R.

Reisman on Chernobyl, Long Before HBO

From George Reisman’s Capitalism treatise, he comments on Chernobyl’s disaster as a symptom of communism’s very nature:

The case of Chernobyl was a genuine disaster. But this fact is not an indictment of atomic power, still less of modern science and technology in general. It is an indictment only of the incompetence, and indifference to human life, inherent in communism. Under communism (socialism), there is no incentive to supply people with anything they need or want, including safety.

In addition, under communism (socialism), the ability of the government to prosecute wrongdoing in connection with the use of means of production is necessarily compromised by the very nature of the case, inasmuch as the state itself is the owner of the means of production and therefore is itself the party responsible for any misuse in connection with them. Indeed, any prosecution by the state would have to be a prosecution of its own officials, logically entailing the prosecution of its very highest officials.

This is because under the central planning that is an essential characteristic of socialism the highest officials have responsibility for every detail of economic activity. The implicit need to challenge the top leaders, of course, greatly diminishes the likelihood of such prosecutions. Thus under communism, as the result of the lack both of economic and legal incentives to provide safety, industrial accidents of all kinds are commonplace, including airplane and train crashes.

This is a good reason for rejecting communism, but certainly not a rational basis for rejecting atomic power and an industrial society.

P.

Paul Gottfried on the Mainstream Left

Buck Johnson, a subscriber to AL Mag and a great supporter of the site, has a fantastic podcast, Death to Tyrants. Just today he published a conversation he had with the always interesting Paul Gottfried; Paul of course is one of the very best conservative writers in our time and he has been a very key influence on the way I interpret political movements.

One of the things that he mentioned in the conversation is something that I referred to when I discussed his book on Multiculturalism, namely that the modern mainstream left is a post-marxist left that has, in Marxism’s stead, replaced economic class warfare with identitarian class warfare. I wrote:

The left (especially the American left), Gottfried argues, was once wholly dependent on narratives relating to economic victims. The statist efforts to solve various economic circumstances produced what he, in his prior book After Liberalism, refers to as “the managerial state.” The managerial state was supposed to be the perfection of social democracy, with the victim groups similar to Karl Marx’s: the laborers, the proletariate, the impoverished, etc.  The managerial state sought to expand its influence in order to protect the economically under privileged.  It developed arguments for things like minimum wage laws, labor unions, and rent control.

 

But things have changed, at least in emphasis. The left, while of course still employing many economic narratives, seems to have doubled down on a different type of social victimization. Thus, the managerial state eventually gave way to a different kind of state, with new classes of victims and new programs to fix the “problems.”  The new costume that the state has put on is what Gottfried refers to as “the therapeutic state.”  Rather than seeing the victim classes in terms of economics, the new victims are those who are culturally underrepresented and “socially oppressed.”  The main key terms in this new phenomenon include “racism,” “sexism,” and “homophobia.” And more are on their way or currently given smaller scale status [i.e., the transexual movement].

He elaborated on this theme and described the modern left as adopting a post-Marxist framework where the current victims are victims of mental oppression, sexual oppression, discrimination and all the rest. This has replaced the old economic-oriented nature of the proletariate of the old left.

Now this is extremely interesting for those who follow this blog and my general way of looking at things. You’re not going to get this anywhere else. You ready?

Jacobin Magazine (what else would I be talking about??) has issued the same criticism of the mainstream left and they so often plea for the left to remember their old Marxist roots and not get distracted by the new mainstream left that has seemingly given up on economic oppression as their primary problem to overcome. Now I very swiftly rush to clarify that they are on board the whole sexual revolution schtick and they of course are all about opposing “discrimination” and liberating the sexually abhorrent from the psychological torture of traditional norms.

But at the same time, they recognize that the left has changed its tune and emphasis and so often complain about the replacement of economic concerns for social ones. In fact, in an interview that Bhaskar Sunkara did in 2011 (Jacobin’s very first print issue), the title was “Let Them Eat Diversity” and the entire thesis was that the left was so focused on racial and culture angst that they were forgetting about the economic class warfare that should be characterizing the left. The mainstream left was getting the poor all thrilled with progress toward racial and sexual diversity that they were secretly abandoning the economic project of old Marxism.

To take a more recent example, in 2015 Jacobin published an article called Race to Nowhere which argued that “elites in the United States have been offering up improved “race relations” rather then interracial workers alliances against capital as the primary solution to American inequality.” This article concluded with the following:

Then, as now, the most reliable path to a progressive politics that produces true justice and human rights is that which begins with building the political power of workers. It is this proposition that has often made elite opponents of white supremacy — both black and white — deeply uncomfortable.

