and Germany — for the wartime emotionalism whipped up here and abroad against Japan was as nothing compared to the frenzy whipped up against Germany and against Hitler. Here the blackout war-born propaganda frenzy has been virtually total.
Into this miasma has stepped, almost like a miraculous deus ex machina, the widely-renowned Oxford professor, A.J.P. Taylor. The shock here is particularly notable and remarkable because Taylor has been distinctive, even among his fellow Establishment historians, for the venom and sweep of his Germanophobia, which he had applied to virtually every European war in addition to World War II. And now, after being widely heralded by the "blackout boys" as a great historian, Prof. Taylor has not only radically changed his mind, but changed it to publish the first real revisionist work on 1939. The personal attacks on Taylor have been predictably numerous, vicious, and virulent. But the important thing is that Taylor was too prominent to ignore, and therefore his book is being, and will be, read, and marks the first great revisionist breakthrough on 1939. It is an inspiring lesson, this story, for it shows that regardless of how virulent and determined the suppression of truth, truth will out, that from somewhere courageous and independent-minded intellectuals and scholars will seize upon it and publish it to the world. And it will be heard. Why the shift in Taylor's entire orientation and approach to Germany? Perfervid personal smears have abounded (e.g., by Trevor-Roper and by Rowse), and it has been suggested that this is all an amusing game, pour epater le bourgeois. None of this is worthy of comment. But one review that might be noted, and one of the most vicious, was by Prof. Stephen Tonsor in National Review. Tonsor, hardly mentioning the contents, hysterically charged that this was all a "presentist" tract, not about Hitler at all, but in the interests of "appeasing" Soviet Russia. But if this had been the reason for Taylor's shift, then he would have shifted long ago, at the beginning of the Cold War. Any yet, as recently as 1958, Prof. Taylor, in his book The Troublemakers: Dissent Over Foreign Policy, 1792–1939 (Indiana University Press, 1958), while praising all the pro-peace dissenters from foreign policy in modern British history, praised the pro-war dissenters from the appeasement policy of the late 1930s. As late as 1958, then, Taylor clung as tenaciously as before to his Germanophobic line (the book incidentally is dedicated to the eminent Germanophobe, Alan Bullock). "Presentist" policy toward Russia, then, could hardly have been the motive. No, there is only one explanation. A.J.P. Taylor began to investigate the documents, and as he did so, he began to realize the truth. The power of the truth, and his courageous recognition of the truth, swept away all of his own biases and preconceptions, and he next took the enormously courageous step to dare to publish these highly important findings to the world. Already, despite the volley of smears, Taylor has made a considerable impact; the distinguished and highly respectable History Book Club has picked the Taylor book as one of its books of the month, and in the History Book Club News the Taylor book received an amazingly favorable review from none other than Walter Millis, formerly one of the leaders of the "blackout brigade" (Millis did not grasp the full implications of the Taylor findings, but this is certainly an excellent beginning).
The central theme of Taylor is simply this: Germany and Hitler were not uniquely guilty of launching World War II (indeed they were scarcely guilty at all); Hitler was not bent on world conquest, for which he had armed Germany to the teeth and constructed a "timetable." Hitler, in brief, (in foreign affairs) was not a uniquely evil monster or daimon, who would continue to gobble up countries diabolically until stopped by superior force. Hitler was a rational German statesman, pursuing — with considerable intuitive insight — a traditional, post-Versailles German policy (to which we might add intimations of desires to expand eastward in an attack on Bolshevism). But basically, Hitler has no "master plan"; he was a German intent, like all Germans, on revising the intolerable and stupid Versailles-diktat, and on doing so by peaceful means, and in collaboration with the British and French. One thing is sure: Hitler had no designs, no plans, not even vague intimations, to expand westward against Britain and France (let alone the United States). Hitler admired the British Empire and wished to collaborate with it. Not only did Hitler do this with insight, he did it with patience, as Taylor excellently shows; the legend (that perhaps all of us have accepted in one degree or another), is that Hitler annoyingly created one European crisis after another, in the late 1930s, proceeding hungrily onward from one victory to another; actually, the crises naturally arose, were developed from external conditions (largely from the breakup of the inherently unstable conditions imposed by the Versailles-diktat), and by others, and which Hitler patiently awaited the outcome to use to his and Germany's advantage.
The European tragedy was that it was generally admitted, by most of the British, by the French (when their grandeur was not involved), and by world opinion, that the Germans were morally right, that the Versailles settlements deserved to be radically revised (e.g., the truncation, and then the prohibited Anschluss, of Austria; the geographical abortion under Czech despotism that called itself the "democracy of Czechoslovakia"; Polish tyranny over the Germans in the Corridor and Danzig, to say nothing of Upper Silesia, etc.). Being morally and generally realized as such, the Versailles settlement was also foredoomed to failure, as the suffering peoples continually would clamor for redress. Taylor points out that it was the great merit of the unsung Ramsay MacDonald to have realized this and to have set the "appeasement" line for Britain until 1939. It was the tragedy of Europe that once this was recognized as the right policy (the rational policy at once the most moral and the most expedient) what it was not pursued as rapidly and as determinedly as possible. Britain dawdled; and not all the British statesmen had the insight to approve "appeasement" as manifested by MacDonald, Stanley Baldwin, or Sir John Simon. Locarno, the grudging end of reparations, etc., were steps taken dawdlingly, haltingly, and slowing. If appeasement had been pursued steadfastly by the late 1920 perhaps Hitler would never have come to power at all. So the tragedy of Europe was therefore this: that Britain (the leader of the Anglo-French coalition) understood that appeasement was the only rational policy, but, being the country "on top," a victor at Versailles over a vanquished Germany, inexcusably dawdled and delayed in putting this into execution. As a result, Hitler was forced to bluster and threaten, or to appear to do so, in order to win concessions which Britain should have granted a decade earlier. As a result, as each "crisis" developed in the late 1930s it seemed — even to Chamberlain and the British — that Hitler was exacting, by vicious threats, and a step at a time, concessions from a grudging, frightened Britain and France. Hitler was put in the wrong in the eyes of Europe and the world, when he was eminently in the right, and all because the British refused to pursue its goal of rational appeasement quickly and single-mindedly
Taylor's history of the various crises is fascinating; for one thing, it shows that, because of this dawdling, Hitler's policy, actually prudent, moderate, and passive (and even pacifistic) was also made to look warlike and belligerent by the almost totally irrational and sudden decisions of the nations concerned (the Austrians, the Czechs, and Poles) to be tough, to take a "firm line" against the so-called "aggressor." Time and time again, these countries were almost completely ruined by their own irrational "toughness" and their decisions to "stand firm." In my review of the important Jakobson work on the Russo-Finnish War (Rothbard to Resch, March 21, 1962) I indicated that Finland almost destroyed itself by its irrationally "tough" policy against the moderate and reasonable demands of Soviet Russia (and was later saved by the courageous "appeasing" acts of President Paasikivi, author of the highly successful "Paasikivi Line" for peace and peaceful coexistence). A similar story occurred with Hitler.
Let us first take "heroic little Austria," whose Chancellor Schuschnigg was supposed to have been "bullied" into submission by Hitler, and where Hitler's troops "invaded" the country. Austria was perhaps the most conspicuous sufferer from World War I and Versailles. Stripped of most of its territory, it found itself in a world of fluctuating currencies and tariffs and exchange controls, hardly a viable economic entity. For the first time reduced to being solely German, and it is eminently understandable that a strong movement for Anschluss with Germany should have developed. But conditions in Austria were troublesome, because Austria, in the 1930s, was run by a fascist dictatorship headed by Dollfuss and then Schuschnigg; the Austrian Nazis, who favored Anschluss, were forced into attempting revolts since the democratic route to power was precluded. Taylor points out, incidentally, a very important fact: that the Nazis in Austria, Sudetenland, Danzig, etc., were not, as has always been considered, mere "puppets" of Hitler, subject to his orders. (The same mistake has been made about domestic Communist parties subject to "orders from Moscow"; in the case of the Nazis, the mistake was even greater. These were ideological movements, which of course admired and were even influenced by Hitler, but could not be "controlled" by him. Indeed, most of the time Hitler was engaged in trying — often unsuccessfully — to restrain these indigenous Nazi movements from revolting, creating trouble, etc., so far from being mere puppet creations of Hitler were they.
To return, the indigenous Nazis had unsuccessfully revolted in 1934, and were generally restive. Schuschnigg, then, was happy to conclude a Gentleman's Agreement with Germany, in July 1936, in which he acknowledged that Austria was a "German State," and agreed to admit Nazis as members of his government. In return, Hitler acknowledged Austrian "sovereignty," and contentedly believed that Austria was now a kind of subordinate state to Germany, and that the Austrian Nazis would gradually, and peacefully, gain control of Austria. This, indeed, was the rational thing to expect from such an agreement. No coercive Anschluss or dramatic marching of German troops was contemplated.
The fool Schuschnigg, however, saw things differently; making the typical mistake that the Austrian Nazis were basically Hitler's puppets, he assumed that his peaceful settlement with Germany, and his inclusion of Nazis in the cabinet, would mean an end to any further domestic agitation by the Austrian Nazis. Now this, as I've said, was totally unrealistic; an ideological movement cannot be "called off" from afar, and Taylor shows that the extreme Austrian Nazis defied Hitler's suggestions to tone down their propaganda. And Schuschnigg assumed unrealistically that, when Austrian Nazi agitation had been publicized, Hitler would "call them off" and repudiate them (since Schuschnigg saw the continued agitation as a betrayal of the Gentleman's Agreement). Taylor demonstrates that, contrary to general opinion, it was Schuschnigg who insisted on presenting his demands to Hitler and who wangled an invitation to see Hitler at Berchtesgaden; Hitler, understandably impatient with the whole affair, thus being pressed on him, insisted that Schuschnigg make the German nationalist Seyss-Inquart Minister of Interior, and agree to coordinate its economic and foreign policy with that of Germany, in return for which, Hitler would agree to repudiation of the Austrian Nazis. Schuschnigg agreed to this voluntarily; this was simply a further evolutionary step, from the Gentleman's Agreement; Austria would become, in effect, a satellite of Germany, in return for which Schuschnigg would be spared revolutionary agitation by the Austrian Nazis. Hitler carried out his part of the bargain by bawling out the Austrian Nazis and insisting on the evolutionary, not revolutionary course.
Everything was now presumably nicely settled; in a peaceful and evolutionary manner, agreed upon by Hitler, Schuschnigg, and the more moderate, evolutionary Austrian Nazis. What happened? Schuschnigg, in effect, repudiated the voluntary Berchtesgaden Agreement of February 12, 1938. Suddenly, after two years of rational appeasement, he decided on a "tough" line; he decided to hurl a challenge to Hitler by dramatically announcing an Austrian plebiscite on Austrian independence, to be held almost immediately. Everyone recognized this as a challenge hurled at Hitler. Hitler saw no alternative to meet this with military action against Austria. When Schuschnigg finally agreed to postpone the plebiscite, after seeing that other countries would not come leaping to his rescue, Hitler now had, understandably, decided that Schuschnigg could not be trusted and that Seyss-Inquart should replace him. Schuschnigg wisely agreed and resigned, but then, another burst of irrational "toughness" occurred, and President Miklas of Austria refused to appoint Seyss-Inquart; finally Hitler marched in. He had not planned to march in; he had not wanted to march in. And even when he marched in, he only planned to insure Seyss-Inquart's appointment and then withdraw. But the great excitement of the enthused Austrian crowds spurred Hitler on, to announce a total Anschluss, an act approved by the overwhelming majority of the Austrian people.
To understand the Czech crisis, it must be understood that Czechoslovakia was the most grotesque of all the abortive creations of the Versailles system. The Czechs, led by the idolized Masaryk, had managed to swindle Wilson into believing that the Czechs and Slovaks were one and the same; and then, of course, Bohemia must have its "natural frontiers," thus dragging the Bohemian Germans into "Czechoslovakia," a land of Czech minority despotism over the Slovaks, the Germans, the Ukrainians, et al. The Germans were particularly unhappy at being plunged from co-partners in the Austro-Hungarian Empire to sufferers under the Czechs. The Anschluss electrified them, and the Czech crisis was on. Actually, the very existence of "Czechoslovakia" virtually cried out for dismemberment, and yet Benes resolved to take a very "tough" line, to stand firm against Hitler's "bluffs" and make him back down by inducing France and Great Britain to come to Benes' aid. Benes deliberately provoked the Sudeten Germans into demanding transfer to Germany and not just autonomy, in order to drive the French and British to his side. Unfortunately, again, the British and French dragged their heels on appeasement; the French were still bemused by their irrational system of alliances with East European countries whom they could not physically support. Once again, delay was so long that it looked as if the British were giving in to German pressure — whereas the British had been most eager for a rational settlement — and Chamberlain allowed himself to be dragooned into guaranteeing the rest of the Czech frontiers.
Munich, as Taylor courageously and perceptively declares, "was a triumph for all that was best and most enlightened in British life; a triumph for those who had preached equal justice between peoples; a triumph for those who had courageously denounced the harshness and short-sightedness of Versailles." Yes, but there was one crucial thing wrong with Munich, as Taylor indicates: not that this was appeasement, but that appeasement had not been pursued quickly, eagerly, and thoroughly enough. Always there was the impression given by the West that the concessions were made out of fear of Hitler rather than for desire for justice; always there was only piecemeal rather than thoroughgoing solutions, so that the canker of unresolved problems still remained in central Europe. It should have been clear to any knowledgeable person that, once the Sudeten Germans had been reunited with their German brethren that Czechoslovakia was finished; the British-French guarantee of the rest of Czechoslovakia was the sheerest folly. Benes saw this, and skipped the country, from then on to proclaim against "appeasement" from a safe sanctuary. The Poles moved in on Tesin; the Hungarians, bitterly smarting from the Versailles-like Treaty of Trianon, moved in. Finally, the Slovaks, taking their cue, declared their much yearned-for independence. The Czechs, turning tough yet once more, prepared to march on Slovakia, whereupon Hitler recognized Slovak independence, to save Slovakia from the Czechs and Hungarians. The Czechs were now left with their own true section of Bohemia; surrounded by enemies, and faced with a Hungarian threat, Hacha, president of the Czechs, again voluntarily sought audience with Hitler, and requested Hitler to adopt Bohemia as a protectorate. And yet, the world, again saw this as a "betrayal" of Munich, German ruthless invasion of a noble, small country, etc. Again, Hitler had not bargained for open invasion, but only for slow, evolutionary disintegration of Czechoslovakia; events again presented him with (overly) dramatic gains.
If Benes was a fool for expecting Britain and France to defend the Czechs to the last when it was not even geographically possible, the same was all the more true of Poland's Josef Beck. Poland was another grotesque — or rather swollen — creature of Versailles. For centuries, Poland had been caught between the millstones of the two great powers in central Europe, Germany and Russia (also Austria-Hungary, which had now been "murdered" at Versailles). It should have been clear to any Pole that Poland could prosper, in fact could exist as an independent country, only in alliance with either Germany, Russia, or both. Any other course would be fatal. But World War I had a very peculiar result, as Taylor perceptively points out at the beginning of his book; both Germany and Russia were defeated in Eastern Europe; Russia by Germany, and then by the fact that Communist Revolution lost Russia the gains it would have reaped from allied victory. With both Great Powers temporarily knocked out, room arose for a myriad of independent countries in Eastern Europe; this was artificial and only temporary room, but few realized this crucial fact. Poland was not only independent, it acquired enough territory to tyrannize over a large number of Germans (in the Corridor, Upper Silesia, and Danzig) and Ukrainians, and White Russians. Poland in alliance with either Germany or Russia might have held to its ill-deserved gains; Poland alone was doomed. And yet, Beck, though initially allied with Germany, elected to stand alone, a Great Power, triumphantly defiant of both Germany and Russia, taking a resolutely "tough," firm line against anybody and everybody. And as a direct result, Poland was destroyed. Hitler's "demands" on the Poles were almost non-existent; as Taylor points out, the Weimar Republic would have scorned the terms as a sell-out of vital German interests. Hitler at most wanted a "corridor through the Corridor" and the return of heavily-German (and pro-German) Danzig; in return for which he would guarantee the rest. Poland resolutely refused to yield "one inch of Polish soil," and refused even to negotiate with the Germans, and this down to the last minute. And yet, even with the Anglo-French guarantee, Beck clearly knew that Britain and France could not actually save Poland from attack. He relied to the end on those great shibboleths of all "hard-liners" everywhere: X is "bluffing"; X will back down if met by toughness, resolution, and the resolve not to give an inch. (Just as in the case of Finland, and other "crackpot realists," when the "X is bluffing" line of the hard-liners is shown to be sheer absurdity, and X has already attacked, the "hard-liner" turns, self-contradictorily, to the dictum that not "one inch of sacred soil" will be given up, no peace while the enemy is on our soil, etc., which completes the ruin of the country by its "hard-line" rulers. This is what Beck did to Poland.) As Taylor shows, Hitler had originally not the slightest intention to invade or conquer Poland; instead, Danzig and other minor rectifications would be gotten out of the way, and then Poland would be a comfortable ally, perhaps for an eventual invasion of Soviet Russia. But Beck's irrational toughness blocked the path.
The real mystery of the book is Great Britain; from being the leader, if dawdlingly, of appeasement at Munich, Britain suddenly turned in early 1939, to the adoption of a "tough," collective security, "hard line against aggression." Britain guaranteed to Poland, a guarantee which of course could not be honored, failed to induce Poland yield to rational demands as it had prodded Czechoslovakia. Inducing Poland to yield would have been the rational conclusion to the English policy of appeasement; this would have written finis — at last — to Versailles. Instead, Britain suddenly became anti-"aggression" minded, and almost frantically tried to prop up the Poles. The question is, why? and here is the major spot in the book where Taylor's discussion is weak and unsatisfactory. For Taylor asserts that British policy had not really changed to much, that Britain was mistakenly of the belief until the very last that Hitler would yield to the threats of a "hard line" and then negotiate, accept reasonable changes at Danzig, etc. Britain, says Taylor, wanted Hitler to agree to be "peaceful" after that. But this was the last place where revision was required! No, it seems clear that Britain's frantic and radical about-face was not simply a bumbling, well-intentioned mistake; it seems clear, even from Taylor's account, that Britain deliberately shifted its policy to a war, and that it was frantic in settling on Poland because Poland was the last place where Britain could precipitate a war, while making Hitler look like a monstrous defiler of small countries.
It was clear that if Poland was to actually be aided by Britain and France, it could only be done, geographically, through Russia. And so the wooing of Soviet Russia began, and Russia was brought back — by the British and French — for the first time since World War I, into the thick of European politics. (The previous Franco-Soviet treaty had done so to some extent.) Taylor wryly points out that anti-Hitler historians had always denounced Hitler for making the Hitler-Stalin pact as a prelude to launching his war of conquest; and that now to that has been added the denunciations by Western Cold War propagandists to denounce Russia for doing the same. Actually, it is absurd propaganda to denounce Russia, as is always done, for not concluding a pact with Britain and France, and concluding one with Germany instead. Taylor is excellent in his discussion of the Pact and its antecedents. Britain and France wanted Russia to agree to come leaping to the aid of either Poland or Rumania if either were attacked by Germany, and if they requested it. In return for this surrender of its freedom of action, Russia was to get ... precisely nothing. The clue to all of Soviet Russia's foreign policy, as Taylor states, was fear; fear of attack by the West, fear of a repetition of the "international capitalist" invasion of Russia during its Civil War, which almost succeeded in destroying the Communist regime, fear of the ideological anti-Bolshevism of Hitler and of his allies in the "anti-Comintern" pact, fear of Japan which was already aggressing against it in Siberia. Soviet Russia's foreign policy was defensive, fearful, and security-minded (far more defensive, it should be added, than the traditional policy of the Czar). Fearful of Hitler, and understandably so, Russia was eager to join an anti-Hitler alliance, but only if it was a firm one; its greatest fear was joining such an alliance and then — like Benes — to be left holding the bag by Britain and France. Russia wanted two things: the ability, in case of a German war, to have its armies cross Poland to thrust at Germany, regardless of whether Poland agreed or not; and the ability to intervene against any pro-German regimes or bases that might be established in the Baltic states. In both cases, Britain, trumpeting the rights or small nations, refused to agree to any such free hand by Russia; and, in the case Poland, Poland flatly refused to have anything to do with Russian troops and a Russian guarantee. Poland would go it alone. In view of this, there was never any hope of a British-Russian alliance, and Taylor indicates that the British were always half-hearted in an attempt for alliance anyway.
Hitler had expected Beck to cave in likes Benes; but this time things were different. (We must remember that the Polish Army was greatly inferior to the Czech Army of 1938). Hitler then set out to conclude his own pact with Soviet Russia; if Russian neutrality were secured, he reasoned, surely Britain would give up any Polish guarantee — which would now be insanity — and Britain and Beck would listen to reason. Hitler offered Russia a non-aggression pact, with the added sweetener that, whatever happened, Germany would not advance beyond the Curzon line in Poland or in the Baltic states; at last, Russia had achieved the recognition which it could not get from the West — wedded to its small-power legalism — a Soviet Monroe Doctrine, a sphere of influence, in its security zone of Eastern Poland and the Baltic states. We should also not forget that Russia was left, like Germany, a "revisionist" power from World War I; this recognition of its sphere of influence was Russia's revision of Brest-Litovsk. And, as Taylor points out, the Hitler-Stalin pact was not an agreement for partition of Poland, as Munich was an agreement for partition of Czechoslovakia; it was rather a mutual agreement for neutrality and non-aggression, plus a German agreement not to penetrate to the Soviet sphere of influence. Poland had no legitimate complaint, since all it wanted from Soviet Russia was neutrality.
The Establishment historians have had a field day with the Hitler-Stalin Pact, since here was an act by both of their bogeymen. Any action mutually agreed-upon by these two dictators is supposed to be a priori monstrous. And so the Pact was supposed to have been the wicked spark that began World War II and dismembered Poland. But, as Taylor shows, both Germany and Russia thought of this as an action for peace, as it rationally should have been. The danger of a German-Russian conflict was avoided; and, both Hitler and Stalin believed, that with all hope of Russian support of Poland gone Britain and France would finally induce Poland to soften up and peace would be preserved. As Taylor states moreover, "it is difficult to see what other course Soviet Russia could have followed," given British adamance. We might go even further; in my view, the Hitler-Stalin Pact was one of the great deeds of European statesmanship — on both sides — in the twentieth century. It continued in the great tradition of Rapallo. The geographic facts are that peace can only be preserved in Eastern Europe if Germany and Russia are at peace, and therefore only a German-Russian policy of friendship or even alliance, will keep the peace in that troubled section of the globe.
Certainly, if the British, French, or Poles had been in the slightest degree rational, the Hitler-Stalin Pact should have done precisely that, and the British should have thrown in the "tough" line towel. Instead, the British and Poles got even tougher if anything, and apparently British public opinion now reveled in an irrational orgy of warmongering for the sale of collective security, "democracy" for small nations and whatnot. Here again, Taylor is rather too kind to British willingness to negotiate. The fact is that Hitler, beginning to be taken aback by his opponents' irrationality, began to urge negotiations, but the Poles remained adamant to the very end. But to me the clearest proof of British bad faith in the matter is that even after Hitler proved that he was serious and not "bluffing" by invading Poland, even then the British and the Poles would not negotiate; now, as we said above, the same "crackpot realists" who had ruined everything by proclaiming that the enemy was "bluffing" and would back down before toughness, were now demanding that no negotiations could possibly begin until the German troops had withdrawn from sacred Polish soil. And so Poland disappeared, and World War II began. Granted the imbecility of the policies of Benes and Beck; but the British, on Taylor's own account, bear more responsibility for the outbreak of that tragic war than he is willing to concede. Surely more than incompetence was here involved.
There are two further, amplifying general observations of importance which I am moved to by this scintillating book. One is the perniciousness of the typical "hard line" mythology, a mythology that has been especially beloved in the United States and Great Britain. It is a mythology that has consistently failed, and consistently plunged these "great democracies" into one war after another. This is the mythology of conceiving the enemy as, not only a "bad" guy; but a bad guy cast in the mold of Fu Manchu or someone from Mars. The bad guy is out, for some obscure reason, to conquer the world, or at the very least, to conquer as much as he can keep conquering. This is his only goal. He can be stopped only by force majeure, i.e., by "standing firm" on a "tough line." In short, while irredeemably evil, the Bad Guy is a craven at heart; and if the noble Good Guy only stands his ground, the Bad Guy, like any bully, will turn tail. Rather than Fu Manchu, then, the Enemy is a Fu Manchu at heart but with all the other characteristics of the Corner Bully, or of a movie Western. "We" are the Good Guys, interested only in justice and self-defense who need only stand our ground to face down the wicked but cravenly bluffing Bad Guys. This is the almost idiotic Morality Play in which Americans and Britons have cast international relations for half a century now, and that is why we are in the mess we are today. Nowhere in this Copybook nonsense is it every conceived that (a) the Bad Guy might be afraid of our attacking him (But Good Guys never attack, by definition!); or (b) that the Bad Guy might, in his foreign policy demands, have a pretty good and just case after all — or at least, that he believes his case to be good and just; or (c) that, faced with the defiance, the Bad Guy might consider it loss of self-respect if he backed down — and so two war. Let us all give up this childlike game of international relations, and begin to consider a policy of rationality, peace, and honest negotiation.
The second general observation is that Eastern Europe seems to have been the cockpit — and in tragic folly — of every major war of the twentieth century: World Wars I and II, and the Cold War. Eastern Europe, as I have indicated above, is a land of many teeming nationalities, almost all small and divided. The reality of Eastern Europe is that it is always fated to be dominated by either Germany or Russia, or both. If East European politicians are to be rational, they must realize this and understand their fated subservience to one or both of these two Power; and, if there is to be peace in Eastern Europe, both Germany and Russia must be friends.
Now don't misunderstand me; I have not abandoned moral principle for cynicism. My heart yearns for ethnic justice, for national self-determination for all people, not only in Eastern Europe but all over the world. I am a non-Ukrainian who would like nothing better than to see a majestic independent ethnic Ukraine, or of Byelorussia; I would to see and independent Slovakia, or a just settlement, at long last, of the knotty Transylvanian question. I still worry over whether Macedonia should properly be independent, or should be united to their presumably ethnic brothers in Bulgaria. But, to paraphrase Sydney Smith's famous letter to Lady Grey, please let them work this out for themselves! Let us abandon the criminal immorality and folly of continual coercive meddling by non-East European powers (e.g., Britain, France, and now the U.S.) in the affairs of East Europe. Let us hope that one day Germany and Russia, at peach, will willingly grant justice to the people of East Europe, but let us not bring about perpetual wars to try to achieve this artificially.
I cannot refrain from quoting Smith's famous passage, so a propos is it:
I am sorry for the Spaniards — I am sorry for the Greeks; I deplore the fate of the Jews; the people of the Sandwich Islands are groaning under the most detestable tyranny; Baghdad is oppressed; I do not like the present state of the Delta; Tibet is not comfortable. Am I to fight for all these people? The world is bursting with sin and sorrow. Am I to be champion of the Decalogue, and to be eternally raising fleets and armies to make all men good and happy? We have just done saving Europe, and I am afraid that the consequence will be, that we shall cut each other's throats. No war, dear Lady Grey! — No eloquence; but apathy, selfishness, common sense, arithmetic! ... "May the vengeance of Heaven" overtake the Legitimates of Verona! But in the present state of rent and taxes, they must be left to the vengeance of Heaven. ... There is no such thing as a "just war," or, at least, as a wise war.
To return to Eastern Europe, we heard little of the various nationalities before 1914, for the region was dominated by Germany, Russia, and Austria-Hungary. World War I was causes, primarily, by Czarist Russian expansionist ambitions in East Europe, particularly in the Balkans, and its egging on of one of the few independent nationalities, Serbia. Germany and Austria-Hungary opposed the Russian move for expansion; Britain, France, and eventually the U.S. naturally insisted on entering the war — why? to promote that expansion?! As I said above, World War I ended in a very "fluke" manner, because of the Communist Revolution; but let us never forget that, if the U.S. and its heroic ally Czarist Russia had won the war — if there had been any Communist Revolution — Czarist Russia would have, as confirmed by allied secret treaties — dominated all of Easter Europe, and taken Constantinople as well. The cant and moralizing of our present Cold Warriors against Soviet "domination" of Eastern Europe appears pretty ludicrous in view of this fact; actually, the Communist Revolution prevented Russian domination of "satellites" in East Europe for a generation, and even then this was only a result of Hitler's attack on Russia. (Indeed, Finland was apparently permanently freed from Russian control by the Communist Revolution.) And yet, Americans would have consented to Czarist puppet states in Eastern Europe as long ago as 1918.
Thus, World War I was essentially a clash between Germany and Austria vs. Russia over who would dominate Eastern Europe, with Britain, France, and U.S. meddling into the fray. The peculiar defeat of both Germany and Russia in World War I, opened up, artificially, the path for national self-determination in Eastern Europe, a task which was terribly botched at Versailles. New injustices were created there, especially for the defeated countries. By 1939, Germany and Russia were at peace over Eastern Europe, and yet Britain precipitated war by leaping to war over a Poland which could not exist in defiance of both its great neighbors. Finally, as a result of Britain, and the U.S. meddling into a war over Eastern which did not properly concern them and Germany's tragic blunder in attacking Russia, the conquest of Germany naturally left Russia in virtual charge over Eastern Europe, again its sphere of influence. (This domination has nothing to do with "communism" but is the result of these Russian, etc., power factors, and would have occurred whatever Russia's social system may have been.)
And then after a record fatal meddling, twice, in East Europe, the U.S. and Britain precipitated the Cold War in order to eject Russia from her hard-won sphere of influence, in East Europe, again where none of the Western powers has any business in meddling!
There are various specific points about the Taylor volume that we might note further. There is a very good discussion at the start about why Revisionism has not been flourishing since the war; a good, if brief, critique of the validity of the Nuremberg documents. Once in a while, Taylor slips back into his old Orthodox line; for example, he doesn't seem to realize that the viper of "collective security" and therefore eternal war to preserve status quo boundaries was inherent in the League of Nations, and therefore that League-mindedness was an enormous obstacle in those years to realizing the morality and justice of an appeasement policy. Taylor also is surprisingly "soft" on Versailles, especially in the first part of the book, where he seems to hold that the only thing really wrong about Versailles was the continuing reparation question, which kept the situation irritated; and yet surely the whole last half of the book, with its discussion of the Austrians, Czechoslovakia, and Polish crises are testimony to the serious evils of Versailles. The importance of the fact that Germany won the war in the East (World War I) is noted, although Taylor erroneously puts the Treat of Brest-Litovsk in January, instead of March, 1918. Taylor fails to mention that the Russo-Polish war of 1920 resulted from Polish aggression against the Russian Ukraine, and the territorial losses Russia suffered to Poland in that war (of ethnically Ukrainian and Byelorussian territory) made her even more eager for revision, when she had the chance. Taylor also under weighs, even ignores, the fact that, at Versailles, a disarmed Germany was supposed to be accompanied by disarmed Allies. By ignoring the persistent Allied violation of the pledge to disarm, Taylor fails to make the case for German rearmament as strong as it was, or rather the case against Allied suppression of German rearmament. Also, Taylor fails to mention either Litvinov's or Hitler's proposals for general and complete disarmament by all countries — proposals by Bad Guys which the Good Guy "democracies" ignored — because they were armed and the Bad Guys were not — a short-sighted view, to say the least. Taylor is very good in his understanding of the merits of the Japanese case in Manchuria; though somewhat more is needed about the later Japanese-Chinese war of 1937 on. Taylor is very good in deprecating the importance of Hitler's — shifting — "dreams," as in Mein Kampf, dreams, even then, which had nothing to do with "world conquest," or even conquest of Britain. There is excellent Revisionism in deflating the much-trumpeted Hossbach Memorandum, purporting to be Hitler's "plans for conquest. Taylor is also excellent in pointing out that, e.g., "in 1940 the German land forces were inferior to the French in everything except leadership."