Economic class, Jacobin argues, not cultural identity, should be the true rallying crying of a better leftism. This is in stark opposition to path that has been chosen by the mainstream left in our time. Of course, it would be absurd to interpret my exposition of all this as somehow preferring old leftism (classical marxism) to new leftism (post-marxism), I’m just trying to properly categorize the it all in my mind.

So Jacobin style democratic socialists want to reorient the left. And Paul Gottfried observes this shift as well. This is why Paul Gottfried is so insightful, why I love him so much, and why I pay attention to Jacobin, because they don’t just repeat mainstream left talking points.

C.

Culture, Downstream from Politics

We always hear that politics is downstream from culture. I am increasingly interested in Paul Gottfried’s case that, in actuality, the opposite is true. Under some forms of democracy, especially in its early years, the government will represent the general culture of the people. Under this arrangement, culture drives politics.

But as democracy matures and the state morphs into the creation of a Total Bureaucracy– indeed as it has developed in the west– things shift. The state takes on a life of its own and has the ingrained tendency to shape culture for its own ends

Gottfried, as usual, is particularly keen:

Contrary to an older understanding of culture, what we are referring to is a process of moral and social radicalization. It is a process that didn’t come about unbidden but which powerful, pervasive administrative rule promoted. And the social engineering function of public administration here and elsewhere in the West has been particularly evident since the 1960s, with governmentally encouraged immigration and an accelerating war against discrimination. Presumably, when Hillary Clinton assured a gay rights group that she was addressing last year (October 5, 2015) that she would use the IRS to force recalcitrant religious institutions into endorsing gay marriage, she was not simply responding to a cultural condition. She was working to create one.

Hence why the state is behind the move in the last 4-5 years to shock the middle class. It’s part of the need that the state has to leverage cultural change for its own ends. Gottfried:

As an engine of social and moral change, the state is on a perpetual behavior-modifying mission. Political Correctness is not just about “culture.” It results from government policies relentlessly applied for the purpose of changing the way we think about human relations. Accelerating immigration from different cultures also furthers the state’s presence in our lives. Demographic change weakens established patterns of social interaction that might resist the state’s expanding control, such as long-standing cultural identities. Further, immigration generates conflicts that require or are thought to require the intervention of state actors.

The issue of immigration is hotly debate in libertarian circles. And while I personally tend toward a more Hoppean approach, I most certainly think that, whatever one’s position, we should at least be mindful of the extent to which the central government loves to use immigration as a tool for cultural conquest. The point isn’t really about immigration per se, but rather how the state recognizes the types of conflicts that are generated in cultural and demographic changes and how it can exploit them for its own ends.

I.

Is Neo-liberalism Neo-socialism?

The great Richard Ebeling has a new article called Why Neo-liberalism is Really Neo-socialism. Of course, I was drawn to reading it because of how much time I spend reading the socialist Jacobin Magazine, and they refer to everything they oppose in the socio-economic world as “Neo-liberalism.” I thought Ebeling’s article was helpful in some ways, but unhelpful in others. He points out, importantly, that “The idea of need for a “new,” or “neo,” ”liberalism did not arise out of the ranks of the proponents of laissez-faire as an attempted justification for unrestrained and unregulated markets.”

One of the Dominant Social Themes in our time, related to economics, is that on the far right extreme, you have Neo-liberals who emphasize markets, profits, capitalists, etc over people, the poor, and the environment. This would be the GOP, for instance. Then in the center you have someone like Elizabeth Warren, and on the Progressive left you have Alexandria Ocasio-Cortez.

But the thing that is shocking is almost nobody talks about the fact that Neo-liberalism is actually a historical deviation from classical liberalism. No one even mentions classical liberalism. Some libertarians scoff at the phrase Neo-liberalism as meaningless and a mere straw man. But this is not quite right. While many are certainly unaware of what it means and use it mindlessly, this does not mean it cannot serve a purpose. In fact, I think the best way to think about Neo-liberalism is in the context of the death of Keynesianism in the late 70s and early 80s during the rise of Milton Friedman. As the world of academic economists were trying to figure out where to go next, the famous (or infamous) Mont Pèlerin Society was born. It was an attempt to bring together those who opposed the budding socialism of the world and offer a new plan for freedom.