Taylor is also very good in criticizing the typical "moderate Revisionist" view of World War I, that no individual government or leaders were guilty because, wars are caused by the "international anarchy" — a view that ignores the actual causes and the actual guilt and blunders of any given war. Says Taylor properly: "'International anarchy' makes war possible; it does not make war certain." There is also a criticism of the Leninist view that capitalism "inevitably" causes wars. In his proper critique of the Lebensraum argument of Germany and Italy for expansion, Taylor ignores the fact that the argument was much more cogent for overpopulated, tariff, and migration-excluded Japan. He is also good — and again courageous — in deprecating the much-inflated importance of the Spanish Civil War, or of the alleged threat which it was supposed to embody of "international fascism." And yet, in some passages it seems that Taylor is reverting to his old self, and calling for active British intervention in the Spanish Civil War.
Taylor also properly states another truth which too many have forgotten: that Soviet Russia has always been interested in its own preservation, beyond the interests of "international Communism," which it has sacrificed for the sake of its peace and security time and again (Taylor mentions the case of Soviet failure to support the Chinese Communists as against Chiang).
Taylor does not exactly mention — it is outside of his province here — that the British, not the Germans, launched the barbaric policy of strategic bombing of civilians in cities, but he does say that the Germans had only planned for tactical fighter-bombing and not at all for strategic bombing of cities — which is testimony enough.
There are also some good pot-shots throughout at the tendency of the Soviet Union and the U.S. to stand aside from the quarrels and deliver moralizing lectures to the endangered parties concerned. Taylor wisely points out: "The experiment of calling in the New World to redress the balance of the Old had already been tried in the First World War. American intervention had been decisive; it had enabled the Allies to win the war. ... In retrospect, would it not have been better if they had been forced to a compromise peace with the more or less moderate Germany of 1917?"
Taylor should point out that Schacht was dismissed, not, as he has it, for cavilling at increased armament spending, but for insisting on higher taxes rather than deficits to finance it. (See the work of Burton Klein.)
The major weakness in the book, aside from the "softness" on British motivations in 1939 discussed above, is — presumably a hangover from the Old Taylor — an almost frenzied denunciation and bias against Mussolini and Italy. Fortunately, this is a tangential matter for 1939, and is not as warping as Germanophobia in this context. Ramsay MacDonald, for example, is denounced for writing cordial letters to Mussolini "at the very moment of Matteoti's murder — and odd pit of moralizing for someone who, on the German question recognizes the differences between domestic and foreign affairs, and what is proper conduct in the latter. Also, in assessing Mussolini's motives in attacking Ethiopia, Taylor states that it was simply unprovoked desire for conquest; no mention is made of continual Ethiopian provocation and aggression at Walwal. At the beginning of this book, Taylor brusquely dismisses American Revisionists as not being sufficiently "scholarly"; if he had paid more attention to American revisionists (such as Tansill's discussion of Italy and Warwal) it would have improved his book considerably.
In style, the Taylor volume is typical of Taylor's works: well-written, witty, abounding in facile generalizations that are grounded in speculation about various motives, and often too skimpily grounded in the documentary sources. The latter skimpiness is, as a matter of fact, all too typical of current British historical scholarship.
To sum up, A.J.P. Taylor's The Origins of the Second World War is a great work, a memorable and path-breaking work, of enormous importance in providing, at last, a Revisionist history of the causes of 1939. It has also the corollary merit, in passing, of providing important ammunition for Cold War Book revisionism as well. If there were to be further National Book Foundation programs, I would unhesitatingly recommend it for NBF distribution. What is needed now is a follow-up to this path-breaking volume, a follow-up which, with more exhaustive thoroughness and documentation, will complement Taylor by providing the definitive account of the origins of 1939. Let us hope that the promised book by David Hoggan will perform this job.
From Part 3, "German Nazism". This audio book is made available through the generosity of Mr. Tyler Folger. Narrated by Millian Quinteros.
From Part 4, "The Future of Western Civilization". This audio book is made available through the generosity of Mr. Tyler Folger. Narrated by Millian Quinteros.
From Part 4, "The Future of Western Civilization". This audio book is made available through the generosity of Mr. Tyler Folger. Narrated by Millian Quinteros.
From Part 3, "German Nazism". This audio book is made available through the generosity of Mr. Tyler Folger. Narrated by Millian Quinteros.
This audio book is made available through the generosity of Mr. Tyler Folger. Narrated by Millian Quinteros. Music by Kevin MacLeod.
Omnipotent Government was published in 1944, when the battle against Nazism held the world’s attention. How had this terrible system gained power? Mises considers and rejects several explanations popular at the time he wrote, such as inherent defects in the German national character. Instead, Mises looks to the rise of a malignant ideology, which he terms etatism.
This audio book is made available through the generosity of Mr. Tyler Folger. Narrated by Millian Quinteros.
Download the complete audiobook (15 MP3 files) here. This audiobook is also available on Soundcloud, Apple Podcasts, Google Podcasts, and via RSS.
From Part 2, "Nationalism". This audio book is made available through the generosity of Mr. Tyler Folger. Narrated by Millian Quinteros.
This audio book is made available through the generosity of Mr. Tyler Folger. Narrated by Millian Quinteros.
From Part 3, "German Nazism". This audio book is made available through the generosity of Mr. Tyler Folger. Narrated by Millian Quinteros.
From Part 3, "German Nazism". This audio book is made available through the generosity of Mr. Tyler Folger. Narrated by Millian Quinteros.
From Part 3, "German Nazism". This audio book is made available through the generosity of Mr. Tyler Folger. Narrated by Millian Quinteros.
From Part 2, "Nationalism". This audio book is made available through the generosity of Mr. Tyler Folger. Narrated by Millian Quinteros.
From Part 2, "Nationalism". This audio book is made available through the generosity of Mr. Tyler Folger. Narrated by Millian Quinteros.
From Part 1, "The Collapse of German Liberalism". This audio book is made available through the generosity of Mr. Tyler Folger. Narrated by Millian Quinteros.
From Part 1, "The Collapse of German Liberalism". This audio book is made available through the generosity of Mr. Tyler Folger. Narrated by Millian Quinteros.
This audio book is made available through the generosity of Mr. Tyler Folger. Narrated by Millian Quinteros. Music by Kevin MacLeod.
It seems like every other news story about the International Monetary Fund (IMF) reflects (at least in passing on the Fund's uneven treatment of developed and developing countries. Established at the Bretton Woods conference to oversee the system of fixed exchange rates prevailing in 1944, the Fund’s mission has gradually expanded to promoting economic growth, macro-economic stability, and poverty reduction.
Yet no one seems convinced anymore that the Fund can actually accomplish these goals. To the contrary, many now argue the IMF is a highly politicized organization, biased in its choice of whom to help, how, and how much. For instance, critics argue that Christine Lagarde (current managing director of the IMF) is keen on denying African countries agricultural subsidies as part of the IMF loans conditionality, even though she supports the same measures — labelled ”economic incentives”— when it comes to the EU Common Agricultural Policy and the French farmers.
While critics often perpetuate many economic fallacies themselves — such as “beneficial subsidies,” or the better-known “exploitation” of developing countries by their developed counterparts — they are not entirely mistaken in their misgivings about the Fund. There is something inherent in what the IMF does that perpetuates conflict among and within national economies. This has to do with the monetary-policy principles on which the Fund was established.
How the IMF Spreads the “Wealth”The IMF’s funds for loans are drawn from the expanded money supplies of its member countries on the basis of a contribution quota, and then redistributed to countries in need of financial or foreign exchange stabilization. The list of borrowers ranges from France in 1947 and Argentina (just before its 2001 crisis) to Ireland, Portugal, Ukraine, Colombia, Greece, and many others.
These loans promote an artificial and temporary type of global economic growth, because they do not have a neutral impact on the world economy. IMF loans endow some countries with additional purchasing power, thus allowing them to increase their command of resources and their wealth to the detriment of other countries. The latter’s resources and overall wealth are diminished by the depreciation of the monetary unit purported by every disbursement of the new money.
This global, inter-country redistribution of wealth is central to the conflicting relationships which arise around the allocation of IMF packages. Mises explained this to his students at FEE in the 1960s when he noted that the central problem is over who gets the money:
Everybody, every country, would say the same thing: “The quantity we got is too small for us.” The rich countries will say, “As the per head quota of money in our country is greater than it is in the poor countries, we must get a greater part.” The poor country will say, “No, on the contrary. Because they have already a greater part of money per head quota than we have, we must get the additional quantity of money.”
But, Mises observed, it’s impossible to distribute the money in a neutral way:
one can never increase the quantity … in such a way that it does not further the economic conditions of one group at the expense of other groups. This is, for instance, something that wasn’t realized in this great error — I don’t find a nice word to describe it — in starting the International Monetary Fund.
The IMF, Inequality, and Central BanksThese conflicts are underlined by an even less acknowledged conflict at the national level — also predicated on the redistribution of wealth — which arises from the inflationary policies of national central banks. National central banks often cooperate with each other to, as Jörg Guido Hülsmann summarized,
to coordinate central-bank policies, i.e. … to increase their note issues in concert, thus avoiding the embarrassment of the falling exchange rates that inevitably result from unilateral inflation.
However, when this coordination fails, IMF loans can be used to buy one’s currency off foreign exchange markets and temporarily halt its collapse. Here too, instead of macroeconomic stability, what IMF loans really accomplish is maintaining the inflationary monetary policies which have brought countries to this predicament in the first place. The primary social consequences of inflationary policies are the redistribution of wealth from the last receivers of the new money toward the first receivers. Thus, the perpetuation of this institutional framework is a fertile ground for growing economic inequality, a hot issue nowadays, often over-estimated, but always blamed on the free market.
The Henry Hazlitt Memorial Lecture sponsored by Hunter Lewis. Recorded at the 2016 Austrian Economics Research Conference. Includes an introduction by Joe Salerno.
What is Europe? It seems that no rigorous answer can be provided. Europe is not exactly a continent. It is not a political entity. It is not a united people. The best definition, in fact, may be that Europe is the outcome of a long historical process that engendered unique institutions and a unique vision of what men ought to be. The idea that men ought to be free from violent government interference. Europe has no founding fathers. Its birth was not orchestrated but completely spontaneous. Its development was not imposed by armies and governments but was the voluntary product of clerics, merchants, serfs, and intellectuals who were seeking to interact freely with each other. Europeans were united by their freedoms and divided by their governments. In other words, Europe was built against States and their arbitrary restrictions, not by them.
After the fall of the Roman Empire a period of political anarchy followed where cities, aristocrats, kings, and the church all competed with each other. Therefore, as Dr. Ralph Raico noted in his article “The European Miracle,”
Although geographical factors played a role, the key to western development is to be found in the fact that, while Europe constituted a single civilization — Latin Christendom — it was at the same time radically decentralized. In contrast to other cultures — especially China, India, and the Islamic world — Europe comprised a system of divided and, hence, competing powers and jurisdictions.
In other words, over the centuries, a long evolution of the institutions gave birth to personal liberty. Although the European aristocracies and states were restricting freedom, they were forced to grant more autonomy to their subjects, for, if they did not, people were opting out by migrating or using black markets. As Leonard Liggio puts it, after 1000 A.D.:
While bound by the chains of the Peace and Truce of God from looting the people, the uncountable manors and baronies meant uncounted competing jurisdictions in close proximity. ... This polycentric system created a check on politicians; the artisan or merchant could move down the road to another jurisdiction if taxes or regulation were imposed.
Europe was where the road to freedom began. It was in Europe that the values of individualism, liberalism, and autonomy rose from history and gave humanity a sense of progress that no civilization had ever experienced to such an extent before. Unfortunately, the values and institutions that made Europe great vanished under the pressure of political centralization, nationalism, statism, socialism, and fascism in the nineteenth and twentieth centuries. Today, however, a new danger looms over Europe — the European Union.
The European Institutions Against the Free MarketContrary to what is often said, the European Union has nothing to do with peace, freedom, free trade, free capital and migration movement, cooperation, or stability. All this can very well be provided in a decentralized system. The European Union is nothing more than a cartel of governments that tries to gain power by harmonizing the fiscal and regulatory legislation in every member State. Article 99 of the Treaty of Rome (1957) clearly states that indirect taxation “can be harmonized in the interest of the Common Market” by the European Commission. As for Article 101 of the same Treaty, it explicitly restrains regulatory competition “where the Commission finds that a disparity existing between the legislative or administrative provisions of the Member States distorts the conditions of competition in the Common Market.”
Since the very beginning, with the creation of the European Coal and Steel Community (ECSC) in 1951, the European institutions were more planning agencies than anything else. Indeed, the coal and steel industries at the time were mostly nationalized and the goal of the ECSC was to coordinate governments’ activities in these two sectors, not to liberalize activity. The fact that the ECSC was not about free trade but about government planning was known by everybody at the time. It was Robert Schuman, the French minister of foreign affairs, who proposed in his declaration of 9 May 1950, that the Franco-German coal and steel production be placed under a common High Authority within the framework of an organization in which other European countries could participate. Also, the ECSC created for the first time European anti-trust legislation, which as Austrians know, is nothing less than government planning in the name of an erroneous vision of what competition is. Even the Treaty of Rome (1957), the basis of the EU as we know it, despite enacting the free movement of goods, capital, and persons, remains a highly statist treaty. Indeed, it is often forgotten that among other things, the Treaty of Rome created a “European Investment Bank,” a “European Social Fund,” the highly protectionist “common agricultural policy,” the “common transport policy,” and reinforced European anti-trust legislation. Therefore, if in the short and medium run, the Treaty of Rome, by breaking the neck of protectionism, was a boon for the European economy, it created institutions that could easily expand their regulatory power in the future, and that is exactly what they did.
Many free marketers support the European Union on the ground that even if their regulations are bad, they are still far better than those produced by our very prolific national governments. Such a line of argument, often used in more socialist countries such as France, is sheer nonsense. It is the equivalent of saying: “I don’t mind being robbed twice because the second thief will be much nicer to me.” The question is not how to make “better” regulations but how to expand free trade.
Europeanism: True and FalseIn 1946, F.A. Hayek wrote a pathbreaking article named “Individualism: True and False” where he distinguished two different individualist intellectual traditions. One, as Hayek calls it, is “true individualism,” based on evolutionism, the idea that institutions and individuals’ behaviors are not planned consciously but are rather the result of a spontaneous process. True individualism follows the tradition of the Scottish Enlightenment. False individualism, on the contrary, is based on extreme rationalism and solipsism. False individualism is based on the idea that society, freedom, and markets, can be planned and should be planned. This false individualism is the heir of the 1789 and — even more clearly — of the 1793 French Revolutionaries.
These two sorts of individualism are today at the root of two different sorts of Europeanism. True Europeanism admits that most of what made Europe was not planned but rather spontaneous. The implications are that we ought to have as much decentralization as possible for Europe to continue to strive and to safeguard human liberties. On the other hand, false Europeanism thinks that Europe can only truly become Europe if planning by common political institutions exists. False Europeanists believe that the only alternative is between Nation States and the European Union. Their defense of a centralized European political entity is based on the erroneous idea that political centralization is positively linked to the process of civilization because society, law, markets, prosperity, and the “European spirit” ought to be designed by rulers. Europe during the Middle Ages, those thinkers say, lacked trade integration because it lacked political unification. It follows that we must be grateful today for the existence of the European Union. In their narrative, economic progress took place only when “Europe” slowly began to develop new trading alliances that combined some aspects of military protection with something akin to a free-trade area. But this version of history is very far from the truth. In the Middle Ages for instance, the lex mercatoria, the law of merchants, was purely private. Furthermore, the protective tariffs were mostly ignored anyway by Europeans. Smuggling was so widespread that England in the late Middle Ages should be in fact considered as a nation of smugglers rather than a nation of merchants. As Murray Rothbard noted in Conceived in Liberty:
Too many historians have fallen under the spell of the interpretation of the late nineteenth-century German economic historians (for example, Schmoller, Bucher, Ehrenberg): that the development of a strong centralized nation-state was requisite to the development of capitalism in the early modern period. Not only is this thesis refuted by the flourishing of commercial capitalism in the Middle Ages in the local and non-centralized cities of northern Italy, the Hanseatic League, and the fairs of Champagne. … It is also refuted by the outstanding growth of the capitalist economy in free, localized Antwerp and Holland in the sixteenth and seventeenth centuries. Thus the Dutch came to outstrip the rest of Europe while retaining medieval local autonomy and eschewing state-building, mercantilism, government participation in enterprise — and aggressive war.
Thus, the idea that a centralized authority, in our case the European Union, is necessary for free trade is pure fantasy, It is false Europeanism. Its constructivist approach has prevailed in European institutions since the beginning. For example, one of the goals advanced by the Treaty of Rome was to “create markets” through a unified European Anti-trust legislation. Similarly, the official justification of the Common Agricultural Policy introduced in 1962 was to create a unified agricultural market. But markets do not need States or treaties to exist and they certainly do not need the European Union.
The parallel between false Europeanism and false individualism is also relevant when it comes to their respective imperialistic tendencies. Whereas the French revolutionaries wanted to invade Europe to impose their “universal values” through force, the European Union does not tolerate, in the name of Europe, independent States that do not want to submit to Brussels. Switzerland, for instance, is forced by the European Union to adopt countless regulations concerning food safety and gun ownership. If the Swiss confederation does not comply with many provisions of European law, the European Union threatens to cut Switzerland’s access to the single market.
The most incredible political success of the European Union zealots is their constant shaming of those who refuse to submit to a European hegemonic super-State. But we must understand that only so-called “Euro sceptics” can truly be pro-Europe. Only “Euro sceptics” can be loyal toward the history and liberal values of their continent. In other words, the European Union is a highly anti-European institution.
We Need DecentralizationOn June 23, 2016, the British will vote on whether they want to stay in the EU or not. If the NO vote wins, it might be the end of the European Union as we know it. Historically, Britain played a major role in the maintenance of a fairly decentralized European order. Whether it was with Napoleonic France, or the German 2nd Reich, or Nazi Germany, it has always been Britain that ultimately helped to break up the hegemonic endeavors of empires on continental Europe. The question is, then, will Britain play its historical role this summer against the imperialistic European Union? We should consider any attempt to establish a more decentralized system with more competition between States as a boon for Europe and the Europeans. To be sure, the Nation-States must be dismantled, but not if it means the creation of an even bigger European Leviathan. It is, on the contrary, the regionalists and independence movements that must be supported, whether it is Scotland, Catalonia, or Corsica. The European miracle can be revived only through extreme political decentralization. What history teaches us is that Europe is greater than the individuals that compose it only insofar as it respects liberty. Insofar as it is controlled or directed by a monolithic and central political authority or by bellicose Nation-States, Europe is limited by the inability of Europeans to escape the arbitrary restrictions of their governments.
Recorded during the Authors Forum at the 2016 Austrian Economics Research Conference, Paul Gottfried (Elizabethtown College), discusses his recent book, Fascism: The Career of a Concept (Northern Illinois University Press, 2015). Includes an introduction by Mark Thornton.
After years of claiming to embrace revolutionary Marxism, the Cuban state is, for reasons of necessity and pragmatism, moving toward becoming a more traditional authoritarian state. Even once Raul and Fidel Castro are dead, it's rather unlikely that the Cuban government will suddenly turn to a political system that leans heavily in favor of relatively free markets. As has been the case with China, the ruling class of Cuba will find ways to perpetuate itself and maintain political control while keeping for itself a substantial amount of the wealth produced by the labors of the common people. It will likely loosen up on its control of the economy because it recognizes that more-free economies are more productive than less-free economies. But, don't look for Cuba to become a haven for entrepreneurship any time soon.
Even as the economy becomes slightly more free, however, Cuba will remain poorer than most of its neighbors indefinitely, and even if Cuba turned into a Caribbean version of Singapore — something that's exceedingly unlikely — it would remain far poorer than even many of its Latin American neighbors for decades.
This is because, in spite of what our politicians may tell us, people cannot be made more prosperous by the government's simply wishing it to be so. After all, if wealth could be produced by government fiat, then the Cuban and North Korean regimes, neither of which have faced any organized political opposition, have both enjoyed nearly untrammeled power to "improve" the economy without limit.
In real life, though, wealth can only be built through the arduous process of work, saving, and capital accumulation. There is no question that some people can benefit from government mandated redistribution of wealth, but to have wealth, it must first be created by producing things or services of value, and by foregoing consumption now in order to invest and obtain more consumption later.
It's easy to state this, but it is far more difficult to actually do it. And most frustrating of all: even after a society embraces relatively free markets, it can still take decades to achieve a wealthy society by modern standards. And worse yet: in the process of building wealth, many ideologues and politicians will point to the discrepancy between rich and poor countries and blame markets.
The Case of East Germany and Eastern EuropeWhile there is no such thing as a truly controlled experiment in the fields of economics or politics, we do have some cases that convincingly demonstrate how political revolutions are insufficient to effect an economic one all by themselves.
For example, even 25 years after the fall of the Berlin Wall, the areas of Germany that once groaned under the soviet-style regime known as the German Democratic Republic remain poorer than the areas of Germany that once formed what was commonly called West Germany.
In 2014, the Washington Post reported how East Germany has lower levels of disposable income, high unemployment rates, and is generally less prosperous. This in turn has led to the old East Germany having fewer young people, many of whom move west for better jobs.
Fortune's Chris Matthews went on to observe "If you look at statistics such as per capita income or worker productivity, they also point to the large disparity in economic development between east and west."
And Claudia Bracholdt further notes: "Today, Germany’s east has many structural problems similar to those of countries like Greece and Spain, though on a much smaller scale."
During the Cold War, numerous opponents of Communism pointed to Germany as the perfect example of how soviet-style communism destroyed economic prosperity. But that was then. Nowadays, the East German regime is gone, and Germany is, relatively speaking, one of the most market-oriented economies on earth. Eastern Germany shares a government with western Germany. So, why is eastern Germany still poor compared to its western German neighbors?
The answer lies in the fact that even though the legal and political systems in eastern Germany are the same as in the West, the East suffers from the fact that it lost out on decades of capital accumulation and growth in worker productivity while under the boot of the Soviets.
The German case offers the most excellent comparison of course, because prior to World War II, western and eastern Germans enjoyed similar political systems for many decades. Moreover, the western and eastern Germans were similar both ethnically and culturally. Thus, the comparison allows us to focus on regime differences in the age of the Cold War.
We can look beyond just the East Germans as well. We might ask ourselves, for example, why Poland, with its Western orientation and long tradition of parliamentary and decentralized governments remains so relatively poor.
The same might be said of the Czech Republic as well, where the principal city, Prague, was once the second city of the Austrian Empire and was a center of European wealth and culture. The Czechs too, have never regained their relative place in terms of European wealth.
Part of the explanation lies in the fact that the legacy of an abandoned political system can live on for decades even after regime change. As Nicolás Cachanosky has observed in the context of South American regimes:
Institutional changes ... define the long-run destiny of a country, not its short-run prosperity. ... For example, as China opened parts of its economy to international markets, the country started to grow, and we are now seeing the effects of decades of relative economic liberalization. It is true that many areas in China continue to lack significant freedoms, but it would be a much different China today had it refused to change its institutions decades ago.
Clearly, the fact that the old Eastern Bloc countries have moved toward liberalization has set those countries on a path toward greater economic prosperity. That by itself, however, cannot put it on a par with countries that never suffered the effects of decades of communism.
Korea: An Extreme, but Relevant, ExampleThis will become all the more obvious if and when North Korea's regime collapses, at which point it is likely to be absorbed into South Korea. When that happens, we will then be looking at a country in which the northern areas, in spite of an identical ethnic makeup and an extremely similar long-term history, will be much, much poorer than the southern areas.
Some Germans to this day are resentful of how much in taxpayer wealth poured out of the west into the east. But that will look like nothing compared to the taxpayer wealth that will flow from the South to the North following a reunification of Korea. As the BBC observed:
Incomes in South Korea are 10 to 20 times higher than they are in North Korea — a much bigger gap than that between East and West Germany. That means that if reunification happened, the economic jolt would be much, much greater.
Already, North Koreans who defect find that their skills aren't adequate for South Korea. Doctors who defect from the North often fail to pass standard South Korean medical exams. This all indicates that the immense effort and money required for reunification would dwarf the scale of the task in Germany.
Under such a scenario, all the same issues found in Germany would be magnified many times over in Korea. Younger workers would flock to the south in search of work and education. The North would become a land of impoverished pensioners living off social benefits paid for by southern workers. Only over many decades would capital slowly move north, and North Korea might even take on the characteristics of a frontier state where the economy is based largely on resource extraction, and where labor must be imported from other parts of the country, or even from abroad.
Certainly, this process could be sped up by forced transfers of wealth and capital paid for by the South, but this would of course come at great cost to the southern Koreans.
The Political BacklashBut even when it is self evident that market systems bring greater wealth and prosperity, such changes in Korea and Cuba will bring a political backlash, just as happened, to a certain extent, in Eastern Europe. The social ills present in the newly Westernizing countries will be blamed on "excessive capitalism" as workers migrate to follow capital, leaving behind a hollowed-out economy in the formerly communist areas. Since wealth cannot be made to magically appear everywhere at once, significant poverty will still persist in many areas, but now, instead of being blamed on domestic bourgeois reactionaries, it will be blamed on capitalism in general, and now, the the actual presence of capitalism will make the argument far more convincing. The relative poverty of the old communist areas will endure, in spite of immense gains in standards of living. Capitalists will be blamed for these inequalities as well. As Andrei Lankov wrote in the Korean context:
Affluence and poverty are, essentially, relative categories. There is little doubt that in the first years that follow unification, the average North Korean assembly line worker or rice farmer will compare their new lives with what had been the norm under the Kim family — with such comparisons being decisively in favor of the new system. However, it is only a matter of time, perhaps merely a few years, before the focal point shifts to the contemporary South. North Koreans will begin comparing their lot not with their pre-unification past, but with South Korea’s present, and these comparisons are not going to be very favorable or seriously encouraging.
In other words, scratching out a subsistence under the North Korean regime will be replaced by a drive to keep up with the Joneses. With it will come nostalgia for a "simpler" time and a drive to blame capitalism, yet again, for persistent inequality. The lessons of what prevented affluence in the first place will be quickly forgotten.
Something similar is likely to happen in Cuba. If Cuba continues to slowly liberalize (economically, if not politically) it will nevertheless remain far poorer than the United States, and also Mexico, Chile, and all the so-called "Pacific Pumas" that continue to move toward more market-based economic systems in Latin America.
Consumed by the perceived inequality, the Cubans will then demand "change," but rather than liberalizing further, they may instead go down the path of Venezuela looking to yet another quick fix in what could unfortunately be a nearly endless cycle.
In my previous column, I noted both the fallacy that libertarianism is inherently “atomistic” as well as the scientific fact that while morality — such as the Golden Rule, may be applied universally — human cooperation and empathy are not. We are hemmed in by “Dunbar’s number” which limits the number of social relationships any one person can have at any given time to approximately 150.
The question left before us is what societal arrangement does such a nature best lend itself to. Karl Marx envisioned a future that would be “From each according to his ability, to each according to his need.” But as the biologist E.O. Wilson cleverly noted of communism, “Wonderful theory, wrong species.” Yes, what works well for ants doesn’t so much for human beings.
Violence and State PowerHumanity’s natural state is that of small tribes that have little or no contact with each other. When they do come into contact, the results have generally been bloody. It would be making the “naturalistic fallacy” to argue that because this is our natural state that we should thereby live in it. Indeed, as Steven Pinker has pointed out, studies of hunter-gatherer societies show them to be extraordinarily violent. He quotes the work of the archaeologist Lawrence Keeley, showing that for eight separate tribal societies, the percentage of male deaths caused by warfare “… range from 10 percent to almost 60 percent.”The Blank Slate, p. 57.
Furthermore, some of the unfortunate side effects of this mental limit are racism and xenophobia and contrary to many leftist, pseudo-agrarian fantasies, these are actually more acute in such tribal societies. As Robin Dunbar, Louise Barrett, and John Lycett note,
In many, if not most, such societies, the word which refers to members of the tribe is usually best translated as “men” or “humans”; those who belong to all other tribes are, by extension, considered to be “not-men.”Evolutionary Psychology, p. 199.
Steven Pinker credits the growth of the state as a method to tame such violence. We’ll leave aside any debate between anarchism and minarchism for now, but Pinker’s claim is highly suspect. R.J. Rummel’s estimates for the number of people governments have murdered (not including war) during the twentieth century alone came out to 262 million! At the very least, this should make it obvious that any sort of totalitarian or oligarchical government is not the best way for human societies to be structured.
To his credit, Steven Pinker does support strongly limiting the state’s power. He emphasizes how liberalizing economic policy was a major factor in the reduction of world violence, particularly people thinking more like a (classically liberal) economist, “That sets [them] in opposition to populist, nationalist, and communist mindsets that see the world's wealth as zero-sum and infer that the enrichment of one group must come at the expense of another.”The Better Angels of Our Nature, p. 664.
Of course he credits many other things, including, as many others have, democracy.
Democracy Can Not Be Applied UniversallyWhile democracy is certainly preferable to totalitarianism, it falls back to many of the same fallacies regarding universalism that the Left has made regarding human nature.
Indeed, what if we had a worldwide democratic government that somehow — however unlikely — maintained strong democratic institutions in spite of facing no competition from other states? Would the Chinese voters simply bow to the whims of the global majority, if it was contrary to the interests of the Chinese voters? Or more likely, given their population, would the voters in the United States bow to the will of Chinese voters?
Democracy may be a useful tool, but its best application is at the local level where the individual vote actually means something. Unfortunately, many proponents of democracy see it as something that it is clearly not; a method for universal cooperation. Given that the research has clearly shown such universalizable cooperation is a utopian fantasy, what does that make democracy?
Violence or Voluntary Exchange?Cooperation is a great thing, but it has only been shown to work in small groups. All that’s left with regards to large group interactions is force or exchange. So democracy, on a large scale, is merely people voting on if, when and how to use force against each other.
It’s for this reason that so-called anarcho-syndacilism or anarcho-communism would fail. As Murray Rothbard pointed out,
All of the left-wing anarchists have agreed that force is necessary against recalcitrants. But then the first possibility means nothing more nor less than Communism, while the second leads to a real chaos of diverse and clashing communisms, that would probably lead finally to some central Communism after a period of social war. Thus, left-wing anarchism must in practice signify either regular Communism or a true chaos of communistic syndics. In both cases, the actual result must be that the State is reestablished under another name. It is the tragic irony of left-wing anarchism that, despite the hopes of its supporters, it is not really anarchism at all. It is either Communism or chaos.
It should be no surprise that any such examples were short-lived, usually existed at a time of war where a clear opponent could rally people together and were not nearly as pleasant as many of their proponents seem to believe. The Paris Commune executed some hundred priests and clergymen and as Bryan Caplan puts it, the Spanish Anarchists of the 1930s carried out “… large-scale murders of people believed to be supporters of the Nationalists.”
Of course, the list of sins of official governments is much, much longer (the French government killed many more people than the Commune during that conflict). But the few examples help prove the rule of anarcho-syndacilism inherent flaws. It should further be noted that many similar experiments were tried in the United States in the nineteenth century with little success, even on a relatively small scale. Here’s Jonathan Haidt’s description of the anthropologist Richard Sosis’s work on the subject,
… [Sosis] examined the history of two hundred communes founded in the United States in the nineteenth century. Communes are natural experiments in cooperation without kinship. Communes can survive only to the extent that they can bind a group together, suppress self-interest, and solve the free rider problem. … For many nineteenth-century communes, the principles were religious; for others they were secular, mostly socialist … just 6 percent of the secular communes were still functioning twenty years after their founding.The Righteous Mind, p. 298.
The religious communes did better, with 39 percent still going after twenty years. But that still leaves a lot to be desired. And remember, these were small-scale communes filled with people from a similar culture who joined voluntarily, not large states with millions and millions of people of different cultures spread across a large geographic region.
While there’s no libertarian objection to such communes, they simply do not represent a universalizable system to emulate. On a large scale, we are simply left with the three choices that Frederic Bastiat so aptly pointed out;
- “The few plunder the many2. Everybody plunders everybody.3. Nobody Plunders anybody.”The Law, p. 19.
No matter how you organize society, people will arrange themselves into shifting, but relatively stable small groups. Families and kin will generally care more for each other than strangers and so on. While “othering” of any sort is an obvious concern when coming to the conclusion that human beings naturally form small groups and see the others as outsiders. I can see no better way to soften these relations than by engaging in mutually beneficial trade. It may not be utopian, but it’s certainly better than using force (be it through tyranny or democracy) to bring other people and groups into line with one’s own desires.
The State Supplants Local-Based CooperationIt should also be noted that there is a great irony in the government for being labeled as an institution to bring about the community such “atomistic” libertarians oppose. In the early twentieth century, vast numbers of workers belonged to various mutual aid societies that provided assistance when needed, medical and other services as well as a sense of comradery. Mutual aid societies, just like all sorts of businesses, churches, charities, and social groups, represented just another example of human’s ability to self-organize.
However the mutual aid societies were short-lived. The large expansion of the welfare state in the 1960s all but supplanted these voluntary institutions with the cold, faceless bureaucracies no rational person could describe as communal.
What about family? This is certainly one of the least atomistic arrangements that exist. Well, after the government implemented welfare and supplanted the traditional role of the father, family formation, divorce, and illegitimacy rates skyrocketed. In 1960, out-of-wedlock births made up about 6 percent of the total. Today, they are over 40 percent.
And the strain put on military families and communities when the government decides to go to war should be self-evident.
The best way to evaluate the strength of communities are various tools to measure what is called social capital (basically social networks buttressed by trust, reciprocity, and cooperation). Robert Putnam has found that most forms of social capital began to precipitously decline after the implementation of The Great Society programs of the 1960s. For example, he finds that membership in voluntary associations “… peaked in the early 1960’s, and began the period of sustained decline by 1969.”Bowling Alone, p. 55.
While Putnam believes the welfare state actually ameliorated the fall of social capital, the timing seems unlikely. Charles Murray, another social scientist, has made the case that happiness and social capital are built on four virtues; industriousness, honesty, marriage, and religion. And the government interferes with each to varying degrees. For example, welfare dependency reduces industriousness and incentivizes family breakdown and a lack of family formation. This argument certainly fits better with the timeline and what we know about human nature.
This is especially true given that force is not a good means to build a cooperative society and the government uses little more than force.
No, the government destroys a sense of community and pits groups of people against each other. Human societies organize naturally through voluntary means, just as libertarians have predicted. And furthermore, a market economy based on mutually beneficial trade is the only way yet found for multiple groups of disparate and overlapping “tribes” or groups of “Dunbar’s numbers” to live peacefully and prosperously in a large, interconnected, and complex modern society.
In a 2012 interview with The Horn Book, Inc., Russian author Eugene Yelchin seemed to take quiet pride in his Newbery Award-winning book Breaking Stalin’s Nose and its special designation as “the first children’s book about Stalin.”
This pride was well-deserved. Like Watership Down and Maus before it, Breaking Stalin’s Nose tells a story that is not always pleasant, but which advanced young readers will enjoy and ask important questions about nevertheless. It is an incredible teaching tool for a world that has largely footnoted, rewritten, or forgotten about the murderous reign of Joseph Stalin.
Myth vs. Reality in Breaking Stalin’s NoseThe protagonist of Yelchin’s tale is ten-year-old Sasha Zaichik, an idealistic boy living in the Soviet Union during the Stalin-era. Raised by his father, a state security officer whom he adores, young Sasha is a true Communist believer whose “greatest dream,” according to the fan letter he writes to Stalin in the book’s opening pages, is “to join the Young Soviet Pioneers — the most important step in becoming a real Communist like my dad.” Throughout his first person narrative, he and the supporting characters around him continually sing the praises of their State-controlled society.
The Soviet Union is “the most democratic and progressive country in the world.” Sasha lives in a communal apartment with forty-seven other people who are “all equal.” Together, they share a single kitchen and toilet “as one large, happy family.” There is not enough food for everyone, but this is okay because “Communism is just over the horizon; soon there will be plenty of food for everyone.” Sasha is a student in the Soviet school system, “the most democratic in the world.” When he is confronted by a classroom bully, he does not retaliate because “The Pioneers rules are clear on this: no fights.” And presiding nobly over this most virtuous of social orders is the godlike Comrade Stalin, “our great Leader and Teacher.”
Even without the benefit of hindsight, Yelchin’s readers can see that these platitudes are transparently false. Sasha and his neighbors may be theoretically equal, but his father is an employee of the State and thus enjoys a much larger apartment than many of his comrades who are crammed into closets and stairwells with their wives and children. At least one member of Sasha’s “large, happy family” apparently resents this and plots to take over the apartment after (falsely) reporting Sasha’s father for being a spy. When a plaster bust of Stalin is accidentally damaged in Sasha’s school auditorium (the broken nose that gives the book its title), the non-violent students of the world’s most democratic school system are asked to compile enemies lists naming the schoolmates they believe to be responsible. Far from being the most progressive country in the world, the Soviet Union of Breaking Stalin’s Nose is a secret police state where poisonous rumors are circulated, confessions are coerced, food shortages turn into famines, and children’s pictures are blotted out of classroom photographs.
Will the Real Joseph Stalin Please Stand Up?The role Stalin himself plays in this tragic system is still a topic of debate more than sixty years after his death. Because his armies were instrumental in defeating Nazi Germany, it has become fashionable in some pockets of the radical Left to view Stalin as a great twentieth-century champion of anti-fascism and anti-imperialism. In both North America and the UK, members of the Stalin Society work to “defend Stalin and his work on the basis of fact and to refute capitalist, revisionist, opportunist, and Trotskyist propaganda directed against him.”
Those who actually knew Stalin were not quite as positive with their reviews. In 1956, just three years after he passed away, Stalin was denounced by Soviet Secretary Nikita Khruschchev in front of the Twentieth Congress of the Communist Party. Stalin’s “grave abuse of power,” Khruschchev said, “caused untold harm to our party.” Elaborating on this point, he went on to say that Stalin had betrayed the fundamental spirit of Marxism-Leninism with his grotesque cult of personality and “brutal violence, not only toward everything which opposed him, but also toward that which seemed to his capricious and despotic character, contrary to his concepts.”
Sadly, many young people now attending American universities do not truly know enough about Stalin to consider him a hero or villain. To them, his is simply a name that gets thoughtlessly tacked to Hitler’s whenever a list of dictators is compiled.
This view of Stalin is not possible for Sasha Zaichik, of course. To him, Stalin is an omnipresent second father figure. Even after his biological father is arrested by Stalin’s goons in the middle of the night, Sasha’s first instinct is to run to Red Square, where he wholeheartedly believes he can meet with Stalin and set everything right. Instead, he is quickly chased away by armed guards — a heartbreaking metaphor for the State’s indifference to individual citizens and unwillingness to address the problems it has created.
By illustrating these and many other lessons, Breaking Stalin’s Nose — which could easily be adapted as a film, stage play, or graphic novel — has the power to introduce a new generation of readers to the cruel realities behind the fantasies of State power. In a children’s book and film market overflowing with fictional dystopias, Eugene Yelchin has given us a remarkable look inside the real thing. Well done, comrade.
One of the most persistent — and fallacious — argument against the libertarian or laissez-faire position is that libertarianism is an “atomistic” and “selfish” philosophy that denies the obvious truth that human beings are a “social species” who long for a strong sense of community.
Perhaps David Masciotra’s semi-coherent rant best illustrates this line of thinking as libertarianism is a political program that “eliminates empathy” and “denies the collective.” That it is in “Opposition to any conception of the public interest and common good, and the consistent rejection of any opportunity to organize communities in the interest of solidarity” and is nothing but a “… rejection of all rules and regulations, and the belief that everyone should have the ability to do whatever they want.” To sum up, “It is infantile naïveté.”
Voluntary Relationships Are Extremely ValuableMost good straw men are as self-evidently true as they are irrelevant. While it may be true that some libertarians want so much to be left alone that they would prefer to be left alone by not just the government but, well, everyone. The vast majority of people — including libertarians — understand quite well that human beings are a social and communitarian species. Libertarians simply believe human beings can self-organize and that it should be left to the individual which communities he or she will join and on what terms.
While a deontological argument could pretty much end there, critics will once again point to the scientific fact that human beings are a social animal and that a “selfish” value system at odds with our nature is a utopian (or maybe dystopian) fantasy.
While libertarians focus on the primacy of the individual, that focus does not in any way necessitate atomism. The plethora of libertarian gatherings and meet-ups should prove that by itself. Nor does it infer selfishness (although Ayn Rand — who explicitly denounced libertarianism, but is often associated with libertarianism — might argue this point). Selfishness and altruism are not mutually exclusive. As the psychologist Robert Wright describes, “Love … makes us want to further the happiness of others; it makes us give up a little so that others (the loved ones) may have a lot. More than that: love actually makes this sacrifice feel good.”The Moral Animal, p. 341. The famous self-help guru Dale Carnegie made the same observation,
Every act you have ever performed since the day you were born was performed because you wanted something. How about the time you gave a large contribution to the Red Cross? Yes, that is no exception to the rule. You gave the Red Cross the donation because you wanted to lend a helping hand; you wanted to do a beautiful, unselfish, divine act.How to Win Friends and Influence People, p. 43.
People can be selfless, sure, but they do so in a selfish way.
Not All Human Relationships Are the SameThis goes beyond a simple misunderstanding of libertarian theory, though. These critics, usually from the Left, have confused the science on human empathy and altruism. In fact, libertarianism is probably the only philosophical framework that can rectify human nature with the modern world in a peaceful way. The mistake stems from attempts to universalize humanity’s natural social instincts. This can be illustrated by an interview Steven Pinker discusses between Zach De La Rocha and Noam Chomsky,
[De La Rocha]: Another unquestionable idea is that people are naturally competitive, and that therefore, capitalism is the only proper way to organize society. Do you agree?
Chomsky: Look around you. In a family for example, if the parents are hungry do they steal food from the children? They would if they were competitive. In most social groupings that are even semi-sane people support each other and are sympathetic and helpful and care about other people and so on. Those are normal human emotions. It takes plenty of training to drive those feelings out of people’s heads, and they show up all over the place.Quoted in The Blank Slate, p. 246.
Chomsky’s mistake is so self-evidently ridiculous it almost beggars belief. He is effectively drawing an equivalence between someone’s own children and some guy that person has never met on the other side of the planet. Does it really take “plenty of training” for someone to care more about their own children than strangers? As Steven Pinker notes,
Unless people treat other members of society the way they treat their own children, the answer is a non-sequitur: people could care deeply about the children but feel differently about the millions of other people who make up society. The very framing of the question and answer assumes that humans are competitive or sympathetic across the board, rather than having different emotions toward people with whom they have different genetic relationships.The Blank Slate, p. 247.
Indeed, Adam Smith noticed this very thing back in the eighteenth century when he wrote,
Let us suppose that the great empire of China, with all its myriads of inhabitants, was suddenly swallowed up by an earthquake, and let us consider how a man of humanity in Europe, who had no sort of connexion with that part of the world, would be affected upon receiving intelligence of this dreadful calamity. He would, I imagine, first of all, express very strongly his sorrow for the misfortune of that unhappy people, he would make many melancholy reflections upon the precariousness of human life, and the vanity of all labours of man, which could thus be annihilated in a moment. He would too, perhaps, if he was a man of speculation, enter into many reasonings concerning the effects which this disaster might produce upon the commerce of Europe, and the trade and business of the world in general. And when all this fine philosophy was over, when all the humane sentiments had been once fairly expressed, he would pursue his business, take his repose or his diversion, with the same ease and tranquility, as if no such accident had happened. The most frivolous disaster which could befall him would occasion a more real disturbance. If he was to lose his little finger to-morrow, he would not sleep to-night; but, provided he never saw them, he will snore with the most profound security over the ruin of a hundred millions of his brethren, and the destruction of that immense multitude seems plainly an object less interesting to him, than this paltry misfortune of his own.The Theory of Moral Sentiments, pp. 126–27.
While we were all shocked and saddened by the tsunami in Indonesia in 2004, the earthquake in Haiti 2010, the tsunami and subsequent nuclear meltdown in Japan in 2011 as well as every other such tragedy, how many people do you know that actually lost any sleep over it?
Scientists explain this selective empathy through either kin selection for family (they share our genes) or reciprocal altruism, which develops friendships; both of which are lacking to strangers and even most acquaintances. So while tragedy abroad comes off to most as an unfortunate curiosity, we have all seen, and likely know, of people taking extreme risks or making huge sacrifices to help people they know, love and care about. Siblings will donate kidneys or part of their liver to each other; parents will take absurd risks to save their children and the like. Yes, strangers can do these things too sometimes. Occasionally there will even be an anonymous kidney donation from a living donor, but it’s quite rare. Indeed, the usual activism expressed at the suffering of strangers is to press the retweet button or to join some group that furthers one’s own self-identity.
The Limits of Human RelationshipsThis would further explain why the pop stars and movie stars are elevated so high in technological societies. It’s not like the average pop star is thousands of times more talented than those that “didn’t make it.” Indeed, the exact same song that makes it to the top of the charts would usually be lost in obscurity if released by a “no name” artist. And we know this without any doubt because the same few people who write pop songs do so for many different pop stars. What happens is that individuals can only keep track of so many different people at once and thereby pick only a select few artists to care about. People associate music or movies they like with that celebrity and despite not knowing the person personally, that celebrity basically becomes a one-way “friend” of sorts.
Much of this may seem quite obvious, but it underlies the fact the human beings are neither purely competitive nor purely cooperative. Even within competitive institutions, there is a substantial amount of cooperation. Other than commission-based industries, virtually all companies rely first and foremost on internal cooperation to fulfill a competitive aim. Businesses even have to cooperate with each other, for example, when it comes to outsourced vendors and suppliers. The term “Co-opertition” has even been coined to describe this phenomenon.
As noted above, the mistake the Left makes when criticizing libertarianism is to mistake humanity’s cooperative instincts as universal. There’s something called Dunbar’s number that notes that human beings can only comfortably maintain approximately 150 stable relationships. There has been some bickering amongst various psychologists about whether the number is actually 100 or 250 or thereabout, but there is basic unanimity that the general thesis is true.
Malcolm Gladwell described in his book The Tipping Point that the company W.L. Gore and Associates discovered by trial and error that social problems started occurring in any building that housed more than 150 people and thus reorganized to avoid such problems. Many other companies have started doing the same. Indeed, most groups, from social clubs to military units and the like tend to cluster around this number or even smaller. Even studies on social media have found that Dunbar’s number holds true. Yes, you may have more than 150 Facebook friends, but how many of those are really, truly friends?
A study in Nature looked at how people played the prisoner’s dilemma (a game that rewards cooperation, but only if all parties cooperate). As Christopher Allen describes, they created,
100 independent simulations with group sizes ranging from 2 to 512, and then [executed] each simulation 1,000 to 2,000 times. Each generation of the "players" was allowed to evolve different strategies of cooperation vs defection, the classic successful strategy being Tit for Tat. They would then evaluate the percentage of players who had cooperative strategies.
If punishment of defections was ruled out, they discovered that over the 1,000+ generations of the simulation that the rate of cooperation quickly crashes, such that at the group size of 8 a little over 50% cooperation evolved, and for groups that are larger than 16 none cooperate.
In essence, the evidence shows the humans either evolved or were created as a tribal species. And this fact is found in the typical group sizes of hunter-gatherer societies that still exist today. As Maria Konnikova notes, “The average group size among modern hunter-gatherer societies (where there was accurate census data) was 148.4 individuals.”
Indeed, the evidence even indicates that this general phenomenon is true across all primates. As Robin Dunbar, Louise Barrett, and John Lycett note,
… a series of studies … showed that relative neocortex volume correlates with various measures of social complexity across primates … [and] Humans fit this primate relationship between group size and neocortex size surprisingly well.Evolutionary Psychology, p. 114–16.
For most monkeys and apes, their “Dunbar’s number” for group size falls between five and 50.
So while human beings are not naturally atomistic, group cohesion, and cooperation are not univeralizable as many on the Left believe (or at least, want to believe). Of course we should treat everyone we come across — be it family, friend, or stranger with decency and respect. But, if naturally-cohesive human groups are small, as the scientific evidence clearly shows, then what sort of societal arrangement would best suit our species in the complex, modern would our minds are clearly not designed for? One governed by a massive state apparatus, or one of more localized, federated communities?
THE AUSTRIAN: Among those of us who are very laissez-faire, Europe's liberal nineteenth century seems like ancient history, and people like Richard Cobden seem to be incredibly far from what is now the mainstream. And yet, leftists seem to believe that “neoliberalism” (i.e., the ideology of “limited government”) is making gains everywhere. Can you put things into perspective for us? Historically speaking, how much cache does liberalism have right now?
RALPH RAICO: Yes, today Cobden is far from the mainstream, which is a pity. He was the best classical liberal (or libertarian) theorist of international relations who ever lived, and his incisive critiques of the greatest empire of his day, Britain’s, are totally pertinent to the greatest empire of our own time, America’s.
Leftists generally have been mistaken regarding our philosophy. What is called “neoliberalism” is in reality simply a center-right point of view, far from what authentic liberalism meant historically — so-called neoliberals include the Christian Democrats in Germany and Italy, for instance, and the Conservatives in Britain. The true anti-state position is represented by a number of relatively small groups, most of them associated with or inspired by the Mises Institute itself.
TA: In your lectures, you have noted that it was really the liberals who came up with “class analysis” which Marx later incorporated into his own work. What can we learn from this today?
RR: Liberal class analysis predated the Marxist version and in fact inspired it, as Marx and Engels freely admitted. It originated in France in the early nineteenth century, with the Industrialist school, but it permeates the whole history of liberalism and libertarianism, from Cobden and John Bright to Herbert Spencer, the great Gustave de Molinari, in America Albert Jay Nock and Frank Chodorov, and to the present day. It was central to the political outlook of Murray Rothbard. Liberal class analysis holds that history is indeed a struggle between two classes.
But these classes aren’t the “bourgeoisie” and the “proletariat,” as Marxism holds is the case in modern times. Rather, one group is composed of the beneficiaries of state action, the other of its victims. State subsidies and prohibitions, state-granted contracts and monopolies, tariffs, central banking and the manipulation of the currency, imperialism, above all preparing for and waging war — historically, the state’s preeminent business — these serve the interest of a favored few and are detrimental to the interests of everyone else.
TA: Much of Europe seems excited about belligerence toward Russia, combined with periodic attacks on African and Middle Eastern countries. Does the ghost of colonialism and nationalism still live among Europeans? Perhaps in some sort of mutated form?
RR: Mass democracy, as its nineteenth century liberal opponents foretold, inevitably devolves into a contest of contending forces, motivated by corrupt self-interest, either directly financial or ideological. (A superb dissection of this phenomenon, incidentally, is provided by my friend, Hans-Hermann Hoppe, in his Democracy: The God that Failed.) “Democracy” has become a concept weaponized by the US government in its global power struggles.
Russia provides an excellent example. Vladimir Putin, for all his faults, has assisted the cause of peace and freedom on a number of fronts. Let’s not forget that he granted asylum to the heroic whistleblower Edward Snowden, who, if the US and its European lapdogs had had their way, would have been condemned to torture and probably found hanged in his cell. Putin has successfully resisted American attempts, under the pretext of spreading democracy, to destabilize his country and subordinate it to US world hegemony, and he has blocked such attempts elsewhere, as in Syria (so far).
The old colonialism is still at work today, obviously so in the Middle East. Here it isn’t the European powers that are primarily involved, but the sole would-be hegemon, the United States. The great majority of Americans have little interest in and virtually no knowledge of foreign affairs. So, again, control falls into the hands of those who have a very definite interest and know exactly what they want.
The classical period of imperialism extended from the last decades of the nineteenth century to 1914. Historians have long since amply demonstrated the role of specific economic players in the home countries, as well as the role of the driving ideology, basically white supremacy. In the present time in the Middle East, the parts played by financial interests, the great oil companies, for example, and by supremacist ethnic groups are also clear. By a great irony, today colonialism in the narrow sense — the migration of populations to foreign lands — is the reverse of what occurred in the past.
As the headlines show us daily, it is the formerly subject peoples, in north- and sub-Saharan Africa, as well as the Middle East, vast hordes of blacks and Arabs, who are migrating to, really, invading, Europe. A Camp of the Saints situation is developing which, if not sternly checked, will result in the death of the old continent, the mother of modern civilization.
TA: Among liberals, the idea of “the small policy” once held sway, albeit not without enduring extensive criticism from those who held it to be too prosaic. It seems that militaristic rhetoric has won out, but at the same time, there has not been a war among major powers for seventy years. Is it possible that economics has precluded war for many, even if few are willing to say so?
RR: Militaristic rhetoric does seem to have won out. Many millions who couldn’t locate Iraq or Afghanistan on a map rush to support American aggression against those unfortunate countries. While there is extensive warfare in many places around the globe it’s true that war between the major powers, principally the US and Russia, has been avoided.
It seems to me, though, that the basic reason is that such a war, between two nuclear-armed nations, would mean the end of all ordered society. The ruling elites on both sides realize this and have, thankfully, refrained from blowing up the world. What would happen if Israel ever decides to exercise the Samson Option, however, is unclear but very troubling.
TA: It is perhaps an irony that liberalism gained strength alongside a strengthening of support for the nation-state as an ideal. This was when politicians like Bismarck succeeded in consolidating state power. What do you see as the trend in this respect here and now in the twenty-first century?
RR: The liberals inherited an older order containing elements of feudalism and of seventeenth- and eighteenth-century mercantilism. To sweep these away, they considered it necessary to establish a strong central state power capable of overcoming localized resistance. The guild system and commercial regulations by the towns, for instance, had to be abolished. This was the case in Germany, where the liberals allied with Bismarck in the 1870s and were actually his main support. When the great chancellor turned against his allies, starting in 1879 with the introduction of protectionism and then in the 1880s with his creation of the modern welfare state, the liberals still for the most part refused to admit their basic error. That was their lack of understanding that in modern times the one great enemy of liberty and general prosperity is the centralized bureaucratic state — what the English liberal Thomas Macaulay already in 1830 characterized as “the all-devouring state.”
As an aspect of their confusion, most of the liberals joined Bismarck in his Kulturkampf, or campaign against the Catholic Church. They did not grasp that such institutions as the Christian churches, made appropriately voluntary, could be powerful allies in the struggle for a free society.
As to how I see the trends: well, I am not an optimist, in the manner of Murray and Lew. Frankly, I tend more toward Bob Higgs’s stoic pessimism. I find the younger generation to be by and large brainwashed by the public schools and otherwise docile. The media, whenever they touch on politics, are eager servants of the political powers that be. Overall, a stultifying conformism seems to be the order of the day. The Mises Institute keeps fighting the good fight although it’s against great odds. They make highly skillful use of the Internet, which has so far resisted efforts to tame it. But for how much longer? Still, my somewhat bleak assessment may be completely mistaken. As Yogi Berra said, “predictions are hard to make, especially about the future.”
Is innovation slowing? Will it stop? A new paper by one Jonathan Huebner in the awesomely-named journal Technological Forecasting & Social Change argues that innovation is slowing, indeed it’s halved in the past hundred years.
Because Huebner is a physicist, he naturally looks for abstract and generalizable reasons. These take him to dark places: he worries that technology has an “economic limit” or perhaps that our brains have a limit we’re bumping against. He concludes, “The rate of innovation reached a peak over a hundred years ago and is now in decline. This decline is most likely due to an economic limit of technology or a limit of the human brain that we are approaching.”
A central problem with Huebner’s theory is that economics is not physics. Because people have brains, we come to do things, or come to believe things, in clusters or “cascades.” And these cascades depend on being personally influenced, personally incentivized, or personally forced.
Economies aren’t smooth machines; they’re lumpy things, influenced by particular individuals with particular motivations and desires using particular resources.
Comparing with the Golden Age of InnovationThe biggest lump in Huebner’s comparison is that he’s comparing today to a period known popularly as the “Gilded Age” and which met its end under particularly suspicious circumstances.
The term “gilded” is a journalistic slander for what’s more naturally called our “Golden Age.” Why Golden? The pace of innovation in the last part of the nineteenth century should dazzle even a jaded iPhone-waving, Tinder-swiping hover-boarder. A partial list reads: electricity, telegraph, automobile, flight, steam turbine, moving pictures, wireless communications, broadcasting, plastics. We went from whale oil to kerosene then gas cooking. From Pony Express to telegraph then wireless broadcasting nationwide. The Golden Age reads straight out of sci-fi. Indeed, for all the gee-whizzery of today, I’d argue it’s quite debatable whether we even match these three decades from 1870 to 1900.
Progress Stymied by the Progressive EraWhat makes the “Golden Age” doubly interesting is that it didn’t just dribble away. No, it ran into that great world-striding ideology: the Progressive Era. It was an era that promised a “scientific” reorganization of society, with one of their first priorities to tame the rampant beast of runaway capitalism; to replace the Law of the Jungle with a humane version that would take care of everybody.
Concretely, the reformers aimed to domesticate corporations using a never-ending stream of regulations, backed by criminal prosecution for disobedience. This leash replaced the traditional control on corporate irresponsibility of tort law. The change from tort to regulation transformed the US system into one where companies become something between a felon on parole and the domesticated pets of government. Taxes were raised, sure, but the main mechanism was constraining business through regulations, fiat commands, and forced cartelizations such as the FDA, FCC, Federal Reserve, and hundreds of industry-specific regulators tasked with “rationalizing” competition in their fiefdoms.
The result of this taming of business was, not shockingly, less innovation. After all, those rampant corporations weren’t doing all that innovation out of kindness, or to advance the torch of civilization. They were doing it so the greedy bastards could get rich. In a free market, the quickest way to make a fortune is to build a better mousetrap and sell it to the world. Edison, Carnegie, Rockefeller responded to incentives, making unimaginable advances so they could be rich.
Once these great innovators were tamed by regulatory micro-management and ever-increasing burdens, they start to settle down to a more-comfortable life. In many cases they switched their innovation investments into investing in regulations themselves. Milking what they got, buying further innovation-hobbling rules and cartels to feather their nests, instead of disrupting industry after industry.
Essentially, the Golden Age ended in a classic protection racket, trading protection for the leash.
The disruptors were tamed.
And, naturally, innovation collapsed. It wasn’t gone, but it was cut empirically by half. Giving us Huebner’s data in which — a zooming 1870s eventually ground down into a progressive slog. Innovation continues, to be sure, since we can stand on the shoulders of giants. But there’s nothing remotely like the TopHat Singularity of the 1870s.
With that narrative, I’ll dig into each of Huebner’s particular concerns.
There’s No Such Thing as An Economic Limit to InnovationFirst, the “economic limit” to technological change. There’s absolutely no economic reason for a limit to technology in terms of either speed or an end-point. Because technology is akin to creating new recipes — new ways to combine inputs into output. Given there are a quadrillion potential sandwich combinations at Subway, there are clearly more potential technological recipes than atoms in the galaxy. Meaning there is effectively no limit to creativity. There’s no sneaky hidden economic mechanism that stomps on the brakes when we’re innovating “too fast.”
Nor have we used up our brains. Because the number of potential technology “recipes” is so large, we’ve gone from exploiting the equivalent of a single grain in the Sahara in 1870 to perhaps 1.3 grains in the Sahara today. The percent of possible innovations we’ve exploited in those interceding 145 years is, in the grand scheme, nothing.
I don’t blame Huebner for the pessimistic mistake. Indeed, it’s very common. I think this is so for two reasons: first is undervaluing the relationship of policy and innovation. And second is simply perspective. For example, is a hundred people a lot or a little? If you’re used to crowds of thousands then one hundred is lonely. And if you’re expecting three people for dinner, hundreds of people is quite a crowd.
Similarly, is it a crazy sci-fi world we’re spinning in, or are we trudging along in a pathetically primitive state, barely above the chimps? It depends what you expected. Most observers look at the past and say “Wow.” If, however, we look at the missed potential — if we extrapolate from the Golden Age — it’s easy to be embarrassed by today’s technology. It becomes easy to see that it’s not natural limits to economics or brains that’s holding us back. It’s simply bad policy. Policies that burden startups, harass and tax innovation, even outlaw it. We haven’t killed the Golden Goose yet. But we’re working on it.
Without the Progressives, Where Might We Be Today?So where are we today? Working off Huebner’s numbers, the regulatory state has managed to kill off about half of innovation. This is fairly catastrophic when you run the numbers. Had the rate of innovation continued at Gilded-Age rates, and if innovation is proportional to productivity, I think a reasonable estimate is we’d be something north of five times richer today (based on post-war BLS numbers, extrapolating to 1900).
Five-fold GDP would be something like $200,000 per person. In other words, we’d be looking at the purchasing power of six-figure salaries for waitresses, janitors, or music teachers. Most people would retire at thirty-five to create art or sip margaritas in Tenerife. Perhaps we’d have had the internet by the 1940s and personal robots by the 1970s. Perhaps today we’d already be post-illness and death. I’ll refrain from dwelling on the hundreds of millions of loved ones, including my own, that we’ve lost to the reformers’ tech-slaughter and just leave it there.
So it’s important to keep in mind what we’ve lost with all that quashed innovation.
Despite the harm, the future is not entirely bleak: half-killed innovation is still, in historical perspective, quite good. Innovation continues, just not at the torrid pace it did before the regulators got their thrones. Indeed, the world economy has been growing around 3 percent per capita for decades now, which is quite spectacular when viewed in context. This growth, however, has largely come from simply adopting rich-country tech — an obvious freebie, albeit many countries were previously too badly run to even manage that.
Meanwhile, rich countries themselves are growing at about 1 percent per capita, which is actually quite pathetic considering our sabotaged Golden Age.
Still, we can’t just sit back. Given our 200-year run of technological growth, it’s easy to take it for granted that tech improves like the sun shines or the seasons change. But history is littered with Golden Ages that turned to dust. Typically because governments destroyed the economic incentives for innovation: from taxing and burdening producers — the late Roman Empire is a dramatic example — to outright bans on innovation like Ming China, which shutdown China’s economic miracle for a good 500 years.