The classical liberals, led by Mises (who was supported by Hayek), obviously argued that it was time for complete freedom based on private property rights and that interventionism would never work. The Neo-liberals argued for a state-planned, or at least state-overseen economy. The Neo-liberals were Neo precisely because they feared the laissez-faire nature of Old School Liberalism and wanted instead to institute frameworks and institutions that would support and foster the health of the economy as a whole. Of course this means tax strategies, a keen central bank, anti-monopoly legislation, bureaus and agencies that would keep and eye on the ravages of the market. It was here that Milton Friedman, champion of using Government for freedom, overcame the older Misesians. As recounted by Guido Hulsmann:

Erhard’s success changed the Mont Pèlerin Society, sweeping in the very themes Mises had stressed should be excluded — such as the need for antitrust and the possible virtues of credit expansion. On both issues Mises sided with Volkmar Muthesius, who argued that the best way to combat monopolies was to abolish the policies and government institutions that created them in the first place. Mises was especially wary of yet another round of discussions of antitrust laws. In his youth he had witnessed the anticartel agitation that followed their rise in the 1890s. At the time, the debate had been propelled by the Verein für Socialpolitik, which was always seeking a new rationale for more interventionism. For decades now he had not come across new arguments on either side, and he expected that any debate in the Mont Pèlerin Society would quickly turn toward an interventionist agenda, rather than addressing the main case of present-day monopoly prices: the US price policies for agricultural products.

[…]

During the next three years, the conflict between Hayek and his recalcitrant secretary lurked beneath the surface. Hayek could not get substantial support to oust Hunold. Most American members were on Hayek’s side but feared that an open conflict would destroy the society. It eventually came to a showdown at the Kassel meeting in 1960. Both Hayek and Hunold stepped down from their positions, but Hunold would become vice president of the society and wreak havoc for a while longer. The 1961 meeting was to celebrate Mises’s eightieth birthday, but Hunold turned it into yet another battle between neoliberalism and laissez-faire. The Ordoliberals would soon be pushed into the background for a while; the power vacuum was not to be filled with Austro-libertarians, but economists from the Chicago School.

Neo-liberalism is therefore indeed the framework of our time. Socialist critics are correct about this. Neo-liberalism runs the world. But Neo-liberalism is economic interventionism. Neo-liberalism is the repudiation of free market capitalism. Therefore, when the far left criticizes the GOP and the Democrats for all being in the tank for the Neo-liberal mindset, there is no inherent reason to argue with this. Our age is the Neo-liberal one, inasmuch as Neo-liberalism is characterized by government interventionism, regulation, and progressive oversight into the framework of private ownership of the means of production. But from this, it is a severe mistake to assume that our age is one of free markets and a capitalist economy. This is because free markets, unregulated by the state and without central banking and national agencies of intervention, contradict the Neo-liberal framework. It is nonsense to blame laissez-faire for the failures of Neo-liberal intervention.

Finally, I do believe Ebeling makes a very common mistake. This mistake is a result of common lack of nuance in our circles. He calls Neo-liberalism Neo-socialism. I don’t think this is helpful. I believe that socialists believe in state ownership of the means of production and that Mises was right that interventionism was a dangerous and devastating deviation or contortion of capitalism, but is not actually socialism. Now, the Neo-socialism can be summarized either as a Neo-syndicalism (workers own their businesses and means of production, not the state itself) or a classical socialism via the backdoor of democracy (the “state is the people”). But neither of these are what we see in the postKeynesian-Monetarism-etc, Neo-liberal economic order under which we Austrians and Socialists all suffer.

W.

Why Americans Clamor for Socialism

If every time the government intervenes (known as economic interventionism) into the broader economy there is an eventual wave of resulting economic pain, and if the political and academic classes continue to describe our system as free market or capitalistic, then the entirely predictable result is a mass embrace of socialism as the solution to said economic pain.

The adoration of socialism by the younger generation is not merely a result of their natural ignorance on these matters; though because they are products of a highly bureaucratized and pro-government system, this is obviously the case. Rather, the espousal is a result of what they have been taught via schools, news, entertainment, political speeches, and other sources of intellectual influence. They have been taught both that we live in a free market, and that government is always the remedy.

Because the narrative is that we live in a free market, the benefit to the political class is twofold. 1) people can blame capitalism instead of government for economic pains; 2) Solutions must always come in the form of new government activity, since that has yet to be tried.

Thus, the masses currently clamor for the utopias of socialism to free them from the evils of capitalism, all while living under the rotten system of interventionism.

H.