And these Golden Ages all die the same way, and the way that we’re gradually strangling ours: ever-heavier burdens on the innovators, ever-tighter circles left open for innovation. We’ve bucked that trend in a few areas, most spectacularly with the Internet, where Bill Clinton set a precedent for hands-off treatment in the 1990s that has been impressively, if imperfectly respected since.
For Spain, 1492 was a transcendent year. The discovery of the New World and the vast hordes of gold and new riches was a springboard vaulting Spain from a barely-known kingdom in medieval Europe, to the most influential global power of the day.
However, this process was not immediate. Despite the vast gold inflows that Spain received, the discovery was a mixed blessing. During this prosperous time, the Spanish Crown declared itself bankrupt nine times: 1557, 1575, 1596, 1607, 1627, 1647, 1652, 1662, and 1666. Spanish finances did not improve significantly until after the War of the Spanish Succession (1701–14) when the Bourbons succeeded the Habsburgs to the Spanish throne.
War and Inflation under the HabsburgsThe seeds of modern Spain were sown when Queen Isabella and King Ferdinand unified the Kingdoms of Castile and Aragon in the fifteenth century. Their eldest daughter, Juana, was crowned upon their deaths. Since Juana’s husband, Philip, was Austrian, this also meant that the Habsburgs became the royal house of the newly unified Spain.
It was during the reigns of Philip and Juana’s son Charles I (1500–58) — and, in turn, his son Philip II (1527–98) — that Spain achieved its pinnacle of international power and influence. Rich with gold from the New World, the later Spanish Habsburgs poured great amounts of money into the military and pursued a religious crusade against the growing Protestant secessionist movement in Northern Europe.
The result of this flow of gold from Spain to Northern Europe has been well-studied. Richard Cantillon described the pernicious effects of monetary expansion with what is now called the Cantillon effect. Inflation caused high prices to spread like a wave across Europe, mostly following the path of the Spanish troops as they marched to the drum.
It is important to note, however, that the average Spaniard’s income did not increase over this period as only a few directly benefited from trade with the Americas or were involved in the new wartime economy. Spaniards as a whole were becoming poorer since the discovery of the Americas.
During the reign of Philip III (1578–1621) the crown declared its fourth bankruptcy. As a mercantilist economy, new policies were implemented in a vain effort to escape the crown’s financial problems. The government issued a new copper coinage aimed at paying off its creditors without resorting to direct taxation. Much to the crown’s dismay, the new “vellón” was not well received because it was not made of gold, and it never attained widespread acceptance.
Monopoly, Mercantilism, and More WarDuring the reign of his successor, Philip IV (1605–1665), Spanish wars continued throughout Europe. Meanwhile, in Spain, farmers struggled with frequent droughts which made food expensive and scarce, while government-backed privileges to the elites continued mismanagement of much of the land. Chief among these privileges was the “Mesta” (an association of sheep ranchers) who enjoyed the right to graze their animals freely anywhere in the kingdom. Making the situation worse, the Black Death made a brief reappearance.
With a decreasing population and active war fronts in Europe, the king needed a solution that would expand Spain’s military forces. The king’s prime minister, the Count-Duke of Olivares, came up with the “Union of Arms,” a new law that would increase military cooperation between the kingdoms ruled by Philip IV (Castile, Aragon, Portugal, Naples, Sicily, Milan, and Spanish Netherlands).
Before this, it was Castile and its people — plus the Americas — which bore all military expenses. The Union of Arms distributed the cost of war across all the kingdoms, and thus diffused the full cost away from the King’s native Castile. But, by the end of Philip’s reign, gold coming from the Americas was still being spent on an increasingly inefficient military that was losing wars. These defeats led to independence movements in both Portugal and the United Provinces (the Netherlands).
The Empire Enters Its Final DecadesThe last Habsburg monarch of Spain, Charles II (1661–1700) did not father an heir. After his death, the pretenders to the Spanish throne were his great-nephews Charles (Austria) and the future Philip V (France). The War of the Spanish Succession began with France and Spain united against Austria. The war ended in 1713 with the Treaty of Utrecht in which Spain lost its European territories to Austria.
As a broken nation with a newly established French dynasty under the Bourbons, Spain faced many challenges. The Spanish economy had foundered under Carlos II, particularly in Castile. The country’s population decreased by nearly two million people during the seventeenth century, partially due to plagues and wartime causalities, but more so due to emigration to the New World as Spaniards sought a better life.
The first Bourbon monarchs of Spain were Philip V and his sons: Louis I, Ferdinand VI, and Charles III. The country’s structures were still medieval with each region having its own laws and privileges as opposed to the centralist mentality of the Bourbons, who firmly believed in uniformity.
Small Steps toward LiberalizationCharles III (1716–1788) is referred to as either an enlightened despot or a liberal reformer as his reforms responded to the deficiencies of the previous mercantilist period. Charles adopted a relatively peaceful attitude toward foreign affairs. Having cut wartime expenditures, he explored new possibilities for filling the state’s coffers.
His first measure was building new shipyards to improve Spanish shipping and speed up the arrival of gold from the Americas. Charles could be considered an early liberal in the sense that his reforms were oriented to opening trade relations and removing special privileges that certain groups held. (Of course, not all his policies were beneficial: in order to stimulate Spanish industries he placed levies on foreign products, though at least he had the prescience to remove internal barriers in the Iberian Peninsula so that goods could be traded freely throughout the territory.)
Charles also sought to improve Spanish competitiveness when trading with the colonies by opening commerce with the Americas to eight new ports in Spain in 1765. Previous to the liberalization, Cadiz held a monopoly.
With these reforms, the Spanish economy started its revive. Charles planned further reforms in the agricultural sector, and he reduced the privileges of the sheep ranchers and expropriated the communal lands of the Spanish countryside to sell them to private individuals, thus ending centuries of neglect created by what can today be seen as a tragedy of the commons.
This period of liberalization and relative prosperity lasted until 1808 when Napoleon invaded Spain.
Lessons from Three Centuries of Booms and BustsThe Napoleonic Wars marked the end of a three-centuries long “boom-bust-boom” cycle in Spain that started with the discovery of the New World in 1492, and was marked by inflation, war, mercantilism, and a variety of government monopolies and interventions.
Although the country seemed wealthy at many times during this period, the average Spaniard lived in continued poverty, and it was only with the reforms brought by the early Bourbon monarchs that many Spaniards began to enjoy the benefits of trade and liberalization that many Europeans elsewhere had long since discovered.
This seminal treatise in the history of ideas demonstrates what has come to be known as the Higgs thesis: that government grows in periods of crisis, for example, war and depression. He demonstrates this with a detailed look at twentieth century economic history.
Higgs's thesis is so compelling that it has become the dominant paradigm for understanding the so-called ratchet effect: government grows during crisis and then retrenches afterwards, but not to the same level as before.
This book is absolutely essential for anyone who seeks to understand the dynamics of government growth and the loss of liberty.
This sweeping book is a systematic treatment of the historic transformation of the West from limited monarchy to unlimited democracy. Revisionist in nature, it reaches the conclusion that monarchy, with all its failings, is a lesser evil than mass democracy, but outlines deficiencies in both as systems of guarding liberty. By focusing on this transformation from private to public government, the author is able to interpret many historical phenomena, such as rising levels of crime, degeneration of standards of conduct and morality, the decline in security and freedom, and the growth of the mega-state.
In addition, Hoppe deconstructs the classical liberal belief in the possibility of limited government and calls for an alignment of anti-statist conservatism and libertarianism as natural allies with common goals. He defends the proper role of the production of defense as undertaken by insurance companies on a free market, and describes the emergence of private law among competing insurers.
The author goes on to assess the prospects for achieving a natural order of liberty. Informed by his analysis of the radical deficiencies of social democracy, and armed with the social theory of legitimation, he forsees secession as the likely future of the US and Europe, resulting in a multitude of region and city-states. Democracy-The God that Failed is a brilliant and unflinching work that will be of intense interest to scholars and students of history, political economy, and political philosophy.
War and Democracy presents a selection of essays and reviews by Paul Gottfried written from 1975 to the present. They cover a variety of topics, both historical and contemporary, ranging from Oswald Spengler and the Frankfurt School to the destruction of classical liberalism, the dumbing down of higher education and the increasing dominance of administration in democratic governments. Most crucially, Gottfried sees Western governments as engaged in a messianic fantasy of bringing democracy to the world, an imperialist endeavor that has only brought disaster to all nations concerned, while liberties at home are being gradually curtailed.
A recurring theme is the transformation of the modern West, and how the meanings behind the ideas and concepts which helped to build our civilization have been altered to create a new type of society that bears a connection with that of our forefathers in name only. He points out that the history we are taught and the "Right" that we know today have become signifiers for a very different reality that is in many ways opposed to what they stood for previously. Gottfried remains tenacious in his defense of the original meaning and purpose behind the conservative movement, which favors organic social growth as opposed to imposition through force and an expanding bureaucracy. "The notion that all countries must be brought - willingly or kicking and screaming - into the democratic fold is an invitation to belligerence. The notion that only democracies such as ours can be peaceful is what Edmund Burke called an 'armed doctrine.' ... It is simply ridiculous to treat the pursuit of peace based on world democratic conversion as a peaceful enterprise. This is a barely disguised adaptation of the Communist goal of bringing about world harmony through worldwide socialist revolution."
This volume has collected the best of the best of early economic thought, and thereby has rooted economics in the broadest range of history dating back centuries before the Industrial Revolution.
Represented here are: William Walwyn, Pieter de la Court, Josiah Cilde, Pierre Nicole, Nicholas Barbon, Dudley North, Andrew Fletcher, John Trenchard, Bernard Mandeville, Daniel Defoe, Voltaire, Montesquieu, Anne-Robert-Jacques Turgot, Jean-François Saint-Lambert, Ferdinando Galiani, Étienne Bonnot de Condillac, among many other thinkers both famed and unfamiliar.
Sweden might be heading toward reform of its very rigid labor laws, which include labor union control of wages and “last in — first out” hiring and firing rules. This means the previously most-untouchable tenet of the Swedish welfare state is finally being discussed as a problem, not a value. And the reason for this change of tone is the immigration crisis.
The Swedish State Prevents IntegrationThat Sweden struggles with immigration has become common knowledge. What is little known, however, is that the problem is not the immigration volume per se. There is plenty of room in Sweden but the country, given the welfare state, is in desperate need of young people to enter the labor force as the baby boomers en masse enter retirement.
The main problem is integration of those who immigrate: they are prohibited to work until their asylum or petition for residency has been approved. In other words, they are a cost in the state’s budget and a burden for taxpayers — often for many years — while bureaucrats process their application. Another effect of this is that immigrants aren’t integrated into Swedish society, since they’re effectively kept out of interacting with “ethnic Swedes” through the normal meeting places: school, the workplace, the commute, and so on.
A major force against allowing immigrants to get integrated into Swedish society is the powerful labor unions. Not only do they control the level of what is not formally — but is effectively — a minimum wage in most occupations, but they also have veto power in approving permanent residency status. Recent examples of the absurdity of this system include the long-time owner of a small business who (on paper) made the equivalent of 50 cents per day below the average salary of union members in this industry. This was deemed to be “too little,” and therefore doesn't meet the formal requirements to make a living. Consequently, and on the labor union’s recommendation, he was deported along with his family after many years living in Sweden.
The Role of Labor UnionsThe labor unions are routinely invited to comment on the salaries earned by immigrants who have already made it through most of the hoops (that is, who have been permitted to work). Unless they earn a sufficiently high salary, which is based on what others make in the same line of business, they are deemed unable to care for themselves and therefore deported. The labor unions, when asked, respond not with their required “minimum” wage but with the “average” wage earned by their members. In other words, unless immigrants in a certain line of work make at least as much as the average of those already employed, they might face deportation.
This type of protection measure is part of the very rigid Swedish labor laws, which also mandate employers to fire in the opposite order they hire: “last in — first out.” Needless to say, this means employers refrain from hiring unless absolutely necessary. It also means they will need to fire (without the possibility of rehiring) productive workers hired after a “bad apple” employee. This type of “protection” of course only leads to a static labor market, where very few workers change jobs as they will then face greater odds of unemployment regardless of their qualities or value to the employer.
Salaries are also set by the labor unions who in centralized negotiations with employers’ alliances decide on changes in wages for the whole country. While this is referred to as “negotiation,” the labor unions have always been negotiating with the threat of legal action: the social democrats, who ruled the country for most of the twentieth century, would legally mandate wage increases unless the parties to the labor market could agree “voluntarily.”
The Consensus Is FailingThis centralized model has always been a core part of the Swedish welfare state, and it has been beyond any type of scrutiny. Indeed, the “Swedish model” is based on this rule by the social democratic labor unions through “negotiation” with employers’ alliances under the threat of legal action by the other wing of the social democratic movement: the party.
But due to the recent increase in migration and millions of refugees seeking shelter, the failing integration of migrants was soon in the public eye — and with it the realization among the public of a major downside to the rigid labor market. This has led to a situation where there is an emergent discussion on the inability of the Swedish model to include new workers — whether they are ethnic Swedes graduating college or migrants from other countries — and possible solutions.
Who knows? Maybe this core of the Swedish welfare state will soon crumble. And as a result, both Swedes and immigrants will be better off.
Happy New Year from everyone at the Mises Institute. After an exciting 2015 filled with important research, exciting global growth, and widespread recognition for our success in spreading the cause of Austrian economics, freedom, and peace, we look forward to what 2016 will bring.
We hope you will make a resolution to join us at one of our events this year and thank you again for your continued support.
Mises Weekends this week features Fox News Senior Judicial Analyst and Distinguished Scholar in Law and Jurisprudence at the Mises Institute, Judge Andrew P. Napolitano. Judge Napolitano discusses the difference between natural and legislative law. You won't want to miss this talk with one of the most prominent advocates of liberty in America today.
And in case you missed any of them, here are this week’s featured Mises Daily articles and some of our most popular articles at Mises Wire:
PC Is About Control, Not Etiquette by Jeff DeistMises: An Audacious Champion of Freedom by Lew RockwellThe Formlessness of Progressivism by Yonathan AmselemEntrepreneur, Economy, and State by Greg MoranWill 2016 Be the End of the Current Skyscraper Boom? by Mark ThorntonSwitzerland to Vote on 100% Reserve Banking by Mark Thornton2015: The Year in Austrian Economic Research by Matt McCaffreyThe Big Short's Michael Burry on the Crash by Hunter LewisWhat Populism Is And Isn't by Hunter Lewis
Our guest this week is Judge John Denson, the great war historian and lawyer who helped Lew Rockwell found the Mises Institute in the early 1980s.
In celebration of Christmas, Judge Denson and I discuss the infamous World War I truce that took place between British and German soldiers in December of 1914 — and how the 20th century may have been radically different, and radically less bloody, if that truce had brought about an early end to the war. We also discuss the critical importance of historical revisionism, and why a more peaceful future depends on all of us questioning official history and state propaganda.
Stay tuned for a great and hopeful interview.
As a young man Alexander Hamilton once wrote, “There is a certain enthusiasm in liberty, that makes human nature rise above itself, in acts of bravery and heroism.” While it is tragic that Hamilton would grow up to advocate all sorts of government policies contrary to liberty — America would be better off had he read Cantillion — there is a power in these words that has always resonated with me.
No man better embodies this heroic nature of liberty than Ludwig von Mises.
My favorite example of Mises’s legendary dedication to his principles is his experience during WWI.
Even though he was already an accomplished scholar, his masterpiece Theory of Money and Credit was published in 1912, the Great War brought Mises to the field of battle. As a commanding officer of an Austrian artillery regiment, Mises and his men were tasked with defending the Northern Front of the Austro-Hungarian Empire from the marching Russians.
Not only were Mises and his men outnumbered, but manning the cannons meant being the prime targets of Russian fire. The result was horrific. As Guido Hülsmann details in Mises: Last Knight of Liberalism, “In the first few weeks and months of the war, almost no day went by that did not see entire [Austrian] batteries (about 100 men each) and even regiments (about 500) being wiped out.”
Mises and his men held the line and the Russians were driven back in December of 1914.
After receiving honors for his actions on the battlefield, First Lieutenant Ludwig von Mises was extended an invitation to join a team of fellow economists on the Viennese war council. Though glad to be away from the canons of war, Mises was horrified by what he found — his nation’s greatest minds, men who knew better, becoming apologists for a bureaucratic government seeking to tighten its grip on the economy.
Writes Hülsmann:
Montesquieu once said that although one had to die for one’s country, one was not obliged to lie for it. This seems to have been Mises’s maxim too. He had already demonstrated his readiness to give his life for his country. Now he showed his will to honor the truth even if it brought him in conflict with powerful opponents. ... Mises argued that, “from a purely economic standpoint,” the case for free trade and against protectionism was unassailable.
The power of the argument ... made it impossible for the war party to ignore Mises. Trouble lay ahead.
The trouble came in the form of orders to return back into combat. The government’s message was clear — Mises needed to go. Not for the last time, his decision to stand firm in his defense of liberty put his very life in danger.
Luckily for us all, Mises survived the war and went on to live a life that fundamentally altered the world. He overcame the Nazis, academic blacklists, and the personal hardships that tends to haunt any man who refuses to sacrifice his principles.
While some like Milton Friedman viewed Mises intransigence as a burden to Mises’s influence, I believe his example is vital to the resurgence of Misesian thought today.
We see this on the streets of Brazil, where earlier this year young Brazilians took to the streets demanding “Less Marx, More Mises”! Thanks to the work of people like Helio Beltrão, Mises is now the most popular economist in the country.
We see this in China, where translations of Mises and fellow Austrians have made it into the hands of students and scholars. Even Murray Rothbard is openly discussed in influential circles.
We see it in the incredible growing international network of young Austrian scholars, complete with university programs dedicated to Austrian insights in topics such as entrepreneurship.
Though it rests far away from the halls of power, and apart from any larger political machine, the Mises Institute stands today the most influential libertarian organization in the world, a testament to the power of Mises’s ideas and a commitment to stay true to principle.
Though there is still much to be done, we should never lose sight of the gains we have made — nor lose hope for the future.
In the words of Lew Rockwell:
Mises never tired of telling his students and readers that trends can change. What makes them change are the choices we make, the values we hold, the ideas we advance, the institutions we support.
Unlike Mises, we do not face obstacles that appear hopelessly high. We owe it to his memory to throw ourselves completely into the intellectual struggle to make liberty not just a hope, but a reality in our times. As we do, let us all adopt as our motto the words Mises returned to again and again in his life. “Do not give in to evil, but proceed ever more boldly against it.”
For as little as $7 a month, you can become a Sustaining Member of the Mises Institute and be a part of this movement. Together, we can follow Mises’s example and change the world.
Ideas are all-important. Indeed, they are more powerful than armies, as Victor Hugo noted. But ideas are advanced by specific individuals, and inculcated in them, and historically tied to them.
How blessed are we that we have not a criminal like Marx nor a monster, like Keynes to follow, but Ludwig von Mises, a hero as well as a genius.
Mises was not only a dazzling economist and champion of liberty, but no Communist, nor Nazi, nor central banker could pressure him into doing the wrong thing.
Born in 1871 in the city of Lemberg, then part of the Austro-Hungarian empire, he moved with his family to Vienna as a young man. Mises’s father was a high executive in the Austro-Hungarian railways.
The grammar schools and gymnasiums he attended—super high schools in our terms—still have his records. He was recognized as extraordinary from the first.
Mises excelled as a student at the University of Vienna, earning a doctorate in economics and law. He wrote a book on housing policy before encountering Menger’s Principles and becoming an Austrian economist.
Mises clerked for judges and practiced law before getting a job as an economist at the professional housing association. While there, he demonstrated that high real estate taxes were hindering new construction, a serious problem in housing-short Vienna. Through his papers and lectures, that is, the pure power of his mind, he brought about a cut in taxes, leading to more investment in housing, exactly as he had predicted.
Mises was denied a paid position at the university, despite publishing his astounding Theory of Money and Credit. Before the founding of the Fed, he demonstrated that such a central bank would harm business and people to aid the government and its cronies, as well as bring on the business cycle of artificial booms followed by busts.
Mises was an army officer during the war, and we are privileged to have his medals at the Institute. At first, Mises was an economic advisor to the general staff. Then he was sent to the most dangerous duty in the war and almost killed. Guido Hülsmann, author of the great Mises biography, discovered that the power of Mises’s free-market analysis led to his corrupt and statist opponents hoping to kill him. There was a lot of money at stake. Still, the wounded Mises was decorated for bravery under fire, and as a great leader of men under brutal attack.
After the war, Mises secured a position as an economic advisor to the government for the Vienna Chamber of Commerce. He had been blocked from a position at the university by powerful socialists, and instead worked as a privatdozent and later a prestigious associate professor at the university, both unpaid positions. Unpaid or not, he used it to teach students and host his famous private seminar, which attracted top intellectuals from all over Europe. They remembered it as the most intense, rigorous, and fun experience of their academic lives.
Though working in effect two full-time jobs, Mises threw himself into his work as an economic advisor to call for a fully redeemable gold standard. The central bank was furious. It turned out that the then-current system allowed officials to have a secret slush fund for themselves and friendly economic journalists. The vice president of the central bank even hinted at a bribe for Mises if only he would be more accommodating to compromise. Of course, then and throughout his life, he never would.
The power of Mises’s influence as an economic advisor was shown in two more important ways. Austria threatened to follow Germany into hyperinflation. Almost singlehandedly his persuasion prevented a repeat in his country, if not of all inflation, of the speed and depth of the German catastrophe.
After the war, a coalition government, in part Marxist, came to power in Austria. Otto Bauer, a leader of the Austrian Social Democratic party and foreign minister, intended to introduce Bolshevism in Austria, but he listened to his old school chum Mises, something Bauer resented bitterly in later years.
Evening after evening, Mises persuaded Bauer and his equally Marxist wife that Bolshevism would mean mass starvation. Bauer was convinced.
All this time, Mises was also trying to do his scholarly work. And he did, while also paying full attention to his day job. In what would normally be his leisure time, for example, he wrote first his world historic article and then his book on Socialism. Just after the establishment of Bolshevism in Russia, he proved that with no private property in the means of production, socialism would be a chaotic and poverty-producing disaster. No planning board could substitute for property and market. Tragically for the world, it took decades before socialists would admit, after his death, “Mises was right.”
But the evil of statism also grew from another direction, and Mises was the first to see what was in store for Austria with the National Socialists. Many colleagues credited him with saving their lives, because they left in time. In 1934, Mises secured the first and only paid professorship of his life, at the International Graduate School in Geneva. It was a happy time for Mises, who lectured in accentless French and wrote in German. But by 1940, it was getting very uncomfortable in Switzerland.
Already in 1938, the invading Nazis had ransacked his Vienna apartment, and stolen his library and papers. Mises and his wife Margit—later first chairman of the Mises Institute—decided to go to America.
They crossed France barely in front of advancing German troops, just making it into neutral Portugal and a ship to New York. Once here, in an academic community offering professorships to all the European Marxists and Keynesians, there was nothing for the “Neanderthal,” “reactionary,” and “caveman” Mises. The intellectual climate of the New Deal was bitterly hostile. Even when the libertarian Volker Fund offered to pay his entire university salary, Mises was shunned for defending freedom and capitalism.
Finally, businessman Lawrence Fertig, later a benefactor of the Mises Institute, was able to persuade NYU, where he was on the board, to allow Mises to be an unpaid, permanent “visiting professor.” Even so, Keynesian deans gave him the worst offices and class hours, and tried to persuade students not to take his courses.
Yet, though in a new country at almost sixty, of whose language he had only a reading and writing knowledge to begin with, Mises was undefeated. He restarted his weekly seminar, attracting such participants as Henry Hazlitt, Ayn Rand, and Murray Rothbard. Important business leaders, journalists, and financiers audited his classes. This drove other professors, said Robert Nozick, wild with envy.
But Mises, never compromising his principles, just moved ahead, uncomplaining, undismayed, and unhindered. And it was in the 1940s that Mises completed his monumental treatise Human Action, in which he reconstructed all of economic analysis on a sound individualistic foundation.
Any of the books I’ve mentioned—and he wrote many more—would be a significant lone achievement for a lifetime. It was one of the great moments of my life to have dinner with Mises and his wife while serving as his editorial assistant. He was eighty-six, and magnificent. I can testify that Rothbard was right: he was trailing clouds of glory from a lost and better civilization: pre-WWI Vienna. In looks, speech, dress, bearing, and manners, he was a great European gentleman.
Because Mises was intransigent on matters of principle, some of his critics have denounced him as “obnoxious”! He might have had reason, but as Rothbard, Hazlitt, Hayek, Fertig, Leonard Read, and so many others confirmed to me, he was kind, funny, and generous, no matter what he was put through. He was especially good with students. Or to a twenty-three-year-old kid helping bring some of his books back into print, as well as to publish a new paper.
In the years after he died in 1973, I worried that his scholarly work was being neglected, as well as his moral stature, and the Austrian school was shrinking. We all need heroes, and he was a great one. So in 1982, I asked his widow for her blessing to start a Mises institute, and asked her to serve as our chairman. She was already a “one-woman Mises industry,” in Murray’s words, and she was thrilled.
Thanks to you and all our donors, our scholars and students, our supporters and readers, my fears have not come true. Today, the Austrian school is worldwide and growing in influence. Mises is increasingly recognized for the creator and hero that he was.
As we carry the banner of Mises and the Austrian school, there is increasing interest in socialism. Keynesianism remains the official ideology of the regime. We have our work cut out for us. But despite everything, we are making great progress with young people here and around the world.
They know they are being fed honeyed lies. They don’t trust the professors who might as well be White House propagandists. And the political correctness on campus and social media repels every person of taste, intelligence, and judgment. Our young people, and our faculty, will not be silenced, and with your help, neither will we.
We not only honor Mises, and the greatest Misesian, Rothbard, we try to emulate the men they were, and the example of lives well and truly lived, no matter what the obstacles.
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In honor of the 24th anniversary of the Soviet Union's collapse, our guest this weekend is our old friend Dr. Yuri Maltsez, a senior fellow here at the Mises Institute and a professor of Economics at Carthage College in Kenosha, Wisconsin. Yuri is famous for having been a Soviet economist during the Gorbachev era and defecting to the United States.
Yuri and Jeff discuss Trump-ism, the Bernie Sanders phenomenon, and Western progressives' silly and enduring love affair with socialism. They also discuss what the often-misused terms socialism and fascism really mean.
In the first volume (Economic Thought Before Adam Smith), Rothbard traces the history of economics from the ancient Greeks to Adam Smith; and in the second volume (Classical Economics), he discusses British classical economics, the French school of classical liberalism, and Marxism.
Narrated by Jeff Riggenbach. The full text is available online here.
Download the complete audio book (two volumes, 62 MP3 files) in one ZIP file here. This audiobook is also available on Apple Podcasts (Volume 1, Volume 2), Google Podcasts (Volume 1, Volume 2), and via RSS (Volume 1, Volume 2).
In times when dictators the world over are falling from pressure from their own people, this book, written nearly 500 years ago, is truly the prophetic tract of our times. Murray Rothbard writes a classic introduction to one of the great political essays in the history of ideas.
Narrated by Dr. Floy Lilley.
Download the complete audiobook (4 MP3 files) here. This audiobook is also available on Apple Podcasts, Google Podcasts, Soundcloud, and via RSS.
The holiday weekend gave way to a tumultuous week full of significant and somber headlines. Here are three stories we've been following closely:
On Monday, the IMF announced that they will include the Chinese yuan in the SDR's basket of currencies. When James Rickards appeared on Mises Weekends in September, he discussed the interest of financial elites in making the SDR the new reserve currency of the world. This week, he reminded us, “The decision to include the yuan in the SDR is a political decision, not an economic one.”
Meanwhile in Brazil, facing a collapsing economy and months of street protests, impeachment charges were announced against President Dilma Rousseff. While the serious challenges facing Brazil go far beyond a single politician, the work of Helio Beltrão and Mises Institute Brazil offers hope for a freer future.
Lastly, Wednesday's tragic shooting in San Bernardino is already being exploited by the Obama administration and others on the left for a renewed push for gun control. Of course it is government, not gun ownership, that makes Americans less safe. As Jeff Deist noted following the attacks in Paris, "when state intelligence and security agencies fail spectacularly, their budgets and personnel increase. Nobody gets fired, nobody apologizes."
Our Mises Weekends guest is Łukasz Dominiak, a professor at Nicolaus Copernicus University and a former Mises Fellow, he joins Jeff to discuss the recent elections in Poland. The media characterized those elections as a triumph for the right-wing, and dismissed large street protests as xenophobic nationalism. But the truth as Łukasz explains is quite different: it's a strange mix of both left and right politics in a country that is not afraid to embrace its Catholic roots and its cultural identity.
And in case you missed any of them, here are this week's featured Mises Daily articles and some of our most popular articles at Mises Wire:
The Problem With "Rules-Based" Monetary Policy by Tommy BehnkeCan the US Dollar Face Down the Chinese Yuan? by James RickardsHow Money Disappears in a Fractional-Reserve Money System by Frank ShostakWe Must Be "Opportunists" In Dismantling the State by Joseph SalernoWill Brazil Impeach Rousseff? by Bruno Gonçalves RosiBorders Closing Across Europe: Norway Joins In by Ryan McMakenHunger and War in WWI Germany: Remembering the Slaughter of Pigs by T. Hunt TooleyTranscript: Jim Rickards on Currency WarsBrazil: Big Government, Small Wages by Ryan McMakenA Behind the Scenes Look at the November Jobs Report by Jonathan NewmanRothbard on Libertarian Populism by Jeff DeistHow Governments Can Manipulate Murder Rates by Excluding "Terrorist" Killings by Ryan McMakenIncentives, Ideology, and Climate Change by Peter G. KleinExtreme Poverty Worldwide Has Plummeted as Market Economics Has Spread by Ryan McMakenIn the 19th Century, Non-Citizens in the US Could Vote in 22 States and Territories by Ryan McMakenRobert Wenzel on the Cato Monetary Conference by David GordonThe November-December Issue of 'The Austrian' Is Now Online
A few years ago, in 2009, The Economist magazine published an issue with its front cover showing a picture of the statue of Christ the Redeemer, one of the main symbols of Brazil, taking off like a rocket. This symbolized the country’s growing economy. The title of the article read “Brazil takes off.” However, in 2013, the same magazine published another issue with its front cover showing a picture of the statue going down like a misfired rocket. The title of the main article asked “Has Brazil blown it?” Yes. It blew it. An even more recent issue, from 2015, states that the country is in a quagmire.
With President Dilma Rousseff now facing impeachment, doubts may arise about the future of Brazil. How likely is this impeachment to remove her from office? And what changes will occur in case it does happen? To answer, I’m going to briefly analyze the last twenty years of Brazilian politics.
Along with Latin America and Eastern Europe, Brazil went through a series of reforms during the 1990s, especially in the government of Fernando Henrique Cardoso (also known as FHC) from 1995 to 2002. FHC actually started the reforms when he was finance minister in the government of his predecessor, Itamar Franco (1992–1994). During the administration of FHC’s successor Lula da Silva (2003–2006), the reforms seemed to continue, paving the way for the prosperity observed in 2009. But things just appeared that way.
FHC and Lula are the better known former presidents in Brazil since 1985, when the country resumed governmental democracy after twenty years of military presidencies. And the two were also heads of the country’s two major political parties, respectively PSDB (Brazilian Social Democracy Party, or Partido da Social Democracia Brasileira) and PT (Worker’s Party, or Partido dos Trabalhadores).
PSDB and PT have similarities and differences. Both parties define themselves as center-left in the single-axis political spectrum. Both parties came into existence in the late 1970s or early 1980s, coming from a prior condition of bipartisanship forced by the military. Both parties include social democracy as part of their political ideology.
But the similarities end there. PT came into existence from three main segments: first, the basic ecclesial communities linked to the Liberation Theology in Latin America, especially in the ABC Region, an industrial region in Greater São Paulo. In the 1970s these communities tried to combine Marxism and Catholicism, turning Jesus into a first century Palestine social revolutionary. Second, PT has its origins in the labor movement of the same region in Sao Paulo — that’s where Lula came from. And finally, the party’s founders were die-hard radical socialists that participated in guerrilla activity against the military government — financed and trained mainly by Cuba — that’s where Rousseff came from.
A more detailed analysis might show that the party had more pragmatic, power-seeking wing — represented by Lula — and a more ideological one.
Among PSDB’s founders were well-established politicians from the PMDB (the opposition party to the military government). Like the founders of the PT, the PMDB opposed the dictatorship, but without the backing of outside communist regimes.
Instead, the PMDB used the legal institutional means available at the time. Although “social democracy” is in its name, PSDB was a much more pragmatic party from its inception, leaning toward a radical centrism, in the sense of calling for fundamental reform of institutions and believing that “genuine solutions require realism and pragmatism, not just idealism and emotion.”
Over time the party was much more willing to support market-based solutions to social problems than its counterpart. The party — and specially FHC — can also be identified with the Third Way, much like Bill Clinton and Tony Blair.
For other countries, the Third Way may be “the fastest route to the Third World.” But in Brazil’s case, coming from a situation of extreme statism since the 1930s, the reforms undertaken by FHC during the nineties were a major relief by comparison. But because of them, the president was accused of being neoliberal, meaning, a follower of Ronald Reagan and Margaret Thatcher (or even worse — from the left-wing point of view — a follower of F.A. Hayek or Milton Friedman).
Lula came to power in 2003 promising to leave behind the more radical positions of his party and to adopt a more pragmatic approach, not much different from that of FHC. That seemed to be the case for a while, and that’s when The Economist committed the mistake of believing Brazil was taking off. But for the more attentive observer it was clear that this could not be the case. Lula slowly but certainly abandoned the more market-oriented policies, a gesture consolidated by his successor, Dilma Rousseff. Instead of deepening the reforms started by FHC, PT was satisfied with keeping them in place for a while, and then abandoning them altogether.
I could go further in the past to explain how Brazil had an anti-liberal mentality from its beginning. But here it’s sufficient to say that, although being a multi-party country, Brazil has two major political forces: the PT and the PSDB. Neither of them is essentially market-friendly. But that’s not to say there are no differences between them. Even a pragmatist like Lula has to please his followers. With its socialist DNA, there’s no hope that PT will do what Brazil needs. And while they stay in power, Brazil’s economy is not resurging any time soon.
In 1992, then-President Fernando Collor was impeached, and what followed were the liberal reforms of FHC. But Collor didn’t have one thing Dilma has: a strong party.
The PT may throw Dilma to the lions in order to appease opposition and the population, but it won’t abandon its skepticism of liberalism, and there are no market-friendly political forces to fill any political vacuum that may result from Rousseff’s removal. With or without Dilma, this is still not time for optimism. Maybe a more pragmatic hope will do.
In the wake of last month’s shooting at Umpqua University in Oregon, national debate has once again been sparked over the role of firearm controls. Gun-control laws must be passed, we are told, that target these events and reduce or eliminate their frequency. However, much like most debates in the political realm, convenience and sound bites take the center stage over understanding root causes of violence itself. The debate is further confused by improper data comparison and information gathering techniques, mainly to drive a pre-designed political agenda and not to attempt to solve the homicide problem.
Before we get into the issue of general homicide, it is important to clear a few common errors in identifying the events in Oregon.
The biggest claim, made by President Obama, is that this doesn’t happen in the same frequency in Europe. Even the linked “Fact Check” at PolitiFact uses information incorrectly. The biggest mistake is that individual nations are compared 1-to-1. A large event in a single small nation will upend the homicide rate while it is true that a smaller nation will have fewer individual events on virtue of being a smaller nation. Before a meaningful comparison can be made, the data needs to be normalized. To accomplish this, I placed every advanced, safe nation in Europe that had a kind of mass killing event into a single, unified nation for the purposes of this exercise. This normalized the population with both the US and this unified state with nearly identical population levels. The nations selected, that had these kinds of events in the past fourteen years, are The United Kingdom, Switzerland, Sweden, Slovakia, Norway, The Netherlands, Italy, Germany, France, Finland, The Czech Republic, Belgium, and Austria.
An additional error that was made by PolitiFact is that their research ignored acts formally defined as terrorism, which means the Boston Marathon bombing in the US and the three Paris terrorist attacks in 2015 were ignored. I included all forms of mass killings since it is difficult to argue that a mass shooting is fundamentally different because of the motivation of the perpetrator. After the normalization, the chart of these events and the aftermath looks like this:
On the surface, this does appear to meet the criteria of President Obama’s claim. These events do happen more often in the United States than in the above grouping of EU nations, with forty-four distinct events in the United States and twenty-five in the EU. However, counting distinct events doesn’t tell the whole story. To get a better understanding of the risk of mass killings, we have to identify the real cause of concern — the loss of human life. When we bring the human loss into consideration, the story changes significantly.
This certainly doesn’t support the claim that the EU is safer from mass killers than the US. The main differences that, it is true, these events happen more often in the US, but the events in the EU normalized zone are more deadly (15 killed per EU event vs 7 per US event) which makes the EU events far worse. Further, the total danger from these events is greater in the EU countries, with the EU zone experiencing 933 injuries and 352 casualties to the 473 injuries and 322 casualties in the US.
Is More Government Security the Answer?We’ve previously pointed out that gun control doesn’t have any meaningful impact on homicide rates in general, but would such controls, and other controls such as improved mental health screening and background checks, resolve this issue? Unfortunately, as the EU has shown, particularly with the recent tragic events in Paris, if a full on ban on ownership doesn’t work, then it is unlikely targeting the above factors will work, either. Not to trivialize those who lose their lives in these events, here is what these events look like compared to the general homicide rate:
I didn’t label this EU or US because both are identical, a small blue sliver in a sea of orange. The total percentage is so small, that it shows up as “zero percent.”
These events are difficult to counteract because of their randomness and infrequency. The ability of the government to identify ahead of time whether or not a small group of men obtained automatic weapons against their ban is likely impossible. Moreover, other means of prevention, such as laws against restricting individuals with mental health problems from purchasing guns, are only as good as those who actively seek help. None of our nations would be willing to subject ourselves to mandatory annual mental health screenings and placing our results in central databases.
Gun bans, mental health screenings, and other government solutions to protect us from these unpredictable events fall under the classification of Security Theater. When the State is actively telling us that they’re taking care of our protection, we allow ourselves to be lulled into a false sense of security. Further, many governments restrict or outright ban individuals from ensuring their own safety.
But State agents can’t be everywhere at all times. Security of your own self is ultimately only possible by engaging in the protection yourself. Around the world, governments have decided on our behalf that we do not have the option to secure our own bodies from violence and, in turn, generate the situations that lead to these events. Much like how most of us would own auto insurance absent government mandates, not because we fear the destruction of our vehicle but because, as the saying goes, it’s better to have it and not need it than need it and not have it. A society that is given the option to protect itself is not a fearful society, it is a prudent one. The victims of Paris were never allowed the option to protect their lives, nor were they fortunate to have armed defenders present or trained combatants to stop the attack before it reached them. People need the opportunity to secure their own safety since, as the past twelve years has shown, the State will fail them.
Last Friday’s terrorist attacks in Paris has forced the world’s attention away from causes such as the plight of “white privilege” on college campuses and back to the consequences of blowback in the Middle East. The political response to these atrocities have been predictable — calls for nationalism, more war, fewer civil liberties, and greater power for the government that failed to protect its citizens. Even those politicians whose rhetoric calls for greater humanitarian efforts for ISIS’s most vulnerable victims still manage to stand in the way of private individuals who wish to help their fellow man.
Of course, the true battle of the day is greater than ISIS or any other single organization.
As Mises wrote in Human Action, “To defeat the aggressors is not enough to make peace durable. The main thing is to discard the ideology that generates war.”
As long as the ideology of statism, militarism, and interventionism maintain its hold on the world, civilization will suffer from its consequences. The desire for power and control will eclipse concern for human life. Only those guided by an ideology of peace and prosperity can offer hope for the world.
On Mises Weekends, Louis Rouanet joins Jeff Deist to discuss the fallout from Paris. Rouanet, a former Mises Fellow who studies in the French capital, talks about how his country’s government has reacted to the attack and the willingness of his countrymen to trade liberty for the theater of security.
And in case you missed any of them, here are this week’s featured Mises Daily articles and some of our most popular articles at Mises Wire:
European Borders May be Redrawn as Europe Embraces Nationalism by Ryan McMakenBlowback: The Washington War Party's Folly Comes Home to Roost by David StockmanISIS May Be Our Ally Some Day by Ferghane AzihariWhite "Privilege" Has Nothing on State Privilege by Tho BishopOpen Borders Are an Assault on Private Property by Llewellyn H. Rockwell Jr.Paris Attacks Are Just Part of the Game for Global "Leaders" by Greg MorinThe Long History of French Military Intervention in the Middle East and Africa by Ryan McMakenState-Provided Security and Market Incentives by Jeff DeistParis: More Bombs Will Not Solve the Problem by Ron PaulHey Big Spender: France's Robust Military Spending by Ryan McMakenA Private Solution to the Syrian Refugee Crisis by Tho BishopWhere the Left Goes Wrong on Foreign Policy by Murray RothbardWar and Strategic Socialism by Matt McCaffreyIs an Interest Rate Hike Overdue? by Randall HolcombeStudent Loans and Uncle Sam by Jonathan NewmanEssential Reading on Entrepreneurship by Matt McCaffreyBaylor University PhD in Entrepreneurship by Peter KleinGilmore and Sugrue On American History by David Gordon
In the wake of the Paris attacks, Europe is being pulled in two directions at once. On the one hand is the rise of localist nationalism in the form of border closings, border fences, and Euroskepticism. On the other hand is the rise of renewed militarism as the French state calls for even more aggressive foreign policy from its European allies in the name of security. In some ways, these two trends appear to be at odds, but they are really just different expressions of nationalism.
European Countries Closing their BordersEven before the Paris attacks, the European Union faced rising skepticism and opposition over its immigration policies. Writing in the UK Independent, John Lichfield noted that
North vs south; east vs west; Britain vs the rest; German leadership or German dominance. The refugee crisis is like a diabolical stress test devised to expose simultaneously all the moral and political fault lines of the European Union.
As the wealthier (and therefore more politically powerful) nations of western Europe handed down edicts as to how migrants shall be spread around Europe, some of the less powerful nations revolted and began to refuse migrants.
Meanwhile, Austria, Hungary, Slovenia, and Macedonia all began building walls to keep out migrants. Serbia, Bulgaria, and Romania have all threatened to do the same.
Late last month, Polish voters elected a new Euroskeptic, anti-immigration government that has pledged to renew opposition to Brussels’ diktats on immigration and national borders.
And then, in the wake of Paris came an even bigger blow to the Europhile plans for a borderless Europe. France, a longtime leader in the European Commission’s efforts to force migrants throughout Europe — called for a suspension of the Schengen Area, the “borderless” zone in Europe through which travelers and migrants may move unimpeded.
In practice, the Schengen Area had shown serious strain even before the Paris attacks occurred. In addition to Eastern European resistance, Sweden introduced border checks in early November. Finland, in response to neighboring Sweden’s policy of accepting large numbers of migrants, began border checks of its own.
In response to France’s request, in an effort to save at least a remnant of Schengen, the Dutch delegation has suggested a “mini-Schengen.” Recognizing that a geographically unified Europe has long been a key component of the plan to build a European megastate, some in Europe are seeing benefits in a reduced version of Schengen, even if it means, as the Daily Mail reports, “kicking out” several members, including Spain, Italy, and Greece. Most of the current Schengen EU members from eastern Europe would be excluded as well, including Poland and Hungary.
Many European elites continue to express confidence in the current expansive version of Schengen, and claim that any changes will be temporary. Clearly, however, any pull back in Schengen is a sign of political weakness on the part of Europhiles, and is a significant step backward in terms of the political unification of Europe. How long before a Mini-Schengen is followed by a “Mini-European Monetary Union” with roughly the same borders?
If Brussels decides that Spain and Italy are not integral to Europe’s core in regards to Schengen, what’s to prevent a similar conversation when the next sovereign debt crisis rears its head in southern Europe?
In fact, any move toward a Mini-Schengen may prove what the smaller countries of eastern Europe have been claiming all along: it’s rich, western Europe versus everybody else.
But rich, western Europe isn’t immune to the localist, nationalist tide either. The Paris attacks have given new voice to nationalist parties in Germany and Europe, and the attacks have further aided France’s nationalist parties and their chief spokeswoman, Marine LePen. Also, dissenters from the Europhile line have been calling for border closings with renewed vigor in Britain, the Netherlands, Belgium, and Germany.
A lack of confidence in the European Commission appears to be spreading, and is weakest outside the core of the wealthy west. Even within the “core,” though, political unification of Europe is facing some of the strongest headwinds it has seen in decades.
Western Europe Looks to Increased MilitarismWhile Europe may be fracturing on domestic affairs, there are few signs of a European willingness to abandon its aggressive military stance in regard to Russia, Africa, the Middle East, and the world in general.
Europhiles have dreamed for years of creating a unified “EU army,” and thanks to the Paris attacks, things are looking up. In the wake of the attacks, according to the UK’s Express, French President Hollande “invoked Article 42.7 of the EU’s Lisbon Treaty, which states that if a member state ‘is the victim of armed aggression on its territory’ then the 27 other member states are obliged to provide aid and assistance ‘by all the means in their power’.”
This is being played up as a turn away from NATO, but that is only partly true. France, especially, has longed for a way to draw upon the military resources of its allies while not having to submit to the NATO bureaucracy.
This goes back at least to the 1960s when de Gaulle failed to get NATO help putting down rebellions in France’s colonies. In response, de Gaulle expelled NATO troops from French soil, built up France’s nuclear stockpiles, and removed France from NATO’s central command structure.
Always committed to aggressively and militarily exploiting its former colonies in Africa and the Middle East, the French state may have finally found the opportunity it needs to create an international military organization that can be dominated by France.
After all, when we’re talking about a possible European military, what we’re really talking about is a French-British-German military, with some token participation from other smaller countries. The UK, France, and Germany are among the world’s biggest spenders on military hardware, and it would be much easier for the French government to wield out-sized influence among only a handful of European governments, than within NATO.
So don’t be fooled. The Telegraph may be claiming that NATO was “shunned” at a recent meeting of European states, but Europe has no intention of abandoning NATO any time soon.
Europe has long freeloaded off the American taxpayer via NATO to ensure the global status quo for European elites, keep the European welfare states humming, and ensure that Europe need not worry about any unwanted diplomatic or military influence from Russia or China.
NATO’s war in Libya, for example, rather conveniently helped reduce Chinese influence which had been rising in North Africa at the expense of French and Italian interests.
Similarly, NATO’s presence helps ensure that European powers (and the Americans) can continue to antagonize the Russians without having to worry about any serious reprisals. In the case of any real conflict, the American taxpayers will pick up most of the tab.
Nevertheless, from the European point of view, a Euro Army offers a chance at renewed international influence for European states. If the Europeans can go their own way in “destroying ISIS,” Europe may be able to carve out its own sphere of influence in the oil-rich region, separate from those of the Americans and Russians.
European Union: Getting Smaller before it Gets Bigger?The borders of Europe are indeed being redrawn. But, it would be premature to declare the project of European unity imperiled. Rather than full dissolution, it seems we’re more likely to see the EU retreat to its wealthier core in northern and western Europe. The newly expelled southern and eastern European countries would serve as buffer zones for migrants while allowing more freedom for the former “Great Powers” (i.e., UK, Germany, and France) to re-assert themselves as global players under the pretense of anti-terrorism.
“ISIS is certainly not a state” said Obama in a recent statement. This is the official line Western governments use to describe ISIS. The label terrorist is often used to describe dangerous and aggressive organizations. However, these characteristics are not used to describe organizations that don’t threaten the strategic interests of states that dominate the international community.
If they serve the interests of established states, those existing states can be very lenient with these organizations. The Turkish state, for example, recently noticed ISIS was a threat to the Kurdish political agenda that threatened the Turkish state. Thus, Turkey remained quite passive towards ISIS, and only began to position itself against ISIS after being pressured by the US.
Still, it is not possible to deny the state-like nature of ISIS without ignoring reality. The primary criteria available to consider is whether or not an organization can claim a monopoly of legal violence within a territory. If it can, it is a state.
Legitimacy Through IdeologyHowever, modern state leaders have understood this monopoly is not sufficient by itself to maintain their power. This is why they use ideologies to hide the violent nature of their authority and make the population more accepting of the state’s coercive methods.
In the West, since the nineteenth century, nationalism has largely filled the role of manufacturing consent to government domination, by drawing arbitrarily the contours of a fantasized historical and cultural community. After that came the welfare-state ideology which aims to develop a sophisticated system of fiscal redistribution that cultivates a strong feeling of economic dependence on the political class. And then came the ideology of democracy which allows the state to identify itself with society overall by promoting the illusion that the citizenry maintains control over the state bureaucracy.
Through these means, states in the West have been able to “legitimize” their monopolies over coercion. The problem one encounters with ISIS, however, is that it is a proto-state under construction, and its savagery lacks the patina of ideological refinement. This is why politicians feel obliged to intervene in the media to reiterate that ISIS is not a state in their view. For established states, achieving statehood confers a sort of title of nobility on the international stage. That is why many political movements aim to gain international recognition of their state. The status of “state” implies “civilized society,” and to accept organizations like ISIS into the club would be problematic.
Making a State with Iron and BloodAnd yet, there is nothing honorable about the formation and maintenance of states. States are essentially bellicose and exploitative institutions. None of them can claim to be the fruit of a peaceful or contractual process. This is indeed what two recent articles published in the journal Foreign Policy remind us.
Rosa Brooks, law professor at Georgetown University, points out the perpetration of mass crimes by political regimes has never been a barrier to gaining international stature. According to Brooks, it is not impossible that ISIS will become, in the medium- or long-term, an ally of the United States. After all, the French State, the US’s oldest ally, is certainly not blameless of war crimes in its own history.
Moreover, Turkish authorities killed more than one million Armenians between 1915 and 1918 during what everybody except the Turkish government calls a genocide. Turkey remains a strategic member of NATO. More recently, European colonial powers have perpetrated countless brutal campaigns against occupied nations. However, the issue has never been about dissolving these organizations but changing their leaders which are today US allies. And there is, of course, the US’s main ally in the Arab world, Saudi Arabia, which is a brutal Islamist dictatorship with a criminal history similar to that of ISIS. Similar critical remarks could be made about the United States, and many American Indians, Spaniards, Frenchmen, and Mexican-Americans could confirm America didn’t build itself peacefully.
While western governments pretend to fight ISIS in the name of human rights, let’s simply remind ourselves there is no such thing as philanthropy in politics and international relations. Democratic governments never hesitate to ally themselves with dictators, as long as they conform to their geo-strategic interests. “Freedom” is only an ideological smokescreen to hide other motives.
The official statements currently talk about the absolute necessity of defeating an organization that came out of Western governments’ imperialism and which also just happens to coincide with Saudi Arabia’s desire to spread Wahhabism across the Muslim world.
But we can be sure that if ISIS were to succeed in proving its ability to stay in power, those currently fighting it won’t be reluctant to treat it like a “normal” state.
This is also Stephen Walt’s theory. Writing in Foreign Policy, Walt reminds us of the fact that a lot of violent political movements have been recognized by the international community once they proved their ability to stay in power. This was the case with the USSR, recognized by the US sixteen years after the Bolshevik revolution. The same thing is true of the Chinese state with which the US established full diplomatic relations in 1979, less than a decade after the end of Mao’s brutal Cultural Revolution. “Justice” and “human rights” have nothing to do with achieving membership in the “international community.” Membership comes to those states that are the strongest and able to impose their power most effectively on others.
Security Rhetoric: A Subjugation ToolIn this regard, public opinion, which treats crimes differently depending on whether they are committed by extremists in the Middle East or by politicians in suits in democratic countries, is suffering from primitive nationalism. It is not possible, logically speaking, to declare ISIS forever a pariah state without questioning modern governments’ legitimacy, since many of them acted similarly in the past.
This is especially true when we consider the fact that western coalitions have — during their multiple “wars on terror” — killed more civilians than all terrorist groups assembled just one decade on. One can say that the ideologies and intentions behind the killings are not similar, but policies have to be judged on results, and not intentions. And the result is there is no difference between someone dead in the name of Allah and another killed during a drone attack in the name of democracy. Given their limited human, financial, technological, and military resources, it is not at all clear that non-state terrorist groups are the main threat to life and limb for numerous populations around the globe.
Unfortunately, much of the problem comes from Western citizens themselves who don’t pay attention to their governments, which never hesitate to use a single tragic event in order to increase their power and their “protection” by limiting their citizens’ individual freedoms. By fueling and exploiting fear, governments create a vicious circle which exacerbates the security demands from their populations, which translates into an increase of states” prerogatives. Military spending increases in turn, which satisfies the powerful interest groups that make up the military-industrial complex. Mass surveillance serves those who want to use state intelligence services to commit industrial espionage.
As much as we like to romanticize states in the West, the fact remains that ISIS is nothing more than a state among others. It perfectly meets Franz Oppenheimer’s criteria. It is:
a social institution, forced by a victorious group of men on a defeated group, with the sole purpose of regulating the dominion of the victorious group over the vanquished, and securing itself against revolt from within and attacks from abroad. Teleologically, this dominion had no other purpose than the economic exploitation of the vanquished by the victors.
While visiting the White House on his first day in the United States this year, Pope Francis made a strong plea on behalf of religious liberty, which he pointedly directed at President Obama. This came shortly before he made an unscheduled visit with the Little Sisters of the Poor, who are suing the Obama administration over their own right not to include artificial contraception as part of their health insurance plan, which is mandated by Obamacare regulations. Catholic teaching views the use of artificial contraception as sinful. The connection between his comments to the president and his visit with the Little Sisters was apparent.
This laudable and welcome stance comes from a Pope who has, out of a concern for the poor, famously made several misguided statements that are quite critical of capitalism. Combined, these two positions, while seemingly unrelated, represent a profound contradiction in the Pope’s thinking.
In reality, the only socio-economic arrangement that guarantees the rights of all people to exercise their religious beliefs freely is free market capitalism, which emphasizes the rights of people to own and use property as they wish and to contract freely with others on any mutually agreeable terms.
It is a system that is based strictly on voluntary cooperation and that de-legitimizes the use of force and fraud. (As an aside, I personally think that, for this reason, it is the system most consistent with Christianity.) Under such institutional arrangements, there would be no need for specific legal or constitutional protections for religious liberty. These liberties are inherent in the system itself.
Consider, for example, the contraception mandate that is being challenged by the Little Sisters of the Poor. This directly conflicts with one of the most basic rights under capitalism: the right to trade and make contracts freely with others.
Under laissez-faire, or as some are calling it, “unfettered” capitalism, what is covered by any health insurance policy purchased by the Little Sisters of the Poor would be a private matter among the Little Sisters, their insurance company, and possibly any employees who would also be covered under the plan.
If the health insurance plan that was being offered by the insurance company was unacceptable to the Little Sisters, for whatever reason, they would be free to walk away from it or negotiate different coverage with the insurance company. And if the health insurance offered by the Little Sisters to any of their employees were an unacceptable part of their compensation package, they too would be free to walk away and find employment elsewhere or forgo the employer-provided insurance and purchase a separate plan of their own choosing. This might occur as part of an exchange with the Little Sisters, their employers, for a higher wage. All of this would happen without a need for any specific discussion about religious liberty. The Little Sister’s religious freedom and their freedom to make mutually agreeable contracts are one in the same.
Beyond this the right to worship as one chooses would be pretty hollow without the right to own or contract for the rental of physical property. The right to worship implies the right of a religious organization to have physical space to assemble and to worship in that space as they see fit. Without this fundamental property right, which is only guaranteed without question under capitalism, the right to worship freely as one chooses is tentative at best and nonexistent at worst.
The right to deny religious liberties stems from the power of government to deny the right to use property freely. When the USSR wanted to shut down the Catholic Church in Ukraine it confiscated its property, i.e., the churches. The Soviets understood quite well that the right to freely worship was the right to freely own.
This does not end with religious liberties. Indeed, property rights and free exchange are at the heart of one’s ability to exercise civil liberties more generally. The right to freedom of speech and press and the rights to freely assemble, protest, boycott, etc., are all automatically guaranteed under capitalism.
This is because capitalism guarantees our right to disagree with one another, which is really what is being protected when all of these liberties are recognized. In this regard it would be useful for Pope Francis to pay attention to the words of a rather famous atheist, Ayn Rand, who noted that:
The right to agree with others is not a problem in any society; it is the right to disagree that is crucial. It is the institution of private property that protects and implements the right to disagree.
Holy Father, religious liberty is nothing more than the right to disagree.
On Friday, a desperate China announced another round of interest rate cuts — its sixth such announcement in the past year. Cheered on by Nobel Prize winning economists, and pundits who dream of socialists utopias, governments continue to cling to the follies of central planning, easy money and growing debt.
Of course, not even science fiction can change the hard realities of economics.
Luckily, the resulting chaos that inevitably leads from these disastrous policies creates opportunities for the truth to prevail. Examples can be seen when panicked regulators taking a second look at the benefits of 100 percent reserve banking or the emergence of healthcare providers have broken the shackles of the government-distorted insurance model.
One doctor that has taken that stand is Dr. Michel Accad. A frequent Mises Daily contributor, Dr. Accad joined Jeff Deist this week on Mises Weekends to discuss his experiences as a practicing cardiologist in the Age of Obamacare. If you feel like just a number at the doctor’s office, you’re right: the entire visit culminates in a particular code being entered into the insurer’s database. That code determines how much your doctor gets paid, and it’s all part of a system of bureaucratic overhead and perverse incentives.
If you’re interested in learning about the true state of medicine in a post-Obamacare world, this interview is a must listen.
In case you missed any of them, here are this week’s featured Mises Daily articles and some of our most popular articles at Mises Wire:
Reflections on Venezuela’s "Economic Miracle" by Andrew SyriosBeavis and Butt-Head Take Over Silicon Valley by Paul CantorStar Trek Is Wrong: There Will Always Be Scarcity by Jonathan NewmanRobert Shiller Is Shilling for Socialism by Peter St. OngeNew Berlin-Based Master's Degree Program in Austrian Economics by Ryan McMakenHappy Birthday, Ralph! by David GordonThe Fed Says No to Pot Money, Unless it's the Government's Pot Money by Jonathan NewmanHow Currency Exchange Rates Are Determined by Frank ShostakDesperate Financial Regulators Turn to ... 100% Reserves by Joseph SalernoThe Complexity of Violent Crime and the Role of State-Sanctioned Killing by Ryan McMakenCanadians (Sort of) Vote for Less Interventionism and More Freedom by Ryan McMakenA Tax I Can Support by Per BylundMy Day at the Fed by Mark ThorntonFantasy Sports and the State of Nevada Go Head-to-Head by Jonathan Newman
Back in 2013, Salon took a quick break from criticizing a caricature of libertarianism to let David Sirota write an embarrassing article praising socialism in what turns out to be a fantastic case study in both the dangers of socialist economics and of course, speaking too soon.
The article was titled “Hugo Chavez’s Economic Miracle” and it was certainly not the only one of its kind to come out at the time. It may seem like twenty-twenty hindsight to criticize such foolishness, but it might be instructive as well. However, looking at Venezuela now as compared to the country Sirota saw in 2013 and thought provided an economic alternative to American capitalism (a truly free market was never discussed) serves as a good example of what Nicolás Cachanosky calls “the bait-and-switch behind economic populism.” Or namely, that government policies focused highly on consumption and lowly on investment will show good economic signs at the beginning, only to be followed by an inevitable decline and likely disaster.
Sirota’s article at least begins by lamenting Chavez’s rather poor record on civil rights (like shutting down a TV station that was critical of him) and noting “a boom in violent crime.” This may somehow be an understatement as Venezuela ranks second in the world in murders per capita at a terrifying rate of 53.7 per 100,000 citizens annually! (So much for socialism alleviating crime.) He finally does arrive at his case for this “economic miracle” that Venezuela was experiencing under Chavez (which, I should note, makes up only one paragraph of his entire article),
…according to data compiled by the UK Guardian, Chavez’s first decade in office saw Venezuelan GDP more than double and both infant mortality and unemployment almost halved. Then there is a remarkable graph from the World Bank that shows that under Chavez’s brand of socialism, poverty in Venezuela plummeted (the same Guardian data reports that its “extreme poverty” rate fell from 23.4 percent in 1999 to 8.5 percent just a decade later). In all, that left the country with the third lowest poverty rate in Latin America.
How much of this was due to Venezuela being an oil-rich nation is debatable. But it’s also very much worth observing that these positive (and underreported) trends existed throughout Latin America, including in countries such as Colombia that have moved in the opposite direction economically. According to the World Bank, Between 2005 and 2013, Colombia’s poverty rate (as opposed to extreme poverty) fell from 45 percent to 30.6 percent, Peru’s fell from 55.6 percent to 23.9 percent, Uruguay’s from 32.5 percent to 11.5 percent, Paraguay’s from 38.6 percent to 23.9 percent, and Ecuador’s from 42.2 percent to 25.6 percent. Venezuela, for its part, fell 43.7 percent to 25.4 percent, which seems to be about average. The same could be said for GDP and Venezuela’s infant mortality rate also only ranks in the middle of the pack.
And of course, all of this was prior to Venezuela’s recent economic crisis.
The fall in the price of oil has certainly harmed Venezuela, but then again, the rise in oil prices during the last decade certainly contributed to its “economic miracle.” However, Venezuela’s problems were starting to become apparent before the drop in oil prices. Back in October of 2014, just before the price of oil sank, Venezuela ran a 17 percent budget deficit and was dealing with a variety of shortages. Furthermore, while every major oil exporter has been hurt by the low oil prices, they have all weathered the storm much better than Venezuela.
It appears that the drop in gas prices simply exacerbated, and more accurately, exposed the problems caused by Chavez’s (and his successor Nicolás Maduro’s) extreme populist policies. As Nicolás Cachanosky notes in his review of Rudiger Dornbusch and Sebastián Edwards work on Latin American populism, regimes that follow such policies go through four economic phases. In stage I,
The populist diagnosis of what is wrong with an economy is confirmed during the first years of the new government. Macroeconomic policy shows good results like growing GDP, a reduction in unemployment, increase in real wages, etc. Because of output gaps, imports paid with central bank reserves, and regulations (maximum prices coupled with subsidies to the firms), inflation is mostly under control.
This is the stage Venezuela was in when Salon saw fit to publish Sirota’s article in 2013.
But then comes Stage II when “bottleneck effects start to appear” and “the underground economy starts to increase as the fiscal deficit worsens …” In Stage III, “Shortage problems become significant, inflation accelerates, and because the nominal exchange rate did not keep pace with inflation, there is an outflow of capital (reserves).”