Hans-Hermann Hoppe on the Long-Term Capital Effects of Taxation

From The Economics and Ethics of Private Property

Taxation is a coercive, non-contractual transfer of definite physical assets (nowadays mostly, but not exclusively, money), and the value embodied in them, from a person or group of persons who first held these assets and who could have derived an income from further holding them, to another, who now possesses them and now derives an income from so doing. How did these assets come into the hands of their original owners? Ruling out that this was the outcome of another previous act of taxation, and noting that only those assets can be taxed that have not yet been consumed or whose value has not yet been exhausted through acts of consumption (a tax-gatherer does not take away another man’s garbage but rather his still valuable assets!), three and only three possibilities exist: They come into one’s possession either by one’s having perceived certain nature-given goods as scarce and having actively brought them into one’s possession before anyone else had seen and done so; by having produced them by means of one’s labor out of such previously appropriated goods; or through voluntary, contractual acquisition from a previous appropriator or producer. Only through these types of activities is one capable of acquiring and increasing valuable—and hence taxable—assets. Acts of original appropriation turn something which no one had previously perceived as a possible source of income into an income-providing asset; acts of production are by their very nature aimed at the transformation of a less valuable asset into a more valuable one; and every contractual exchange concerns the change and redirection of specific assets from the hands of those who value their possession less to those who value them more.

 

From this it follows that any form of taxation implies a reduction of income a person can expect to receive from original appropriation, from production, or from contracting. Since these activities require the employment of scarce means—at least time and the use of one’s body—which could be used for consumption and/or leisure, the opportunity cost of performing them is raised. The marginal utility of appropriating, producing, and contracting is decreased, and the marginal utility of consumption and leisure increased. Accordingly, there will be a tendency to shift out of the former roles and into the latter ones.

 

Thus, by coercively transferring valuable, not yet consumed assets from their producers (in the wider sense of the term including appropriators and contractors) to people who have not produced them, taxation reduces producers’ present income and their presently possible level of consumption. Moreover, it reduces the present incentive for future production of valuable assets and thereby also lowers future income and the future level of available consumption. Taxation is not just a punishment of consumption without any effect on productive efforts; it is also an assault on production as the only means of providing for and possibly increasing future income and consumption expenditure. By lowering the present value associated with future-directed, value-productive efforts, taxation raises the effective rate of time preference, i.e., the rate of originary interest and, accordingly, leads to a shortening of the period of production and provision and so exerts an inexorable influence of pushing mankind into the direction of an existence of living from hand to mouth. Just increase taxation enough, and you will have mankind reduced to the level of barbaric animal beasts.

This gets to the heart of what I had mentioned in my article on consumption charity. When you spend money on longer term capital projects, you increase future wealth for future people who otherwise would have been poor.

P.

Pride Month and Woke Capitalism

Social media, the Internet in general, is almost unbearable during the so called “Pride month,” where the western world parades its predilection toward the sexually absurd in a modern exercise of the old French revolutionary spirit: épater le bourgeois. The Revolution which now dominates the social mood does not tolerate anything from dissent to disinterest— all must participate, all must pay tribute, all must turn attention in reverence to those selected as recipients of adoration and celebration.

Even the corporate branding and marketing teams understand the social consequences of giving the appearance of neutrality as the mania sweeps through the land. Conformity and subordination characterize the general response to the mob’s expectations.

To operate otherwise, even to carry on without partaking in the madness, is to adorn the label of Hateful One— a terrible and vicious social sin in the age of Love.

M.

Mises on the Anti-Capitalist Bias

From Planned Chaos, which itself is an excerpt of Mises’s Socialism treatise.

Nothing is more unpopular today than the free market economy, i.e., capitalism. Everything that is considered unsatisfactory in present-day conditions is charged to capitalism.

 

The atheists make capitalism responsible for the survival of Christianity. But the papal encyclicals blame capitalism for the spread of irreligion and the sins of our contemporaries, and the Protestant churches and sects are no less vigorous in their indictment of capitalist greed. Friends of peace consider our wars as an offshoot of capitalist imperialism. But the adamant nationalist warmongers of Germany and Italy indicted capitalism for its “bourgeois” pacifism, contrary to human nature and to the inescapable laws of history. Sermonizers accuse capitalism of disrupting the family and fostering licentiousness. But the “progressives” blame capitalism for the preservation of allegedly outdated rules of sexual restraint.

 

Almost all men agree that poverty is an outcome of capitalism. On the other hand many deplore the fact that capitalism, in catering lavishly to the wishes of people intent upon getting more amenities and a better living, promotes a crass materialism. These contradictory accusations of capitalism cancel one another. But the fact remains that there are few people left who would not condemn capitalism altogether.