This is exactly what’s happening in Venezuela today. Venezuela’s projected inflation for 2015 is a whopping 64 percent! The country with the second highest rate in South America is Argentina at 10.9 percent. The CIA Factbook lists Venezuela’s budget deficit at 29.4 percent and Moody’s downgraded Venezuela’s credit rating to the lowest rating possible for a country not in default. And there is serious talk of that coming to pass as well.
The government has instituted price controls to fight inflation and predictably, massive shortages have forced Venezuelans to turn to the black market for ordinary daily goods such as milk and toilet paper.
Venezuela’s unemployment rate shot up from 5.5 to 7.9 percent in January of 2015 and is likely to rise further. Even as it stands now, it is the third highest rate on the South American continent (excluding Central America). And as one would expect, poverty has started to rise again as well.
After Stage III comes Stage IV, which Cachanosky describes as follows,
A new government is swept into office and is forced to engage in “orthodox” adjustments, possibly under the supervision of the IMF or an international organization that provides the funds required to go through policy reforms. Because capital has been consumed and destroyed, real wages fall to levels even lower than those that existed at the beginning of the populist government’s election. The “orthodox” government is then responsible for picking up the pieces and covering the costs of failed policies left from the previous populist regime.
Whether it comes to that is still yet to be seen. But what this economic crisis does highlight is that short-term success should never be taken as proof of a long-term solution. And this is particularly true when it comes to quasi-socialist and extreme populist governments. In the long-run, countries that follow these policies have a consistent track record, which is basically the same as what we’re witnessing now in Venezuela.
We’ll have to see if Salon writes a follow up.
On Tuesday, Vermont Senator Bernie Sanders stood up on the stage of a Democratic Party presidential debate and proudly proclaimed himself a “democratic socialist” to an adoring crowd. Spurred on by myths about the success of socialism in countries like Sweden and Norway, the horrors of a centrally planned economy have never been more popular in American politics. As Mises President Jeff Deist highlighted in Thursday’s Mises Daily:
These ideas, and the people who hold them, are not outliers in America. There are millions … who believe exactly as Bernie believes. They may prefer to vote for Hillary Clinton purely as a tactical matter because they are unsure the country is “ready” for full socialism … but average progressives and Democrats agree with Bernie Sanders across the board …
Ninety-five years after Ludwig von Mises published his indispensable essay Economic Calculation in the Socialist Commonwealth, it is as critical to stand up to the tyranny of statism — on any scale — now as ever before.
The devastating consequences of government intervention into healthcare markets is the topic of this week’s episode of Mises Weekends. Charles Hugh Smith joins Jeff to discuss how Washington’s desire to eliminate markets from medicine has led to the industry being captured both by incompetent government regulators and insurance lobbyists.
In case you missed any of them, here are this week’s featured Mises Daily articles and some of our most popular articles at Mises Wire:
Charles Murray's Tepid Radicalism by David GordonWhat "Progressive" Corporate Welfare Looks Like by Andrew SyriosThe Dirty Business of Government Trash Collection by Allen MendenhallSanders and His Followers Are Not Outliers by Jeff DeistHow Modern Sweden Profits from the Success of Its Free-Market History by Yonathan AmselemGeorge Akerlof, Meet Oliver Williamson by Peter KleinAngus Deaton and Modern Economics by Peter KleinThe Mistake of Only Comparing US Murder Rates to "Developed" Countries by Ryan McMakenThe Fed’s Quadral Mandate and Impossible Balancing Act by Jonathan NewmanRothbard on Economic Ignorance by Matt McCaffreyTrue Money Supply: August Money Supply Growth Remains Way Down from 2012 Levels by Ryan McMakenDonald's Remarks on the Bubble and the Fed Are on the Money by Joseph SalernoNo way, Norway! by Carmen Elena Dorobăț
The Nobel Prize just gets cheaper and cheaper. Recent laureate Bob Shiller graces the New York Times with his latest rant that free-markets stink, bolstering his argument by making stuff up.
For starters, Shiller writes that America’s wealth “can be attributed” to regulation. Well, sure, it “can be attributed” to Zeus. Or sunspots. In the real world, America became the richest country long before the regulation age, and that position has been eroding ever since. Maddison (2007) estimates that by 1913 — before the New Deal regulatory explosion — the US was at $5,300 per person PPP (purchasing power parity), against $3,500 in Western Europe, $1,500 in Latin America, and $700 in the rest of Asia and Africa.
A similar pattern occurred in Europe, where the richest countries of the pre-modern age, Britain and Holland, used relatively free markets regulated by tort, while the rest of Europe mired hobbling markets with regulation and diktat. So, the story isn’t that regulation made the West. It’s that low-regulation economies soared ahead of the rest of humanity until socialists clipped their wings.
Indeed, Shiller doesn’t even seem to believe his own fantasy, writing, “The Thatcher-Reagan revolution a third of a century ago was a turning point away from market regulation, with mixed results.“
Here, the phrase “mixed results” is a red flag that the data doesn’t support his argument. Because Shiller would be kind enough to share the data if it did; it’s not very hard to look up GDP figures. And what do GDP figures tell us? That in Reagan’s eight years per capita GDP adjusted for inflation rose 3.5 percent per year. Compared to 0.7 percent in the previous eight years and 1.5 percent in the following eight years.
So, no, this is not a “mixed result.” This is a clear contradiction of Shiller’s claim that socialism makes America rich. Not to be too hard on Shiller, but he is the one who brought up Reagan.
By the way, if the US economy had kept up that Reagan 3.5 percent growth today, we’d have a per-capita GDP of $70,000. Twenty percent higher than Switzerland, and 50 percent above where we are today. Take your salary, top up by 50 percent, and that’s how rich you’d be if characters like Shiller would get out of the way.
Shiller’s next section is even heavier on the wishful thinking. He writes, “In fact, the real success of economies that embody free markets has much to do with the heroic efforts of campaigners for better values, both among private organizations and advocates of government regulation.”
I’m sure many economists are impressed that Shiller managed to mathematically quantify “real success” or “better values” to arrive at this particular “fact” of his. He is writing in The New York Times, not an academic journal, so we can forgive some looseness. Still, an economist writing about economics should take care in labeling opinions as facts, lest they be thought of abusing public trust in our field.
It helps to know where Shiller’s coming from. For a few years now, Bob Shiller’s been hawking institutionalized bail-outs. He wants to extend bail-outs into brave new corners of our lives. Career insurance for those who major in gender studies, housing insurance for house-flippers, even GDP insurance so countries that wreck their economies can get bailed-out by the prudent. The idea of making you pay for others’ screw-ups is one hustle socialists are always selling, simply because people vote for politicians who bail them out.
And this brings us to why Shiller’s telling tales about capitalism. Shiller thinks people are stupid so companies manipulate them, so Bob Shiller and his friends in government should run peoples’ lives. His vehicle here is Irving Fisher’s line that people don’t maximize utility — happiness — rather, in Fisher’s phrasing, “something that could better be described as ‘wantability’ rather than utility, for they are subject to temptation and mistakes.”
Shiller is dredging a strawman here; no economist thinks humans are perfect and error-free. What economists do debate is whether people should have overlords. Because the problem here is that somebody must decide whether you buy an iPhone, eat salad or bacon, or drive an SUV or a compact. If individuals don’t get to choose, who does? Alas, we know who: Bob Shiller and his buddies in government.
While overlords are antithetical to any lover of freedom, let’s humor Shiller and ask whether overlords can make “better” decisions than people. Here the key is what Hayek called the local knowledge problem: preferences aren’t automatically known by the overlords. Indeed, as Shiller complains, people often don’t even know their own preferences. Why would we think bureaucrats would know our preferences better than we ourselves do?
Does Bob Shiller really know you better than you do? Do his bureaucrats in the Department of What to Have for Lunch, or the Department of Choosing Vacation Destinations? Worse, to use real-world socialist examples, the Department of Dating and Marriage, or the Department of Choosing a Career? Unless Shiller has stumbled across a secret stash of all-knowing Angels, his overlords are only human. And their mistakes are magnified by their power.
Worse, putting overlords in charge brings a dark new problem — overlords want things, too. Maybe they love power, maybe they want to purify the earth and usher in a thousand-year Reich. Or maybe they just accept campaign donations. This means Shiller’s big-brained overlords may not even be trying to estimate what you want. They may not care. Because they want things, too.
You might think this problem — in Roman poet Juvenal’s phrase, “who watches the watchers” — would merit some thought after a century of blood and poverty from socialism’s failures. Alas, we’re subjected to a non-stop stream of Nobel laureates oblivious to what Mises’s Human Action told us a generation ago: “Socialism is not an alternative to capitalism; it is an alternative to any system under which men can live as human beings.”
International trade grabbed headlines this week with Monday’s announcement that twelve governments have reached agreement on the Trans-Pacific Partnership. While it should be of no surprise to see the news celebrated in the editorial pages of the Wall Street Journal or the Council of Foreign Relations blog, it is unfortunate even libertarian organizations are praising the agreement.
Of course, this is not the first time alleged defenders of lassiez-faire have endorsed intergovernmental agreements that enhance the power of the state. Ferghane Azihari and Louis Rouanet put TPP in historical context in Wednesday’s Mises Daily:
Murray Rothbard opposed NAFTA and showed that what the Orwellians were calling a “free trade” agreement was in reality a means to cartelize and increase government control over the economy. Several clues lead us to the conclusion that protectionist policies often hide behind free trade agreements, for as Rothbard said, “genuine free trade doesn’t require a treaty.”
Dr. Ed Stringham takes on the notion that government is necessary at all for markets and trade to thrive in his new book Private Governance. He joined Jeff Deist to discuss his work on the latest episode of Mises Weekends. Listen as Jeff and Ed destroy the argument that markets rely on government to protect property rights, mediate contracts, and numerous other excuses interventionists make in defense of the state.
In case you missed any of them, here are articles from this past week’s Mises Daily and Mises Wire:
The TPP and the Trade Rhetoric by Carmen Elena DorobățTPP: The Latest Assault on Free Trade by Ryan McMakenRothbard: Gun Regulation Explained by Murray RothbardIn Policy Debates, Can Economics Trump Ethics? by Matt McCaffreyThe Future Is Decentralized by Patrick ByrneNo More "Free Trade" Treaties: It's Time for Genuine Free Trade by Ferghane Azihari and Louis RouanetThe Menace of Egalitarianism by Lew RockwellFashionable Prohibition for Modern Lawmakers by Ryan McMakenIn Brazil, Free-Market Ideas Rise as the Economy Falls by Antony P. MuellerMissed last Saturday’s Mises Circle? Watch Jeff Deist, Tom DiLorenzo, Tom Woods and Lew Rockwell tackle the threat of political correctness.
Our guest this weekend is Edward Stringham, professor of Economics at Trinity College in Hartford, Connecticut. He is the author of a fantastic new book called Private Governance: Creating Order in Economic and Social Life. In this book, Ed looks back at the history of private legal systems, and in so doing demolishes the idea that only the state can manage and adjudicate human conflicts. Today, Ed gives some concrete, real-world examples of how private governance operates in our statist world. If you're interested in Rothbardian and Hoppean anarcho-capitalism, you'll find Ed's book a great addition to your library, and you'll enjoy hearing this interview with Edward Stringham.
It is erroneous to believe that free traders have been historically in favor of free trade agreements between governments. Paradoxically, the opposite is true. Curiously, many laissez-faire advocates fall into the government-made trap by supporting “free-trade” treaties. However, as Vilfredo Pareto stated in the article “Traités de commerce of the Nouveau Dictionnaire d’Economie Politique” (1901):
If we accept free trade, treaties of commerce have no reason to exist as a goal. There is no need to have them since what they are meant to fix does not exist anymore, each nation letting come and go freely any commodity at its borders. This was the doctrine of J.B. Say and of all the French economic school until Michel Chevalier. It is the exact model Léon Say recently adopted. It was also the doctrine of the English economic school until Cobden. Cobden, by taking the responsibility of the 1860 treaty between France and England, moved closer to the revival of the odious policy of the treaties of reciprocity, and came close to forgetting the doctrine of political economy for which he had been, in the first part of his life, the intransigent advocate.The original French version follows:Si l’on admet le libre-échange, les traités de commerce n’ont aucune raison d’exister comme but. Il n’y en a pas besoin, puisque la matière qu’ils devraient régler n’existe plus, chaque peuple laissant librement, à ses frontières, entrer et sortir toute marchandise. C’est la doctrine de J.B. Say et de toute l’école économique Française jusqu’à Michel Chevalier; c’est celle qu’a reprise récemment M. Léon Say. C’était également la doctrine de l’école économique anglaise jusqu’à Cobden. Cobden, en prenant la responsabilité du traité de 1860 entre la France et l’Angleterre, s’est rapproché de faire revivre la détestable politique des traités de réciprocité et d’oublier les doctrines de l’économie politiques dont il avait été dans la première partie de sa vie le défenseur intransigeant. In Léon Say, ed., “Nouveau Dictionnaire d’économie politique” (Guillaumin: Paris, 1900): 1047.
In 1859, the French liberal economist Michel Chevalier went to see Richard Cobden to propose a free trade treaty between France and England. For sure, this treaty, enacted in 1860, was a temporary success for free traders. What is less known however, is that at first, Cobden, in accordance with the free trade doctrine, refused to negotiate or sign any “free trade” treaty. His argument was that free trade should be unilateral, that it consists not in treaties but in complete freedom in international trade, regardless of where products come from.
Chevalier eventually succeeded in obtaining Cobden’s support. But Cobden was puzzled by the complete secrecy surrounding the negotiations and, in a letter to Lord Palmerston, he attributed this secrecy to the “lack of courage” of the French government.Gustave de Molinari, “Michel Chevalier, ‘Sa Vie et Ces Travaux,’” Journal des Economistes 4, no. 25 (1880): 30–39. Similarly, today, the lack of transparency concerning free-trade negotiations is problematic and it is often hard to know what the content of a treaty will be.
Today, while some of these treaties are currently being negotiated, there are already examples of similar agreements enforced. One could refer to the General Agreement on Tariffs and Trade (GATT), the General Agreement on Trade in Services (GATS), the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) or more regional agreements like the North American Free Trade Agreement (NAFTA) or the European Economic Area (EEA).
But why would protectionist governments who spend their time hampering markets by giving monopolies and other kinds of privileges at national level, open markets at the international level? The very fact that governments are negotiating in the name of free trade should be suspicious for any libertarian or true advocate of free trade.
Intergovernmental Agreements Enhance Government PowerMurray Rothbard opposed NAFTA and showed that what the Orwellians were calling a “free trade” agreement was in reality a means to cartelize and increase government control over the economy. Several clues lead us to the conclusion that protectionist policies often hide behind free trade agreements, for as Rothbard said, “genuine free trade doesn’t require a treaty.”
The first clue is the intergovernmental and top down approach. Intergovernmentalism is nothing more than a process governments use to mutualize their respective sovereignties in order to complete tasks they are not able to accomplish alone. Nation-states are entities which rarely give up power. When they finalize agreements, it is to strengthen their power, not to weaken it. On the contrary, free trade requires a decline of governments’ regulatory power.
Also, free trade does not require interstate cooperation. On the contrary, free trade can be and has to be done unilaterally. As freedom of speech does not need international cooperation, freedom to trade with foreigners does not need governments and treaties. Similarly, our government should not rob their population with corporatist and protectionist policies just because others do. Anyone who believes in free trade does not fear unilateralism. The simple fact that bureaucrats and politicians do not conceive of the international economy outside of a legal frame settled by intergovernmental agreements is sufficient to show the mistrust they express toward individual freedom. This reinforces the conviction that these agreements are driven by mercantilist preoccupations rather than genuine free trade goals.
Extending Regulatory Control Beyond Your Own BordersThe second clue concerns the intense conflicts between governments on these agreements characterized by a high degree of technicality. History shows that multilateralism leads toward deadlock. The failure of the Doha Round is the cause of the proliferation of bilateral and regional initiatives. The contentious relations between governments come from the will of some states to dictate their norms to other countries’ producers through an international harmonization process. But this is the exact opposite of free trade. As economic theory shows us, exchange and the division of labor is not based on equality and harmonization but rather on differences and inequality. Furthermore, the technicality and secrecy surrounding free-trade agreements favor mercantilism and protectionism to the extent that technical regulations are used to favor producers who are politically well connected.
The Trans Pacific Partnership (TPP) is a good illustration of this balance of power. It was at first an agreement between four countries (Brunei, New-Zealand, Singapore, and Chile.) which tried to resist some neighbors’ commercial influence, especially China. Then the United States came and convinced more countries (Australia, Malaysia, Peru, Vietnam, Canada, Mexico, and Japan) to join the negotiations. Let’s also notice that most of the countries invited are already bound by regional or bilateral agreements with the United States. China remains excluded from the process. This governmental drive toward regulatory hegemony is obviously the complete opposite of free trade. Indeed, free trade supposes letting consumers peacefully choose what products they want to promote rather than determining what is available through bureaucratic coercion.
Consolidation of MonopoliesThe third clue concerns the vigor with which governments have tried over several decades to impose at the international level a more constraining legal framework for so-called “intellectual property.” The first initiatives appear in 1883 and 1886 with the Paris Convention for the Protection of Industrial Property and the Bern Convention for the Protection of Literary and Artistic Works. Amended several times during the twentieth century, the initiatives embrace, respectively, 176 and 168 states. These conventions are placed under the auspices of the World Intellectual Property Organization (WIPO), an international bureaucracy which joined the United Nations system in 1974. A turning point came in 1994 with the signature of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) administrated by the World Trade Organization (WTO). It is now incorporated as an essential part of the administration of international commerce and benefits from the WTO’s sanction mechanisms.
In 2012 we endured a fresh attempt by our governments to reduce our freedom to create and share intellectual works with the Anti-Counterfeiting Trade Agreement (ACTA). And, if we look at the negotiations mandates of these trade agreements, we can see they all include a chapter on the reinforcement of “intellectual property” rights. Intellectual property has become a key concept of the international economy. But this must not hide its illegitimacy.
As Vilfredo Pareto remarked, “From the point of view of the protectionist, treaties of commerce are … what is most important for a country’s economic future.” Each time a new “free trade” treaty is enacted, what is seen is the attenuation of tariff barriers, but what is not seen is the sneaky proliferation and harmonization of non-tariff barriers impeding free enterprise and creating monopolies at an international scale at the expense of the consumer. It’s time for genuine free trade.
Being a government means never having to say you’re sorry. And it also means you get to blame everyone else for all the problems you’ve caused.
This week at mises.org, we explored how deeply indebted governments blame the ones who lend them money, while government prosecutors blame entrepreneurs, businesses, and “white collar crime” for other problems in the economy. And surges in drug prices, we’re told, have nothing to do with government control of the drug market.
Lackluster new jobs data and continued surges in home price inflation confirm that the distortions of the Fed-induced boom continue to add up.
But even with all the bad news, the miracles of the market place point toward a brighter future. This week on Mises Weekends, Rod Martin, a co-founder of PayPal and world renown philosopher-capitalist, joins Jeff for a wide-ranging interview covering such topics as the refugee situation in Europe, unrest in the Middle East, and why some cultures are more prosperous than others. Martin contrasts the difficulties world governments have in confronting global macro-crises with the hope and resilience of technological innovation and entrepreneurship.
Indeed, Ludwig von Mises would have easily understood how market innovations outpace government innovations, since Mises, whose birthday we celebrated this week, pioneered our understanding of how government intervention cannot achieve the goals it tries to achieve. Be sure to see this never-before-published essay by Bettina Bien Greaves, and this newly-discovered recording of a Mises lecture from 1962.
In case you missed any of this week’s Mises Daily and Mises Wire articles, take a second look:
The Reality Behind the Numbers in China's Boom-Bust Economy by Yonathan AmselemDrug Shortages, Price Gouging, and Our Broken Health Care System by Michel AccadThe Coming Corporate "Crime Wave" by William L. AndersonLuwig von Mises, Genius? by Bettina Bien GreavesGovernments Turn to the UN to Avoid Paying Their Debts by Nicolás CachanoskyThe Military Gravy Train: Full Speed Ahead by Andrew SyriosThe Silent, Slow, Stubborn Revolution Carmen Elena DorobățCollege Athletics: Public Institutions Are the Real Sham By Jonathan NewmanThe Real Estate Crisis in North Dakota's Man Camps by Mark Thornton
The Mises Institute spoke with Associated Scholar Antony Mueller last week about recent economic and ideological trends in Brazil. Prof. Mueller teaches economics at Federal University of Sergipe (UFS) in Brazil.
Mises Institute: For those of us not in Brazil, it is hard to interpret the commentary on Brazil’s economy right now. Brazil’s debt was recently reduced to junk status, and we can see that Brazil’s economy is not doing well. But how severe is the crisis?
Antony Mueller: Part of the explanation is that for a large part of the population and for the government itself, the crisis came as a shock. At first, the Brazilian government ignored the coming of the crisis and when it arrived, the government ignored its existence.
Imagine Brazil like a family with a lot of inherited wealth that spends as if there were no tomorrow. Yet someday this family wakes up to the fact that its wealth has been squandered and its financial accounts are in the red. The government did not recognize that the boom would be temporary. The Brazilian economy began to sputter as commodity prices fell and the demand from China decreased. Yet in order to adapt to the new situation and cut expenditures, the Brazilian government spent even more.
Incumbent President Dilma Rousseff from the Workers Party, which has been in power since 2003, won a second term in 2014 with a campaign that deceived the population about the true state of the economy. The government implemented a series of cheap financial tricks such as delaying the rise of the prices for fuel and electricity and of other items in the large list of administered prices.
After the election, hell broke loose and the true state of the economy became visible for the broad public. The popularity of the president began to fall to single-digit approval ratings. The crisis is serious in itself, yet its psychological impact becomes more severe because of the shock of disillusion. In part, this shock also applies to foreign observers and investors who bought into government propaganda or based their outlook on the projections of the International Monetary Fund whose prognosis in 2013 said that Brazil would maintain economic growth rates of at least over 4 percent for each of the years to come up to 2018.
MI: Ambrose Evans-Pritchard is writing off Brazil as if it’s a total disaster area, and he quotes one observer who says “things will get much worse before they get better.” Is this true, and if so, what are the obstacles to improvement?
AM: Evans-Pritchard’s remarks reflect the consensus among foreign observers and there is indeed little doubt that the crisis will deteriorate before it gets better. Even worse, the recuperation could take much longer than is generally assumed. The reason for a pessimistic outlook comes from the fact that the crisis is not only economic, but also political in character. Not only members of the present government, but also figures of the opposition parties are under investigation about massive corruption linked to the major Brazilian oil company Petrobras. There is much frustration in the country because there is no promising alternative in sight.
MI: Assuming we are looking at real declines in standards of living, how long will it take the country to get back to where it was at the height of the boom?
AM: This is a difficult question for a specific answer. So let me answer in a more fundamental way. Brazil’s economic development has been on a roller coaster ride for centuries. Phases of extraordinary booms were followed by long periods of busts and stagnation.
In the second half of the twentieth century, the boom of the 1950s, with the promise that Brazil would achieve growth and development of “fifty years in five years” ended in economic disaster and the military dictatorship that lasted from 1964 to 1985, which in turn ended with Brazil’s catastrophic foreign debt crisis. It took a “lost decade” for the country to recuperate.
The 1990s saw a series of reforms that put the country back on the track. In 2003, when the newly elected president, Luiz Inácio “Lula” da Silva from the Workers Party took over the government, the economy was already on a growth path. Then came the commodity boom with a seemingly insatiable appetite for Brazilian natural and agricultural products. Yet, instead of using the good times that filled the coffers of the Brazilian treasury to carry out highly necessary reforms, the Labor government pursued a populist policy of generous social spending, particularly for the poor parts of the population.
Now, these achievements of reducing poverty and inequality have come under threat because of the lack of financial funds. This means that Brazil must face not only an economic and a political crisis, but also a social crisis. The confluence of such a triple crisis increases the risks that any one of them gets worse because each individual crisis affects negatively the other crises. The consequential chain from the economic to the political and from there to the social crisis then goes into reverse and the social crisis worsens the outlook to get out of the political and the economic crisis.
MI: Brazil was a big part of the BRICS effort to create a group of up-and-coming economies that could rival the big economies like the US and Germany. Is that idea totally dead, or is the demise of BRICS overstated?
AM: The BRICS never managed to operate as a coherent group. Now, that not only Brazil is in crisis, but also Russia, and that China is in troubled waters, the outlook for the BRICS as a group of playing a major role in global affairs has diminished even more.
It is similar with MERCOSUL, the common market project in South America. Instead of achieving free exchange, trade conflicts are on the rise and not a single supranational institution has become effective. From my observations of Latin America and of Brazil in particular, I conclude that there are still vast mental and ideological barriers in place that work against sustained prosperity. The ideological dominance of statism, socialism, and interventionism is present in every layer of the Brazilian society — not only in politics or academia, but also in the business community itself.
Bureaucracy is a nightmare without end. Taxation is high and brings little return. The public educational system is in shambles. The legal system is unable to cope with an enormous backlog of unresolved cases, while at the same time, judges and other legal authorities enjoy grandiose privileges. Salaries in the judiciary are astronomical compared to what the average person or the poorer parts of the Brazilian society earn.
The public sector in general is extremely inefficient and is an El Dorado of rent-seekers. I do not expect that any of these obstacles will be resolved in the coming years. I fear that it is not much different in some other BRICS countries. They are all stuck in the “middle income trap,” as they are apparently unable to change from a statist to a free market system. There are many vested interests in place, in both politics and in established business, preventing change from state capitalism to an entrepreneurial capitalism. Only based on a fundamental change of ideology in favor of markets and individual and entrepreneurial liberty, will countries like Brazil gain long-term prosperity. I would also say that the same holds for China and the other members of the BRICS and emerging markets in general.
MI: Ideologically, is there any hope of a shift in Brazilian ideology? Some in the US media have featured libertarian free market groups in Brazil and suggested there is a change going on. Do you see any of that?
AM: Well, there is hope, yet it is a long way down the road. The Brazilian libertarian movement is gaining strength, particularly among students and young people in general. In fact, the spread of libertarian ideas among young Brazilians is amazing. The Brazilian Mises Institute is overwhelmed by visits to its site and the Institute’s events are grandiose. There is much good will, high hopes, a lot of serious dedication and extreme diligence at work in the libertarian movement of Brazil. If this trend continues, the walls that surround the established ideology will finally crumble. Anybody with an alert mind must see that statism has failed; that the ideas of socialism and interventionism are sterile and that they produce mainly frustration, stagnation, and crises. The libertarian movement in Brazil is the new avant-garde; its members are the true “progressives.”
The modern electronic media help to accelerate their ascendancy to influence and recognition. The current crisis will be a further wake-up call for young people to recognize that it is their future which is at stake if Brazil should continue in its old ways. With ever more young people joining the libertarian movement, I am sure that sometime in the future a critical mass will be reached and things will change.
Following the July 5 “no” vote in Greece against the terms of the negotiated bailout, European elites swore they would no longer negotiate:
[E]urozone officials shot down any prospect of a quick resumption of talks, even though finance ministers were planning to meet during the week to discuss the fallout from the vote. German Chancellor Angela Merkel and French President Francois Hollande immediately scheduled a bilateral meeting.
“Tsipras and his government are leading the Greek people on a path of bitter abandonment and hopelessness,” Germany’s Economy Minister Sigmar Gabriel told the Tagesspiegel daily. He said negotiations with Athens now were “barely conceivable.”
And yet, by mid-July, everyone was back at the negotiating table, and a deal had been struck. The new deal contained plenty of what the Greek voters said they didn’t want. Namely, austerity. On the other hand, the voters also expressed a desire to stay within the eurozone.
Both goals cannot be realistically achieved at once, so, faced with this ambiguous and contradictory message from the voters, the Greek negotiators went right back to what they had been doing before.
But, given that the European Central Bank had Greece over a barrel, there wasn’t much else the Greeks could do, short of withdrawing from the eurozone. As a means of squeezing the Greek politicians, the ECB had restricted emergency euro funds to the Greek banking system during the Greek crisis, so in order to stay in the eurozone, the Greek politicians were faced with two choices: close the banks or endure a full-blown run on the banks. They opted for bail-ins and bank closures, with predictable results on the standards of living for the Greeks.
In other words, as Martin Sandbu observed in The Financial Times, “the ECB forced a shutdown of the Greek banking system and made clear it would only let it function again once a deal on sovereign finances had been struck. … This has established beyond any doubt that the independence of the eurozone’s central bank from politicians is nothing of the sort. Far from being independent, the ECB does governments’ bidding.”
European Elites Got What They WantedIn this case, in the end, the European elites got what they wanted. They used the ECB to bring the Greeks to heel, and all the negotiators simply ignored the obvious political implications of the Greek referendum by adopting a deal that looked a whole lot like the rejected one. Indeed, some European politicians were explicit about their disdain for elections, as was Jyrki Kitainen of the European Commission when he declared “We don’t change policies depending on elections.”
Understandably, then, the Greeks have become cynical about their own elections, and realized that once you’ve committed your economy to the playground of European elites known as the eurozone, your local elections don’t mean much anymore. In reference to the upcoming polls, one Greek remarked “It’s just a pointless election.” Indeed it is, and countries with small and poor economies in Europe should get used to it. As a net receiver of EU funds, Greece handed over national economic policy and local control to a Europe-wide bureaucracy in exchange for freebies from the EU. So now their bargaining position isn’t exactly a strong one.
Recent Crisis Undermines Calls for a Politically Unified Europe (for Now)Ironically, the victory for the European creditors in the Greek crisis, and the demonstration of ECB power over a local political system, has undermined the efforts by advocates for political unity in Europe. The recent deal has demonstrated that the negotiation process can work.
For much of 2014 and early 2015, the media in Europe and the West in general had been calling for fiscal and political unity in Europe. In other words, they were calling for a strong central government in Europe that can simply force terms on misbehaving countries like Greece in order to avoid the need for tiresome negotiations.
For example, as the Greek crisis intensified, Timothy Garton Ash in the Los Angeles Times contended that monetary union without political union is “tearing Europe apart.” Eduardo Porter opined in The New York Times in February that “local politics” are undermining European unity.
There is general agreement among media pundits in the West that Europe needs a way to mandate participation from local politicians in Europe-wide fiscal and economic schemes. The real goal, Ash contends in The Guardian, should be “a proper federal union such as the United States” when the central government can take money from some states and hand it over to other states. At the same time, debtors can be directly compelled to pay up.
Ash recognizes that this scheme is directly opposed to professed European ideals of liberalism and democracy, so Ash is sure to include a disclaimer in which he notes “given the choice between democracy and a paternalistic, top-down, Euro-Leninis[m],” he’ll choose democracy. As pleasing as it is to see that Leninism is off the table, one is left wondering just how close to the Leninist line Europe ought to get in Ash’s mind.
And Ash’s disclaimer tells us a lot. The call for European integration is fundamentally about coercion and transferring power away from local populations to the machinery of a central state where, as the IMF notes, it can create a system that no longer requires this cumbersome system of sovereign debt, negotiations, and repayment plans. Why do that when you can simply execute wealth transfer schemes with the touch of a button?
Until it seizes that power, however, the European elites will have to rely on decentralized decision-making. As is so often the case, though, this sort of thing is denounced in the press and by politicians as a type of chaos. It’s the age-old call of the political centralizers: unity is strength, and decentralization is chaos.
The fact that the Greeks and their creditors were able to come to an agreement undermines this argument. Clearly, what economic chaos in Europe exists cannot be blamed on too much independence for the Greeks who were easily brought under control by threats from European-wide institutions and by the machinations of the ECB. Apparently, European elites already have many tools at their disposal for forcing the hand of European-member states. Perhaps the need for political unity is really not so dire after all. There’s already a whole lot of it.
The Big, Rich Member States Present the Real RiskBut Greece is just a small country with a small economy. Were it to leave the euro, it would hardly spell the end of the eurozone.
So, the real threat to European unity comes not from a Greek or Portuguese exit, but from a wealthy, net-payer state. Imagine, for example, that Mississippi seceded from the United States. As a net tax-receiver state, such a secession would hardly be noticed in the national economy or at the US Treasury. But imagine if New York, with it’s huge financial sector and immense income-tax revenues wished to secede. Obviously, that would be viewed by the national government as a grave economic threat.
And so it is for Europe. Greece could be lost without much economic threat to the whole. The exit of a country like the United Kingdom or Germany, on the other hand, would be another matter entirely.
And it’s this possibility of exit for these larger countries that has the IMF and other advocates for centralization most worried. The centralizers want the ability to easily compel transfer payments from wealthy countries to poorer countries. But, they know that this would generate opposition in the richer countries. The solution to this, of course, is to make sure and already have in place the coercive machinery that would prevent secession or resistance from the richer countries should they ever want out.
Without the means of directly coercing member states in this new unified Europe, the central government will have to engage in the slow, tiring business of negotiations and give-and-take among members. That is, the central government would have to actually care about what voters and taxpayers in the member states think. But once they get their “proper federal union” (likely to include a prohibition on secession), the power of individual member states will be eviscerated, and the goal of a politically unified Europe — complete with a strong central government and weak member-state governments — will be at hand.
[Updated Author’s Note: The issue of immigration has only become more pressing over the ten years that have passed since this article’s original publication. And, unfortunately, the libertarian movement has not reached a consensus on this issue. But it should be easy, considering how government is at both ends of the problem: government is the number one reason people choose to escape their countries, whether because of governments’ war or devastating poverty due to the lack of opportunities in regulated markets; and government is the reason ordinary people, in a desperate state because their lives have been forcefully uprooted, have a hard time choosing where to lead their lives in peace. The desperation is due to the so-called “failings” of their own governments, and augmented by ours.
I too have fled my country, though not because I’m fearing for my life but because I sought a better life and greater opportunities. While the immigration issue generally focuses on people from poor countries with little skill or education, it is hardly the case that governments welcome people at the other end of the spectrum: the highly productive, highly educated, and hard-working. On the contrary, government is the least forgiving, least reasonable, and most costly when it deals with non-citizens — those who cannot hold government officials accountable in any sense and do not have a voice. This should make immigration a prime target for the libertarian argument for freedom, peace, and property.]
Immigration Controls and the StateThe pre-1914 world saw no immigration issues or policies, and no real border controls. Instead, there was free movement in the real sense; there were no questions asked, people were treated respectfully and one did not even need official documents to enter or leave a country. This all changed with the First World War, after which states seem to compete with having the least humane view on foreigners seeking refuge within its territory.
The “immigration policies” of modern states is yet another licensing scheme of the twentieth century: the state has enforced licensing of movement. It is virtually impossible to move across the artificial boundaries of the state’s territory in the search for opportunity, love, or work; one needs a state-issued license to move one’s body, be it across a river, over a mountain, or through a forest. The Berlin Wall may be gone, but the basic principle of it lives and thrives.
Immigration controls are not different from other kinds of licensing even though it has been awarded a special name. Licensing has the same result regardless of what is licensed: licensing of physicians causes poor health care at higher cost just as licensing taxi businesses causes poor and untimely service at high cost — licensing on movement means restricted freedom and higher taxes for people (whether “citizens” or “foreigners”). From a libertarian point of view it should be clear that all licensing needs to be done away with, including licensing for immigrants.
Yet the immigration issue seems to be somewhat of a divide within libertarianism, with two seemingly conflicting views on how to deal with population growth through immigration. On the one hand, it is not possible as a libertarian to support a regulated immigration policy, since government itself is never legitimate. This is the somewhat classical libertarian standpoint on immigration: open borders.
On the other hand, the theory of natural rights and, especially, private property rights tells us anyone could move anywhere — but they need first to purchase their own piece of land on which to live or obtain necessary permission from the owner. Otherwise immigration becomes a violation of property rights, a trespass. This is an interpretation of a libertarian-principled immigration policy presented by Hans-Hermann Hoppe a few years ago, which since then has gained increasing recognition and support.
To a non-libertarian bystander, the discussion of the two alternatives must seem quite absurd. What is the use of this libertarian idea of liberty, if people cannot agree on a simple issue such as immigration? I intend to show that the libertarian idea is as powerful as we claim, and that there is no reason we should not be able to reach consensus on the immigration issue. Both sides in this debate, the anti-government-policy as well as the pro-private-property, somehow fail to realize there is no real contradiction in their views.
The Open Borders ArgumentThe people advocating “open borders” in the immigration issue argue state borders are artificial, they are creations based on the coercive powers of the state, and therefore nothing about them can be legitimate. As things are, we should not (or, rather: cannot) regulate immigration. Everyone has a right to settle down and live wherever they wish. This is a matter of natural right; no one enjoys the right to force his decision upon me unless it is an act of self-defense when I am violating his rights.
In a world order based on natural rights, this would be true. It is a golden rule, a universal rule of thumb proscribing that I’ll leave you alone if you leave me alone; if you attack me or try to force something or someone on me, I have a right to use force to defend myself and what is mine.
The problem with this idea is that it has too much of a macro perspective. While arguing there should be no states and therefore no state borders, it presents arguments with an intellectual point of departure in the division of mankind into territorial nationalities and ethnicity. It is simply not possible to make conclusions on immigration to, say, the United States, if we start our argument from the libertarian idea. What is “immigration” in a world with no states?
The Pro-Property ArgumentA less macro view on immigration is taken for granted in the pro-property argument. Here, the individual’s natural right to make his own choices and his right to personal property is the point of departure. Since we all have in our power to create value through putting our minds and bodies to work, we also enjoy a natural right to do as we please with that which we have created and place ourselves wherever we have property owners or guests. Or, as Hoppe puts it, “[i]n a natural order, immigration is a person's migration from one neighborhood-community into a different one.”
Consequently, the immigration issue is in real terms solved through the many choices made by sovereign individuals; how they act and interact in order to achieve their goals. There can simply be no immigration policy, since there is no government — only individuals, their actions and their rights (to property). The “open borders” argument is therefore not only irrelevant, since it has a macro point of view; it also fails to realize property rights as a natural regulation of movement. Since all property must be owned and created by the individual, government cannot own property. Furthermore, the property currently in government control was once stolen from individuals — and should be returned the second the state is abolished since property rights are absolute. There is consequently no unowned land to be homesteaded in the Western world, and so “open borders” is in essence a meaningless concept.
Libertarian UtopiaImmigration will thus be naturally restricted in a free society, since all landed property (at least in the Western world) is rightfully owned by self-owning individuals. Just like Nozick argues in his magnum opus Anarchy, State, and Utopia, a society based on natural rights should honor property rights in absolute terms, and therefore the rightful owners of each piece of property should be identified despite the fact that humankind has been plundered by a parasitic class for centuries.
What is to be considered just property when the welfare-warfare state is eventually abolished is not at all clear. Can one take for granted that the subjects (citizens) of a certain state have the right to an equal share of what is currently controlled by the government? Are they, at all, the rightful owners to what they currently control with the state’s legal protection? If we intend to seek the just origin of property, we need to roll back all transactions until the times before the modern state, before monarchies and feudalism, and probably to a time before the city states of ancient Greece. If we do, how should we consider the produced values of the generations we’ve effectively dismissed?
There is probably no way to sort out this unbelievable mess along the lines of absolute property rights. It should be dealt with this way, but I dare say it will be a practical issue when we get to that point, rather than a philosophical one.
A State Immigration ProblemAnother problem of immigration and property arises from the social welfare system financed by money extorted from citizens. With the open borders argument, private property rights might be undermined even further if immigrants are entitled to special rights such as housing, social security, minority status and rights, etc. Also, immigrants will automatically become part of the parasitic masses through enjoying the common right to use public roads, public schooling, and public health care — while not paying for it (yet).
The concept of private property rights seems to offer a solution to this, but it is not really a way out: it is not as simple as “private property rights — yes or no?” Private property rights is a philosophical position offering a morally superior fundamental framework for how to structure society, but it does not offer guidance in what to do with non-property such as that currently controlled by government.
It is deceivingly simple to claim all of the state’s subjects have just claims to “state property” since they are entitled to retribution for years of rights violations. This is, however, only part of the truth. It is also a matter of fact that all private production to some degree is part of the rights violation process, with direct state support through subsidies, tax breaks, patent laws, police protection, etc., or indirectly through state meddling with currency exchange rates, “protective” state legislation, through using publicly-owned and maintained property and services for transportation, and so on. There is simply no such thing as just private property anymore in the philosophical sense.
Therefore, it is impossible to say immigrants would be parasites to a greater degree than, e.g., Bill Gates: the Microsoft Corporation has benefited greatly thanks to state regulation of the market, but has also been severely punished in a number of ways. We are all both victims and beneficiaries. Of course, one might argue that forced benefits are not really benefits, but only one aspect of oppression. Well, in that case it would also be true for immigrants, who too are or will be victims of the state (but perhaps not for as long as you and I).
A Libertarian Stand on ImmigrationWe must not forget libertarianism is not a teleological dogma striving for a certain end; it rather sees individual freedom and rights as the natural point of departure for a just society. When people are truly free, whatever will be will be. Hence, the question is not what the effects of a certain immigration policy would be, but whether there should be one at all.
From a libertarian point of view, it is not relevant to discuss whether to support immigration policy A, B, or C. The answer is not open borders but no borders; the libertarian case is not whether private property rights restrict immigration or not, but that a free society is based on private property. Both of these views are equally libertarian — but they apply the libertarian idea from different points of view. The open borders argument provides the libertarian stand on immigration from a macro view, and therefore stresses the libertarian values of tolerance and openness. The private property argument assumes the micro view and therefore stresses the individual and natural rights.
There is no conflict between these views, except when each perspective is presented as a policy to be enforced by the state. With the state as it is today, should we as libertarians champion open borders or enforced property rights (with citizens’ claims on “state property”)? Both views are equally troublesome when applied within the framework of the state, but they do not contradict each other; they are not opposites.
Over time, the claim that there is increasing income inequality globally has looked increasingly like a fairy tale. The assertions of inequality consist of the popular notion that the spread of capitalism leads to an immense increase in income inequality. The differences between rich and poor, we are told, are rising so fast that the situation is no longer sustainable. The narrative further asserts that there is an intrinsic tendency in capitalism toward inequality. This story is so often repeated that nobody questions it.
Is this picture accurate? The “naked” data seems to agree with the Marxist version of the market process, in which a small number of capitalists get richer as the people overall become more impoverished over time. Indeed, it seems that inequality since the Industrial Revolution has exploded. We can see how global inequality exploded since 1820 in both commonly-used indicators of inequality: Gini and Theil indices (figure 1).
Figure 1
Data source: Milanovic (2009)A closer look at the available data, however, suggests something else.
First, we notice that the world’s income inequality has been decreasing since 1980. This decrease is mainly because of the introduction of market reforms in China that caused huge increases in productivity and remarkable high rates of growth that get out of poverty millions of people. In other words, 1.3 billion people are converging toward the world’s average income.
Nonetheless the differences between the richer and poorer increased substantially between 1850 and 1980. So the question remains unanswered: is capitalism the cause?
Within-Border Inequality vs. Cross-Border InequalityIn the early nineteenth century, the Gini coefficient was 43 while in the early twenty-first century was near 70 (the number changes between 65 and 70 depending the on source of the data).
But are these numbers comparable? For this task we have to separate the components of the Gini coefficient into income differences within borders, and differences across borders.
During the early nineteenth century, 35 percent of the global inequality found by the Gini index was due to differences across national borders. At the same time, 65 percent of the inequality was generated by differences in incomes within each country. But by the early twenty-first century, 85 to 90 percent of the inequality was due to differences across national borders, while only 10 to 15 percent of inequality was due to income differences within each country.
In other words, the main source of inequality in the world has changed from the within-border inequality to cross-border inequality.
This is clearly an indicator that inequality does not come from capitalism, but comes from the spread of industrialism and market institutions to different places at a different pace. If half of the world embraces markets and the other half doesn’t, it is clear that the development of the first group makes the world more unequal, but this fact doesn’t tell us anything about the inequality in the areas adopting market institutions. Indeed, the available data supports precisely this hypothesis: inequality across countries has risen from 15 Gini points to 60–63 Gini points, while within-border inequality has fallen from 28 points to 7–11 points (figure 2 and 3):
Figure 2
Data source: Milanovic (2009)Figure 3
Data source: Milanovic (2009)In both Gini and Theil indicators, the trend shows that cross-border inequality rises while the within-border inequality diminishes until 1980. The last observation changes the trend, as we pointed out, partly because of the recent incorporation of China and its labor force into the international economy.
Inequality is Unavoidable in Poor SocietiesWe can use another approach to the inequality measurement if we take subsistence levels into account. In preindustrial societies, the average income was very close to the subsistence level, but as populations move away from subsistence living, the Gini index value may increase if low-level income growth does not match growth at the high level.
In other words, the higher the top income goes, the greater the inequality. The income level of subsistence is set at $300:
Figure 4
Data source: Milanovic (2009) Figure 5
Data source: Milanovic (2009)In 1820, the average global income was only twice the subsistence level. But by 1980, the average income was around fifteen times the subsistence level. All the while, however, inequality, as measured by both the Gini and Theil indices, was increasing.
Branko Milanovic takes this a step further. From here we can compare the “maximum feasible inequality” with the measurement of this equality and we obtain what is called the “extraction ratio.”
“Extraction ratio” is a vague term, and gives the impression that wealth is extracted instead of created, but the logic behind the metric is solid: given the maximum amount of inequality possible, how far is this maximum point from the actual measurement of it?
Figure 6
Data source: Milanovic (2009)When this gap is measured, we see two different trends depending on the indicator that we choose. The Gini indicator shows us that inequality has slightly decreased since the Industrial Revolution, but the level of inequality remains more or less constant. The Theil indicator, in contrast, shows us a huge decrease in inequality since the Industrial Revolution takes place.
ConclusionAs we attempt to measure inequality, we see that, in the first place, it is caused by the irregular adoption of market institutions over the world. If we disaggregate the data we see that inequality within countries has plummeted, suggesting that market institutions tend to make the society more equal.
In the second case, we see that preindustrial societies are equal because of their low income. Disparity of incomes can only be achievable in rich societies. Once we seriously consider subsistence levels, we find that inequality slightly decreases in the last 200 years measured by the Gini index, or strongly decreases when measured with the Theil index.
The claim that markets are the cause of increasing an “unsustainable” inequality is now less convincing than ever.
In late June of this year, President Obama signed an executive order and presidential directive clarifying the administration’s hostage policy. Afterward he gave a statement to the press, in which he condemned threats of prosecution against families trying to pay ransom: “the last thing we should ever do is add to a family’s pain with threats like that.”
This follows a review into the government’s treatment of overseas hostages, which found that the family of James Foley, the freelance journalist beheaded by ISIS in August 2014, had been told that they would be taken to court if they tried to negotiate with the terrorist group.
Following the review’s publication, the president was faced with three choices:
(1) A policy of no-concession, whereby the government not only refuses to pay ransom, but continues to threaten the prosecution of private citizens who negotiate;
(2) A policy of laissez-faire, whereby the government does nothing — it neither pays ransom, nor interferes with the negotiations of private citizens; and
(3) A policy of concession, whereby the government foots the ransom bill.
The president’s statement indicates his administration’s support for policy number 2. This article compares said policy — of laissez-faire —with its rivals, policy 1 and policy 3, both of which have recently found public proponents.
No-Concession: Coercing the Victims of CoercionAdvocates of no-concession (e.g., House Speaker John Boehner) argue that if families are allowed to bargain for the release of their loved ones, it will send a message to rogues overseas that American hostages fetch a price. The number of kidnappings will increase as a consequence.
This argument fails on its own terms. While it assumes hostage-takers are rational, self-interested actors who respond to incentives, it does not afford American travelers the same courtesy, instead assuming that they would not act any differently in light of the heightened threat to life and limb. In fact, if the risk of visiting lawless, unstable regions has increased appreciably, then marginal visitors (e.g., amateur journalists) can be expected to cancel their excursions; more serious trippers, on the other hand, will spend more on security provisions.
There are now two forces acting, each in the opposite direction: rogues are increasingly on the prowl for victims, but trippers are fewer in number and more vigilant. Whether the number of kidnappings should fall or rise with the payment of ransom by families, then, is a matter of some ambiguity.
But don’t ransom payments enable hostage-taking groups the material resources necessary to kidnap more frequently in the future? This objection is vulnerable to the same counterargument: as rogues militarize, some American visitors will armor up, while others will cancel their trips. Just as the lynx population cannot expand indefinitely at the expense of the snowshoe hare’s, the hostage-takers face constraints — as they become stronger and more numerous, they will find the pickings less plentiful, because their prey has in turn become stronger or has simply stayed at home.
In short, a policy of no-concession asks that we tolerate the addition of government coercion to an already coercive situation; that we strip hostages and their families of their best hope for conflict resolution. And yet, in return, it does not even give us reason to believe that the total number of kidnappings should certainly drop. A sorry trade-off indeed!
Uncle Sam’s Deep PocketsThere are currently over thirty American hostages held abroad, and, quite understandably, it is their families who form the dominant lobby for a policy of government-paid ransom. How might we expect a policy of concession, practiced in some form by every country but America and Britain, to affect the number of kidnappings?
First, we should note that governments do not face the same budget constraints as private individuals, meaning kidnappers could expect to extract a far higher ransom. And even if the government-paid ransom were capped, it would still stimulate kidnappings by rewarding rogues with income security. By contrast, under the policy of laissez-faire which Obama has endorsed, hostage-takers enjoy no such certainty — they may find, after outlawing themselves and expending labor in the process of kidnapping, that their victim hasn’t the means to pay.
Furthermore, under a policy of government-paid ransom, Americans could be expected to visit dangerous regions in greater numbers, and to become less vigilant while doing so. It would, of course, still be unpleasant to be kidnapped, but it would be made less onerous if one knew one’s house needn’t be re-mortgaged to buy freedom. That is, government guarantee of ransom creates moral hazard, partly removing the incentive to guard against risk. Other things being equal, a policy of concession stimulates the kidnapping industry, providing it with more opportunities and a stable, generous bounty per head.
However, all other things are not equal between countries: that is the reason why, in spite of its government’s consistent refusal to pay ransom, the US had the second highest number of citizens held hostage in 2013.This source reports that America had nine citizens in the hands of hostage-takers in 2013. However, the U.S. government reported in 2015 that over thirty Americans are currently being held. In the interim, IntelCenter reports that only two hostages were taken: 0 in 2013, 1 in 2014 and 1 so far in 2015 (data on yearly kidnappings here. This demonstrates the difficulty of finding consistent data on American hostage-takings. It is government policy not to publicize hostages, so as to deny their kidnappers limelight and bargaining power. America’s foreign policy has made political targets of its citizens, with many being kidnapped and killed to influence military decisions. That is not, however, to discount the importance of government ransom policy; the country that beat America in 2013 was France — the French have intervened in places such as Mali and Libya, while at the same time paying out more in ransoms than any other nation since 2008. And that shows in the hostage nationality data.
ConclusionAllowing families to negotiate without fear of prosecution provides some hope for those seized overseas; at the same time, the moral hazard associated with government-paid ransom is avoided. In short, it is a humane and level-headed response to the lengthening list of American abductees.
However, until such a day as American spears are beat into pruning hooks, citizens will remain in disproportionate danger of abduction while abroad. John Boehner, in response to Obama’s recent change in hostage policy, lamented, “... you could be endangering more Americans here and overseas.” If, like Boehner, one is truly concerned with the safety of citizens at home and overseas, one must consider the crucial role played by American military intervention and political subversion in creating hatred for the homeland and her people.
Economics is dead, and economists killed it.
What we have seen over the course of the last eighty years is a systematic dismantling of the contribution of economics to our understanding of the social world. Whatever the cause, modern economics is now not much more than formal modeling using mathematics dressed up in economics-sounding lingo. In this sense, economics is dead as a science, assuming it was ever alive. Economics in mathematical form cannot fulfill its promises and neither the scientific literature nor advanced education in the subject provide insights that are applicable to or useful in everyday life, business, or policy.
But apparently what is dead can be killed again. This, at least, appears to be the goal of the present tide of leftist critics who demand that economics be restructured from the bottom up. Why? The real reason is unlikely to be anything but the common leftist fear of what the science of economics reveals about the economy and the world. As often claimed by ideologues on the left, the science of economics “is ideology.” This is evident, we are supposed to believe, when we consult “scientific Marxism.”
The stated reason in the contemporary discussion is different, however. We need to restructure (if not do away with) economics because, we are told, it has failed. Why? Because economics could not predict the financial crisis of 2008.
These critics of economics will never let a crisis go to waste, and not only do they believe that the most recent crisis should be used to prove the Marxist dogma about the inherent contradictions in the market, but it can also be used as an ostensible reason to rethink the whole science of economics. Indeed, it is general knowledge that economists didn’t foresee the crisis, and their prescriptions to solve it quite obviously haven’t worked, either.
You have to applaud the anti-economics left for this rhetorical masterpiece. They have struggled for decades to sink the ship of economics, the generally acclaimed science that has firmly stood in the way of their anti-market and egalitarian policies, hindered the growth of big government, and raised obstacles to enact everything else that is beautiful to the anti-economics left. The financial crisis is exactly the excuse the Left has been waiting for. It is a slam dunk: government grows, Keynesianism is revived, and economics is made the culprit for all our troubles.
We see this now in education, as students demand to be taught (and professors demand permission to teach) a more “relevant” economics. Relevance, apparently, is achieved by diluting economics with a lot of the worst kinds of sociology, post modernism, and carefully structured discourse aimed to liberate us from our neoliberal bias. And, it turns out, we must also teach Keynesian ideas about how government must save the market economy.
We see this same agenda at academic research conferences, where it is now rather common to hear voices (or, as is my own experience, keynote talks) claiming that “it is time” for another paradigm: post-economics. The reason is always that economics “has failed.”
If this weren’t so serious, it would be amusing that the failure of Keynesian macro-economics (whether it is formally Keynes’s theory or post-Keynesian, new Keynesian, neo-Keynesian, monetarist, etc.) is taken as an excuse to do away with sound micro-economic theory to be replaced with Keynesian and other anti-market ideas. But it is not amusing. If most of the discussions heard are to be believed, the failures of central planning is a reason for central planning, just like socialism is a reason for socialism. The success of the market, on the other hand, is not a reason for the market.
It should not be a surprise that economics has finally become irrelevant after decades of uncalled-for mathematizing and formal modeling based on outrageous assumptions. This perverse kind of pseudo-economic analysis had it coming, really. One cannot calculate maxima for the social world; it is, as Mises showed almost a century ago, impossible. If mathematical economics is finally dead, then that is above all else an improvement.
But the death of mathematical economics should not mean economics is to be rejected. It should mean a return to proper and sound economic analysis — the state of the science prior to the “contributions” of Keynes, Samuelson, and that bunch. Mathematical economics is a failure, but economics proper is still the queen of the social sciences. And for good reason: she relies on irrefutable axioms about the real world, from which logically stringent and rigorous conclusions are derived. The object of study is the messy and sometimes ambiguous social world, but this does not require that the science is also messy and ambiguous. On the contrary, economics is unparalleled in its ability to provide proper and illuminating understanding of how the economy works. It is neither messy nor ambiguous. It brings clarity to the processes that make out the market.
This is the reason why the Left hates all that is economics. Because it points out that creating a better world through central planning, money-printing, and political manipulation is indeed impossible. The market is neither perfect nor efficient, but it is better than any available alternative. In fact, the unhampered market is the only positive-sum means available for human society. The market is indeed the only way of progress; all else is a step backward.
But the market is also uncontrollable and seems, at least to the non-economist, both unpredictable and unintuitive. This is why the Left hates it — and why the Right despises it.
The Left knows full well that they cannot beat proper economics; their ideology will always fail when put up against economic science. But they can beat mathematical economics, since it follows in the tradition of Lange-Lerner market socialism and is fundamentally flawed. They finally have. And they are using this as an excuse to kill economics again. Let’s hope for the sake of humanity that they will fail in their undertaking.
Ronald Reagan used to be called the Teflon president, on the grounds that no matter what gaffe or scandal engulfed him, it never stuck: he didn’t suffer in the polls. If Reagan was the Teflon president, the military is America’s Teflon institution. Even people who oppose whatever the current war happens to be can be counted on to “support the troops” and to live by the comforting delusion that whatever aberrations may be evident today, the system itself is basically sound.
To add insult to injury, whenever the US government gears up for yet another military intervention, it’s people who pretend to favor “limited government,” and who pride themselves on not falling for government propaganda, who can be counted on to stand up and salute.
I had the rare honor of serving as Ron Paul’s congressional chief of staff, and observed him in many proud moments in those days, and in his presidential campaigns. But Ron’s new book Swords into Plowshares: A Life in Wartime and a Future of Peace and Prosperity, a plainspoken and relentless case against war that ranks alongside Smedley Butler’s classic War Is a Racket, is possibly the proudest Ron Paul moment of all.
It’s been calculated that over the past 5,000 years there have been 14,000 wars fought, resulting in three and a half billion deaths. In the United States, between 1798 and 2015 there have been 369 uses of military force abroad. We have been conditioned to accept this as normal, or at the very least unavoidable. We are told to stifle any moral qualms we may have about mass killing on the question-begging grounds that, after all, “it’s war.”
Ron, on this as on a wide array of other topics, isn’t prepared to accept the conventional platitudes, and a recurring theme in his book involves speculating on whether, in the same way the human race has advanced so extraordinarily from a technological point of view, we might be capable of a comparable moral advance as well.
There is much in this book for libertarians and indeed all opponents of war to enjoy – for starters, a refutation of the claim that war is “good for the economy,” a discussion of the dangers of “blowback” posed by foreign interventionism, and an overview of the War on Terror from a noninterventionist perspective. But there is a profoundly personal dimension to this book as well, as we follow Ron’s life from his childhood to the present and the evolution of his thought on war. I’ll leave readers to discover these gems for themselves.
Likewise, Ron relates some little-known stories of war. In one, it’s two weeks after D-Day, and Captain Jack Tueller decided to play his trumpet that evening. He was instructed not to do so: his commander explained that a German sniper had still not been captured from the day’s battle. Figuring the sniper was a frightened young man not unlike himself, he played the German song “Lili Marleen.” The sniper surrendered to the Americans the next day.
Before being sent off to prison, the sniper asked to meet the trumpet player. He said, through tears, “When I heard that number that you played I thought about my fiancée in Germany. I thought about my mother and dad and about my brothers and sisters, and I could not fire.”
“He stuck out his hand and I shook the hand of the enemy,” Tueller recalls. “He was no enemy. He was scared and lonely like me.”
Another story takes place just before Christmas 1943. Charlie Brown, a 21-year-old farm boy from West Virginia was on his first combat mission as a pilot when his B-17 was seriously damaged over Germany. With half his crew dead or wounded, he was struggling to get his plane back to England when a German fighter came within three feet of his right wingtip. But Franz Stigler, the German pilot, did not fire. Instead, he simply nodded, pointed, and flew off, allowing Brown to make his way back to England.
Some 46 years later, the two men met again. Brown finally got to ask Stigler why he had been pointing. Stigler replied that he was trying to tell Brown to fly to Sweden, which was closer. But since Brown knew only how to get back to England, that’s where he went.
The two men became close friends, even fishing buddies. Stigler said that saving Brown’s life was the only good thing that came out of the whole war for him.
You won’t be surprised to learn that in addition to human-interest anecdotes like these, Ron spends time in Swords into Plowshares linking central banking and war, one of his perennial themes over the years. It isn’t for nothing that again and again, countries abandoned the gold standard when they went to war.
We rarely pause to consider what that tells us. If they needed to abandon the gold standard to go to war, that means the gold standard was a barrier against war. Of course, the ease with which governments could abandon the gold standard serves to remind us of the need to separate money and state altogether, and that the state cannot be trusted to maintain a sound money standard.
As always, Ron is at his fiery best when he unleashes on the neoconservatives, whose every overseas fiasco becomes a justification for still another fiasco six months later. He invites us to consider a typical remark by neoconservative Michael Ledeen: “Paradoxically, peace increases our peril, by making discipline less urgent, encouraging some of our worst instincts, and depriving us of some of our best leaders.”
Note that it is peace, according to Ledeen, and not war, that encourages our worst instincts. This was the view of Theodore Roosevelt, loved and admired by progressives and neoconservatives alike, who considered prolonged peace a deplorable state that made a people flabby and otiose.
Neocons complain when libertarians describe them as “pro-war” – why, they favor war only as a last resort, they assure us, and only because there are bad people in the world – but how else can we describe the views of Ledeen, who to my knowledge has never been publicly taken to task by any other neocon?
(Perhaps my favorite of Ron’s collection of ghoulish neocon quotations, though, if only for its obliviously Orwellian quality, is George W. Bush’s remark from June 2002: “I just want you to know that, when we talk about war, we’re really talking about peace.”)
Meanwhile, the American people have been indoctrinated into a cult of the veteran, whom evangelicals blasphemously compare to Jesus Christ, and whereby everyone is expected to salute, applaud, and offer ostentatious thanks for the veteran’s “service.”
Here, by contrast, is Ron:
“Service” in our military to invade, occupy, and oppress countries in order to extend [the] US Empire must not be glorified as a “heroic” and sacred effort. My five years in the Air Force during the 1960s did not qualify me as any sort of hero. My primary thoughts now about that period of time are: “Why was I so complacent, and why did I so rarely seriously question the wisdom of the Vietnam War?”
Ron calls upon the peoples of the world to resist their governments’ calls to war and to refuse to take part in violent conflict. “If the authoritarians continue to abuse power in spite of constitutional and moral limits,” he writes, “the only recourse left is for the people to go on strike and refuse to sanction the wars and thefts. Deny the dictators your money and your bodies…. The more this is a worldwide movement, the better.”
This is why Ron is such a fan of the song “Universal Soldier,” which he asked singer Aimee Allen to perform at his dramatic Rally for the Republic in 2008. The man who enlists in the military and simply goes along with the prevailing current of opinion is the universal soldier. If he refused to “serve” and to fight, there could be no wars. Even Ron, a flight surgeon who never fired a shot, looks back on his time in the military and asks himself: why did I not resist? Why did I go along?
Needless to say, few among our political class – people who, generally speaking, have rather more to repent of than mild Ron Paul – reflect seriously on their moral choices, or rebuke themselves publicly.
When people read Swords into Plowshares generations from now – and they will – they will marvel that such a man actually served in the US Congress, and defied every campaign of war propaganda right on the House floor. But what’s great about Ron is not just his honesty, but also his constant intellectual growth – with the passage of time he has become an ever-more radical champion of freedom. His evolution is especially plain in this book, as you’ll discover for yourself.
One of the most important things Ron accomplished in public life was to show that it’s possible to oppose war without being a leftist. He likewise explained that a foreign policy of peace and nonintervention was a central, indispensable feature of the message of freedom, and not just an odd personality quirk of Ron Paul – as the many people who said “I like Ron Paul except his foreign policy” seem to have believed.
Bernie Sanders pretends to be antiwar, but as usual with socialists, a closer look shows he doesn’t really mean it. But even if he did, as a socialist he simply wants to point the guns at different targets – the undifferentiated aggregates like “the rich” to whom he urges his followers to direct their uncomprehending hate. Ron, on the other hand, is calling on us to put the guns down, and for peaceful interaction both between nations and among individuals.
It is a position most people had never heard of before 2008, since election campaigns are all about grabbing the machinery of state and pointing its guns at whatever group the eventual victor despises. But Ron captured the imaginations of millions of intelligent young people, whose brains hadn’t yet been deformed by an American political culture designed to deprive them of humane possibilities.
Ron turns 80 this month, and continues his life’s work of truth-telling. Wish Ron a happy birthday by joining us for a celebration in Lake Jackson on August 15, and by reading this extraordinary book.
[Libertarian Forum (March 1983)]Wisdom has taught us to be calm and meek,To take one blow, and turn the other cheek;It is not written what a man shall do,If the rude caitiff smite the other too!—Oliver Wendell Holmes, Sr.Somewhere in Ayn Rand’s Fountainhead there is a striking passage where one of the Bad Guys (and Rand’s Bad Guys are always unmistakably bad) abandons the Communist Party and rushes off to India to plunge into Hindu/guru mysticism. Rand caught one of the striking intellectual movements of our age. Time and time again, left-collectivists, after toiling many years in the Marxian vineyard, get disillusioned, give up, and join some Maharishi cult or other, babbling about the ineffable Wisdom of the East. On the New Left, Rennie Davis was a striking example; before that, veteran Communist fellow traveler Louis Fischer suddenly rushed down to India to do a biography of Mahatma Gandhi.
In my own experience, I knew a bright young Trotskyite who, during the New Left epoch, suddenly discovered LSD, and started distributing LSD tracts instead of Trotskyite ones. Pretty soon, one mind-destroying experience begat another, and he was putting up Krishna/Vishnu Indian mystical posters and babbling accordingly.
One of the most thoughtful analysts of this phenomenon has been Arthur Koestler; even the titles of some of his works portray his insights: the Lotus and the Robot, the Yogi and the Commissar. The point is that the Yogi is but the flip side of the Commissar. After years of trying to transform the world by forcing others to do his bidding, the Commissar abandons the world and strives to obliterate his ego in some mystical Great All-is-One Nirvana.
- The Menace of GandhismIt is said that history comes the first time as tragedy, the second as farce. In my more pessimistic moments, I sometimes believe that the libertarian movement is destined to repeat-as-farce many of the calamities that have befallen the Marxian and other ideological movements. And so there is now a spectre haunting the libertarian movement: the spectre of Gandhian non-violence, of the old Hindu baloney sliced once again.
Part of this new fad undoubtedly stems from seeing the movie Gandhi, which has inspired a lot of this nonsense, and so the fad might well be over when the movie fades at last from the theater screens. But the non-violence fad cuts deeper than that. For one thing, it has been picking off some of the best and most radical Libertarian Party activists, ones which the Party can ill afford to lose if it is to retain its thrust and its principles.
There has long been an anti-party tendency in the libertarian movement, headed by Sam Konkin, a tendency holding all voting and political action to be immoral for libertarians. But, in confronting the challenge of activism by we pro-Party types: What is your strategy for rolling back the State, Konkin could only fall back on forming a cheering section for black marketeers. But most libertarians find this an unsatisfactory outlet for activism, first, because black markets, while helpful, do not strike at the core of State power, and second, because black markets will be formed by adept entrepreneurs and need no cheering squads to urge them on. The other major anti-party leader, George H. Smith, confronting the same challenge, has come up with another strategy that has already drawn many radical activists out of the LP: Bringing down the State by massive non-violent resistance, or civil disobedience. This is the nub of Smith’s recently formed Voluntaryist movement, and the current Gandhi film has lent effective focus to Voluntaryist efforts.
At the heart of the Voluntaryist strategy is an unquestionably correct syllogism: If the mass of the people were, at one blow, to withhold their obedience from the State, refuse to pay taxes, stop circulating the State’s paper money, or refuse to obey unjust laws, then the State would be brought down. The major problem, of course, is the likelihood of the If.
There are many successful examples of violent revolution against the State in modern history; the state only two examples of successful non-violent revolution. (Professor Gene Sharp, the current apostle of non-violence, mainly cites marginal examples which have a similar standing to Konkin’s black markets: they ease some of the pain of oppression without doing much to end it. E.g., Danish slowdowns in obeying Nazi orders during the German occupation in World War II). These two examples are instructive, especially in light of the fact that violent revolutions are attacked from all sides as leading to new forms of State oppression. For they are Gandhi’s India, which led to Mrs. Gandhi’s dictatorship and the horrifying experiment in compulsory sterilization; and the Khomeini revolution in Iran, which brought down the Shah’s regime by a series of non-violent actions culminating in a universal general strike. The non-violent Khomeini revolution, of course, has brought forth the monstrous tyranny of Khomeini’s Islamic fundamentalism.
The comparative record of non-violent revolutions is, then, worse than that of violent ones, for the violence of the American Revolution after all brought forth a pretty good result, while non-violence has accomplished nothing fruitful at all.
Which leads to a fundamental libertarian point: What’s so great about non-violence anyway? Libertarians, after all, are not opposed to violence per se; they are opposed only to violent aggression, to the initiation of violence against another’s person or property. With the exception of the LeFevrian aberration, all libertarians, including Konkin and the Smithian Voluntaryists, concede the right to use violence in defense against violent invasion of person and property. So what’s so great about non-violence? Why wantonly abandon an important tool of self-defense?
The new craze of non-violence or Gandhism, is a menace to the libertarian movement for several crucial reasons. It is a dead-end for the libertarian movement. It serves the function of providing burnt-out LP activists with the illusion of an alternative form of productive libertarian activity. My observation is that many, if not most, Voluntaryists or their fellow-travelers do not arrive at this strategy from a studied conviction that political action is immoral. (Even if it were, non-violent resistance would still be an illusory, dead-end strategy). Instead, they begin with various forms of disillusion or exhaustion with LP activities. At this perhaps temporary moment of weakness, they seize on Voluntaryism for providing them with a cosmic rationale for dropping out of a commitment to the libertarian movement.
Why is non-violent resistance a dead end? First, because if we observe the two successful examples of mass resistance, they emerged from a monolithic religious tradition (Shi-ite Islam) or were steeped in the religious culture of the country (Yogi/guru India.) The United States has no monolithic religion or religious culture, and we have no real tradition of coordinated mass non-violence. If anything, Americans, more than most other Western countries, have often been ready to pick up the club or the gun at infractions on their liberty.
Secondly, since there is zero possibility of Smith and his confreres generating a mass movement for civil disobedience, this means that the Voluntaryist movement is destined to take one of two roads, each disastrous in different ways. For when a dozen or so libertarians sit around for a year or two talking about bringing down the State by non-violent resistance, what is likely to happen? Either nothing, in which case everyone gets bored with meta-discussions of revolution, and the movement falls apart and disappears. Or the couple of dozen revolutionaries decide to put their talk into practice by confronting the State apparatus with their bodies, by throwing themselves into stalling the machinery of the State. And what will happen then is inevitable: They will get smashed. The police hate pacifists and non-resisters even worse than Commies, and they will be the first to have their bodies dragged through the muck. Since these are some of the finest young men and women I have ever known, the personal tragedy, let alone tragedy to the movement, will be incalculable. If the movement needs martyrs, I have scads of suitable candidates for martyrdom before George Smith, Wendy McElroy, Carl Watner and the others get ground under the heel.
Note that the inner contradiction, the inner tension, in a handful of people talking continually about non-violent revolution is almost the same as in any similar group sitting around talking about violent revolution (e.g., the Weathermen, et al., in the New Left period.) For then the tendency, after a while, is either for the members to dismiss the whole thing as fruitless palaver and re-enter the mainstream of life, or else to start bombing. Either way, the movement is finished.
For those who believe that libertarian political action is immoral, there are other forms of activism that do not involve what is tantamount to self-destruction: education, lobbying, even Common Cause-type membership organizations. But of course I do not believe for a minute that political action is immoral for a libertarian or an anarchist (see the article by Scott Olmsted and myself on “Is Voting Unlibertarian?” in the next issue of Libertarian Vanguard.)
It is true, moreover, that Smith and McElroy are squarely in the Benjamin Tucker tradition. Tucker and Liberty counselled against political action and called for mass nonviolent disobedience. Their call, of course, got exactly nowhere. The difference between Tucker and his followers, and Smith and his, is that Tucker shrewdly never tried to put his strategy into practice, only paid lip-service to civil disobedience, and remained content to forge a scintillating intellectual movement of individualist anarchism. Would that Smith and the Voluntaryists did the same! Unfortunately, Smith seems to be taking the more reckless and futile course.
Smith, McElroy and the others deny vehemently either that they are mystics or that they are courting martyrdom. I remain unconvinced. In the same way that Smith is certain that there is an inner logic of libertarian political action that leads ineluctably to sellout, so I am convinced that the inner logic of the new Voluntaryist fascination with Gandhite nonviolent resistance will lead ineluctably either to disintegration or to what the Black Panthers used to call “Custeristic” confrontations with the State apparatus.
Indeed, one of the keenest analysts of the libertarian scene attended Smith’s Voluntaryist workshop at the recent February California LP convention, and reported that “George is psyching himself up for confrontation with the State.” The “psyching up” is what Smith, Sharp and other preachers of non-violence refer to vaguely and disquietingly as “training.” I personally find the very word “training” one of the most irritating in the English language, conjuring up as it does linked words such as “basic”, “military”, or EST. Top sergeants “train” the humanity out of their recruits, so as to form a disciplined team, ready to carry out instant orders from above. Even apart from the military connotations, “training” implies distorting persons away from their natural inclinations and choices, and toward some form of imposed regimen. Even if the training is self-imposed, the word has the smell of suppression of the individual and his or her values and authentic personality.
In a session on non-violence held in New York recently, I challenged Professor Sharp in the Q. and A.:“You speak repeatedly of ‘training.’ What is this training? And more important, who is to train whom? Because I tell you one thing: I ain’t going to be ‘trained’ by anybody.” Sharp’s answer was that I had obviously already “trained myself.” Cute, but evasive.
II. The Mahatma DesanctifiedThe time has now come to rip off the veil of sanctity that has been carefully wrapped around Gandhi by his numerous disciples, that has been stirred anew by the hagiographical movie, and that has greatly inspired the new Voluntaryist upsurge. In considering various aspects of his thought and life, we must realize that, for Gandhi at least, they all formed part of a seamless web, an integrated whole.
(Note: this section is based on the superb revisionist article on Gandhi by Arthur Koestler, “Mahatma Gandhi: A Revaluation,” in Bricks to Babel [London: Hutchinson, 1980 pp. 595–619.)
- Economics
Let us not mince words: Mahatma Gandhi was an economic crazy. For Gandhi, not only modern technology but almost any technology was sinful and evil. Railroads were evil, the industrial revolution was evil, cotton textiles were evil, modern medicine was evil, education was evil.
On railroads, Gandhi literally took the line that if God meant us to move around he would have provided us with personal locomotives. Note the following from Bapu (“father”, a widely used term of affection for Gandhi in India) himself:
Man is so made by nature as to require him to restrict his movements as far as his hands and feet will take him. If we did not rush about from place to place by means of railways and other maddening conveniences, much of the confusion that arises would be obviated ... God set a limit to a man’s locomotive ambition in the construction of his body. Man immediately proceeded to discover means of overriding the limit. ... According to this reasoning, it must be apparent to you that railways are a most dangerous institution. Man has gone further away from his maker. (Quoted in Sir C. Sankavan Nair, Gandhi and Anarchy, Madras, 1922, pp. 4–5)
It is characteristic of Bapu that he nevertheless spent most of his life “rushing from place to place” in railway carriages in organizing his movement; it is also characteristic of his phony egalitarianism that he insisted on traveling third class—but with a special coach all to himself.
For Bapu, modern medicine and hospitals were pure evil: “Hospitals are institutions for propagating sin. ... Hospitals are the instruments that the devil has been using for his own purpose, in order to keep his hold on his kingdom. They perpetuate vice, misery and degradation and real slavery.” (Nair, pp. 6–7, 18). All his life, accordingly, the Mahatma experimented with nature-cures and remedies. And much of his life he was ill. But it was again typical of the quality of Gandhi’s alleged devotion to the unity of theory and practice that each time he was seriously ill he began on nature cures, refusing Western medicine and surgery, but invariably ended submitting to drugs, injections, and Western-style surgical procedures.
Again and again, Gandhi, though himself highly educated, attacked education: not just public schools, or private schools, but education per se. A typical quote: “To give millions a knowledge of English is to enslave them.” And: “A peasant earns his bread honestly. What do you propose to do by giving him a knowledge of letters? Will you add an inch to his happiness? Do you wish to make him discontented with his cottage or his lot?” (Mohandas K. Gandhi, Hind Swaraj or Indian Home Rule, Ahmedabad, 1946, pp. 63– 66)
But Gandhi’s nuttiest and most intensely held economic fallacy was his bitter attack on machine-made textiles and his holding up of homespun clothing as having virtually sacral value. It must be emphasized that Gandhi’s lifelong war against manufactured textiles was not just a tactic to boycott English products in his struggle against British imperialism. For Gandhi, the home spinning wheel, which he had designed as the centerpiece of the Indian flag, was a holy symbol of a hoped-for return by the Indian masses to the Simple Life, and of absolute rejection of the impious Industrial Revolution.
Thus: “The call of the spinning-wheel, Gandhi wrote in Young India, is the noblest of all. Because it is the call of love. ... The spinning-wheel is the reviving draught for the millions of our dying countrymen and countrywomen ...” (In The Gandhi Reader, London, 1958, pp. 229–230.) The cult of the spinning-wheel spread through the Gandhi movement, and Gandhi’s Congress Party resolved that all of its members should take up home spinning and pay their membership dues in self-spun yarn; Congress officeholders had to pay to the Congress 2000 yards of yarn per month. In its meetings, the top politicians of the Congress Party participated in the debates while operating their portable spinning-wheels. The plain white cap and white cloth became the uniform of the Congress movement, and Gandhi’s hand-picked successor, Pandit Nehru, called this uniform “the livery of freedom.” Gandhi, meanwhile, called the homespun cap and cloth “the sacrament of millions” and “a gateway to my spiritual salvation.”
Gandhi led large-scale public bonfires of foreign (manufactured) cloth. His burning of English cloth might be considered a tactic in the revolution against Britain, but why then burn all foreign cloth, British or no? In a reply to his lifelong admirer, the poet Rabindranath Tagore, who had accused him of employing a “magical formula” in burning all foreign cloth, Gandhi essentially confirmed the charge:
I do indeed ask the poet to spin the wheel as a sacrament. ... It was our love of foreign cloth that ousted the wheel from its position of dignity. Therefore I consider it a sin to wear foreign cloth. ... On the knowledge of my sin bursting upon me, I must consign the foreign garments to the flames and thus purify myself, and thenceforth rest content with the rough khadi made by my neighbors. (The Gandhi Reader, pp. 228–231)
The homespun khadi may have made a deep imprint on the Congress Party and other Gandhi cultists, but ironically it never did so for the mass of Indian peasantry and villagers for whom the khadi campaign was intended. The peasants after all, were not loonies, and it took them little time to realize that there were better things to do, and that foreign manufactured textiles were not only better in quality than homespun, but also that homespun cost fully three times as much! As Koestler sardonically writes: “The spinning-wheel found its place on the national flag, but not in the peasants’ cottages.”
Arthur Koestler begins his excellent article, with a quote from a long-time friend of Gandhi’s: “It takes a great deal of money to keep Bapu living in poverty.” Mrs. Naidu, who made that statement, was more perceptive than she knew, for the “great deal of money” applies not only to fund-raising campaigns for khadi, but also to the Indian masses who had to suffer from demented attempts at economic self-sufficiency and reversing the Industrial Revolution.
- Sex
From his late thirties, Mahatma Gandhi engaged in a lifelong crusade for chastity and against sex. For Gandhi, devotion to brahmacharya (sexual abstinence) was heavily influenced by the mystical Indian yogi tradition which can best be likened to the views of the nutty general in Dr. Strangelove (played by Sterling Hayden), who was chiefly concerned with “preserving his vital bodily fluids (bindu).” Whether married or not, people were supposed to engage in brahmacharya as “the conduct that leads to God”, as the “sine qua non for those who aspire to a spiritual or higher life.” From the age of 37, when he began the practice of abstinence, Gandhi repeatedly “tested” his devotion to brahmacharya by sleeping with a succession of women, beginning with his own wife and ending with the young granddaughter of a cousin.
It must be understood that, for Gandhi, sexual abstinence and non-violence (satyagraha) were mutually intertwined and interdependent. It was in 1906 that Gandhi embarked on his vow of chastity, and when he also launched his first campaign of non-violent resistance. Brahmacharya put Gandhi “in touch with the infinite,” with the soul-force which also powered satyagraha. For Gandhi, furthermore, sex is violence, and so abstention from the two evils become closely linked.
One of the worst aspects of Gandhi’s anti-sex crusade was the way he treated his own sons, conceived, of course, in his pre-chastity days of “sin” and lubricity. He apparently hated his sons for being the living embodiment of his own sin, and he tried his best to keep them from falling into the same sinful trap. He disowned his eldest son, Harilal, for daring to marry and thereby disobey his father’s injunctions to chastity, and when his second son, Manilal, committed the mortal sin of losing his virginity to a woman, the Mahatma went on a public pentential fast. Gandhi decreed that Manilal might never marry, and managed to persuade the guilty female to shave her hair in penitence.
Scorning all education, Gandhi kept his sons from school, intending to teach them himself. An admirable goal—except that, in his pursuit of the higher truth, he somehow never found the time.
Gandhi’s lifelong struggle to “purify” his diet was linked with his campaign against sex. When taking the vow of chastity, he wrote: “Control of the palate is the first essential in the observance of the vow. ... The brahmacharya’s food should be limited, simple, spiceless and if possible uncooked. ... Six years of experiment have shown me that the brahmacharya’s ideal food is fresh fruit and nuts.” (Gandhi, “How to Serve the Cow,” Ahmedabad.)
- The Scam of Non-Violence
It should be clear that the life of Mahatma Gandhi was essentially a scam, from start to finish. Making a big show of his allegedly deeply-held principles, claiming to make his life and thought a seamless web, he always ended Up betraying those principles. He rode on railways, he fell back repeatedly on Western medicine and surgery, and he continued to “test” his chastity with various females until the end of his life. The same is even true for his allegedly great contribution, the theory and practice of non-violence. Let us then examine two aspects of Gandhi and non-violence: first, how successful was Gandhi’s campaign, and second, how consistently did he adhere to the principle?
a. The Effectiveness of Gandhi’s Non-Violence
Mahatma Gandhi launched his first nationwide civil disobedience campaign in 1919. But the campaign was an abject failure, for the non-violent action quickly degenerated into violent rioting all over India. Gandhi suspended the action, confessed to having made a “Himalayan blunder,” and, characteristically, went on a penitential fast. He attributed the failure to launching the campaign before the Indian masses had been sufficiently “trained” in the philosophy and techniques of satyagraha.
A year later, apparently believing that sufficient training had now taken place, Gandhi launched another nationwide campaign of non-violent resistance. But it too led to widespread violent riots, culminating in the massacre of Chauri Chaura; Gandhi again suspended the action and went on a penitential fast.
Gandhi’s most successful campaign of civil disobedience occurred in 1930-31, in his “march to the sea” against the salt laws. But even here, there was widespread rioting by the Indian masses. His later satyagraha campaigns—1932–34, 1940–41, and 1942–43—were highly publicized, but inconclusive. In general, we can say that Gandhi’s nonviolence did not “liberate India”; on the contrary, the British decision to pull out of India was triggered far more by their general withdrawal from Empire after World War II, attendant up on British economic exhaustion, than it was by Gandhi’s campaigns of non-violent resistance. Indeed, many historians have pointed out that India would have won independence earlier without Gandhi’s existence. (See, for example, John Grigg, “A Quest for Gandhi,” London Sunday Times, Sept. 28, 1969).
What Gandhi did manage to achieve, in contrast, was (a) to make himself into a living and eternal legend, misleading countless Western seekers after truth; (b) poisoning the wells of Indian culture by perpetuating its most misguided, foolish, and genuinely reactionary economic and social views; (c) seeing to it that the reins of the new independent India were seized by his own statist and dictatorial—and scarcely nonviolent—Congress Party; and (d) achieving an independence that led to the decidedly non-nonviolent slaughter of literally millions of Hindus and Muslims.
b. How Consistent was Gandhi?
In some ways, Gandhi was horrifyingly consistent on nonviolence, especially if the non-violence was supposed to be practiced by other people in other countries. Thus, after the first nationwide pogrom against the Jews in Germany, in December 1938, Gandhi counselled the Jews to react in a nonviolent manner: “if the Jews can summon to their aid soul-power that comes only from non-violence, Herr Hitler will bow before the courage which he will own is infinitely superior to that shown by his best stormtroopers.” And after the news of the Holocaust became known, Gandhi, in 1946, counselled retroactively.
The Jews should have offered themselves to the butcher’s knife. They should have thrown themselves into the sea from cliffs. ... It would have roused the world and the people of Germany. (Geoffrey Ashe, Gandhi: A Study in Revolution, London, 1968, p. 341)
Perhaps what the Jews lacked was little Bapu to give them their “training.”
After the fall of France, the Mahatma praised Petain for his courage to surrender, and on July 6, 1940, Bapu published an “Appeal to Every Briton” to follow Petain’s lead:
want you to fight Nazism without arms or with non-violent arms. I would like you to lay down the arms you have. ... You will invite Herr Hitler and Signor Mussolini to take what they want of the countries you call your possessions. Let them take possession of your beautiful island, with your many beautiful buildings. You will give all these, but neither your souls, nor your minds. If these gentlemen choose to occupy your homes, you will vacate them. If they do not give you free passage out, you will allow yourself, man, woman, and child, to be slaughtered, but you will refuse to owe allegiance to them. (T. A. Raman, What Does Gandhi Want? Oxford, 1943, p. 24)
George, Wendy, Carl: In the grand old Randian phrase, check your premises! Is this really the credo that you would like Americans to adopt? I personally find it odious, repellent, and extraordinarily creepy, and I venture to predict that there are damned few libertarians, let alone the mass of Americans, who will go along with it. Arthur Koestler’s reaction to this paragraph was scintillating: “It would have taken a great deal of corpses to keep Bapu in non-violence.”
Perhaps the height of Gandhian idiocy on non-violence came in his reaction, on the last day of his life, before he was assassinated, when a Life magazine reporter asked him: “How would you meet the atom bomb ... with nonviolence?” Here’s Bapu’s answer to what is certainly a crucial question in our modern world:
I will come out in the open and let the pilot see I have not a trace of ill-will against him. The pilot will not see our faces from his great height, I know. But the longing in our hearts—that he will not come to harm—would reach up to him and his eyes would be opened. (The Essential Gandhi, London, 1963, p. 334)
I suppose that we should be thankful that we cannot now hear Bapu opine on how the longing in our hearts will reach out to button-pushers of missiles many thousands of miles away.
If the Mahatma was fiercely consistent on non-violence for other people, how was he on his own home ground? First, in 1918, he served as a recruiting sergeant for the British Army, stating that to achieve home rule India “should have the ability to defend ourselves, that is, the ability to bear arms and to use them”, and therefore “it is our duty to enlist in the army.” Three years later, Gandhi stated that “Under Independence I too would not hesitate to advise those who would bear arms to do so and fight for the country.” (The Essential Gandhi, p. 125; and Louis Fischer, The Life of Mahatma Gandhi, London, 1951, p. 371)
Gandhi later excused these positions as early lapses: “I had not yet found my feet ... I was not sufficiently sure of my ground.” (The Essential Gandhi, p. 125.) Okay, fair enough. At 52, Gandhi was not exactly a spring chicken, but nobody expects a man to arrive in the world a full-blown theoretician. Chalk that one up to a learning experience. But we surely cannot use such an alibi for the last years of Gandhi’s life, when he had long since found his ground. In late 1947, after the partition of the newly independent states of India and Pakistan, the two new states went to war over largely Muslim Kashmir (a province which India unfortunately was able to conquer and keep.) Where did Bapu stand on the India-Pakistan war? The true Bapu now took his stand. He had been, he said in an important speech:
an opponent of all warfare. But if there was no other way of securing justice from Pakistan, if Pakistan persistently refused to see its proved error and continued to minimize it, the Indian Union would have to go to war against it. War was no joke. No one wanted war. That way lay destruction. But he could never advise anyone to put up with injustice. (Nirmal Kumar Bose, My Days with Gandhi, Calcutta, 1953, p. 251)
In the crunch, then, when his theories came home to roost, the Mahatma caved in and sold out. Traveling through massacre-torn East Bengal, Gandhi admitted to his intimates that “for the time being!” he had “given up searching for a non-violent remedy applicable to the masses.” And a few days later: “Violence is horrible and retarding, but may be used in self-defense.” To Nirmal Bose, in commenting on Indian Deputy Premier Patel’s decision to send troops into Kashmir, the Mahatma confessed that:
he could no longer successfully apply the method of nonviolence which he used to wield with signal success. I have made the discovery that what I and the people with me termed non-violence was not the genuine article, but a weak copy known as passive resistance.
And to Professor Stuart Nelson, Gandhi admitted that “what he had mistaken for satyagraha was not more than passive resistance, which was a weapon of the weak ... Gandhiji proceeded to say that it was indeed true that he had all along laboured under an illusion. But he was never sorry for it.” (Bose, My Days, pp. 104, 107, 251, 270–71, 4n)
I suppose that being a successful ideologue means never having to say I’m sorry, even if millions of followers had been tragically misled. Gandhi never lived long enough to adumbrate any new doctrines of “genuine” civil disobedience, but I suppose that we are just as well off.
Anti-market and pro-socialist rhetoric is surging in headlines (see also here, here, and here) and popping up more and more on social media feeds. Much of the time, these opponents of markets can’t tell the difference between state-sponsored organizations like the International Monetary Fund and actual markets. But, that doesn’t matter because the articles and memes are often populist and vaguely worded — intentionally framed in such a way to easily deflect uninformed attacks and honest descriptions of what they are actually saying. In the end, they can all be boiled down to one message: socialism works and is better than capitalism.
While most of it comes from the Left, the Right is not innocent, since the Right appears to be primarily concerned with promoting its own version of populism, which apparently does not involve a defense of markets. “Build bigger walls at the border,” for example, is not a sufficient response to “All profits are evil!”
Instead of stooping to this level or simply resorting to “Read Mises!” (a more fitting response), we must show, yet again, that socialism — even under well-meaning political leaders — is impossible and leads to disastrous consequences.
The Necessity of Profits, Prices, and EntrepreneursSocialism is the collective ownership (i.e., a state monopoly) of the means of production. It calls for the abolition of private ownership of factors of production. Wages and profits are two parts of the same pie, and socialism says the profit slice should be zero.
The inherent theoretical problems of socialism all emanate from its definition, and not the particulars of its application. However, the supporters of socialism define “collective,” as no exchange of the factors of production. And without exchange, there can be no prices, and without prices there is no way to measure the costs of production.
In an unhampered market economy, the prices of the factors of production are determined by their aid in producing things that consumers want. They tend to earn their marginal product, and because every laborer has some comparative advantage, there is a slice of pie for everybody.
If technological changes make certain factors more productive, or if education and training makes a laborer more productive, their prices or wages may be bid up to their new, higher marginal product. An entrepreneur would not like to hire or buy any factor at a price that exceeds its marginal product because the entrepreneur would then incur losses.
Entrepreneurial losses are more important than many realize. They aren’t just hits to the entrepreneur’s bottom line. Losses show that on the market, the resources used to produce something were more highly valued than what they were producing. Losses show that wealth has been destroyed.
Profits give the opposite signal. They represent economic growth and wealth creation. A profitable line of production is one in which the stuff that goes into producing some consumer good costs less than what consumers are willing to pay for the consumer good.
As such, profits and losses are more than just important incentives, or cover in a conspiratorial capitalist class system; they are the only way to know that wealth is being created instead of destroyed in any line of production.
Under socialism, there is a single owner that does not bid factors away from some lines of production and toward others. Nobody is able to say, with any shred of certainty, that a particular tool or machine or factory could be used to produce something else in a more effective way. Nobody knows what to produce or how much to produce. It’s economic chaos.
Without Markets, We Can’t Know What or How to ProduceProfits and losses guide and correct entrepreneurs in the process of producing things they expect consumers will demand. Without this information, including the costs of production specifically, entrepreneurs cannot engage in economic calculation, the estimation of the difference between future revenues and the costs of production necessary to gain those future revenues.
Laborers are put to work in areas where they don’t have a comparative advantage. Farmers are sent to factories, and tailors are sent to the mines. Workers are in the wrong lines of production and have the wrong tools. Every morning, the economy looks like Robert Murphy’s capital rearranging gnomes just ransacked it.
The Polish film Brunet Will Call lampooned situations like this throughout the movie, with consumer and capital goods in the most unlikely places. A butcher pulls an automobile’s clutch cable out of his freezer, and gives it to the main character, who pays for it with information on the whereabouts of a double buggy for someone’s newborn twins (at the flower shop, obviously).
So the failure of socialism is not conditional on the culture, time, or place of the victims. Socialism is flawed at its core: the “collective” ownership of the means of production. As such, there is no way to enact a functioning, growth-inducing version of socialism anywhere. In practice, however, the theoretical problems of socialism give way to civil unrest, which is met with state force and results in a death toll higher than any official war ever fought.
Without profit motives to produce, quotas must be put in place. With quotas, even in the cases where workers don’t lie about their production, chaos still reigns. For example, if a nail production quota is based on the number of nails, workers produce a lot of tiny, unusable nails. A nail quota based on weight would encourage workers to produce massive, but still unusable nails — a situation lampooned by this cartoon in Krokodil during the 1960s.
Endless queues stretched across the USSR, filled with people looking for shoes even though shoe production in the USSR exceeded that of the US. The problem was all the shoes were too small, because shoe production was measured by number, with no regard for the sizes or designs consumers demand.
The Wake of SocialismSome cases are funny; others are not. About seven million people died of starvation in the USSR just in 1932–33 (middle-of-the-road estimate based on manipulated data). The authors of The Black Book of Communism (1999) estimate the deaths of close to 100 million people are attributable to communist and socialist regimes. That’s more than 200 times the number of US deaths in WWII (and a case could be made that their deaths are attributable to socialism, too).
Even today, in Cuba, the average wage is about $20 a month. In North Korea civilians are routinely rounded up by the dozens for public execution for the crime of watching South Korean TV smuggled into the country.
When people are hungry and unhappy, the state cannot survive if the people know others are better off. The state uses propaganda, misinformation, and censorship to make an already captive citizenry even more confused and submissive.
So count me surprised to hear fresh calls for socialism in 2015 — if the strong economic calculation argument and astronomical death toll haven’t turned the Left off of socialism, I don’t know what will. The idea is both bankrupt and deadly in both theory and practice.