 

The characteristic mark of this age of dictators, wars and revolutions is its anti-capitalistic bias. Most governments and political parties are eager to restrict the sphere of private initiative and free enterprise. It is an almost unchallenged dogma that capitalism is done for and that the coming of all-round regimentation of economic activities is both inescapable and highly desirable.

 

None the less capitalism is still very vigorous in the Western Hemisphere. Capitalist production has made very remarkable progress even in these last years. Methods of production were greatly improved. Consumers have been supplied with better and cheaper goods and with many new articles unheard of a short time ago. Many countries have expanded the size and improved the quality of their manufacturing. In spite of the anti-capitalistic policies of all governments and of almost all political parties, the capitalist mode of production is in many countries still fulfilling its social function in supplying the consumers with more, better and cheaper goods.

 

It is certainly not a merit of governments, politicians and labour union officers that the standard of living is improving in the countries committed to the principle of private ownership of the means of production. Not offices and bureaucrats, but big business deserves credit for the fact that most of the families in the United States own a motor car and a radio set. The increase in per capita consumption in America as compared with conditions a quarter of a century ago is not an achievement of laws and executive orders. It is an accomplishment of business men who enlarged the size of their factories or built new ones.

 

One must stress this point because our contemporaries are inclined to ignore it. Entangled in the superstitions of statism and government omnipotence, they are exclusively preoccupied with governmental measures. They expect everything from authoritarian action and very little from the initiative of enterprising citizens. Yet, the only means to increase well-being is to increase the quantity of products. This is what business aims at.

 

The dogma that the State or the Government is the embodiment of all that is good and beneficial and that the individuals are wretched underlings, exclusively intent upon inflicting harm upon one another and badly in need of a guardian, is almost unchallenged. It is taboo to question it in the slightest way. He who proclaims the godliness of the State and the infallibility of its priests, the bureaucrats, is considered as an impartial student of the social sciences. All those raising objections are branded as biased and narrow-minded. The supporters of the new religion of statolatry are no less fanatical and intolerant than were the Mohammedan conquerors of Africa and Spain.

 

History will call our age the age of the dictators and tyrants. We have witnessed in the last years the fall of two of these inflated supermen. But the spirit which raised these knaves to autocratic power survives. It permeates textbooks and periodicals, it speaks through the mouths of teachers and politicians, it manifests itself in party programmes and in plays and novels. As long as this spirit prevails there cannot be any hope of durable peace,… of the preservation of freedom or of a steady improvement in the nation’s economic well-being.

T.

The Meaning of “Dismal Science”

Just this week, I interviewed Gene Epstein for the summer issue of the Austro Libertarian Magazine. One of the questions I was preparing to ask him had to do with the description of economics as the “dismal science.” This phrase of course refers to the words of Thomas Carlyle. Gene explained to me that most people think that by this phrase it is meant that economics is bland or boring. But this is not what Carlyle meant– he was actually seeking to praise economics. Gene writes to me:

Why is economics called “the dismal science”? Ask the victims of Econ 101 — who are routinely confronted with indifference curves, money multipliers, and equations of exchange (bogus concepts, all) — and they’ll probably tell you: because it’s the boring science!

Ask the textbook writers, environmentalists, and general cognoscenti, and they’ll almost surely tell you: because it’s the unhappy science.

According to almost any standard source, 19th century author Thomas Carlyle used the phrase to describe the pessimistic theories of Thomas Malthus and David Ricardo, since they predicted decline and fall.

Not true, as economists David M. Levy and Sandra J. Peart show in their essay, “The Secret History of the Dismal Science.”

Thomas Carlyle did originate the phrase, and he did direct it at economists. But the “scientists” he had in mind were not Ricardo and Malthus, but economists like John Stuart Mill and Harriet Martineau. And their “dismal” offence was to advocate the abolition of slavery.

In a fierce and ongoing debate, the celebrated author of The French Revolution referred to “the Social Science [sic]…which finds the secret of this universe in ‘supply-and-demand,’ and reduces the duty of human governors to that of letting men alone.”

The above is from Carlyle’s 1849 essay, “An Occasional discourse [sic] on the Negro Question,” in which he goes on to use the D-S phrase for the first time. Compared to the “gay science” — meaning poetry — he calls economics the “quite abject and distressing…dismal science...led by [the] sacred cause of Black Emancipation [itals and caps in original].”

My impression is that Carlyle meant economics was too reductive to recognize the poetry of racial superiority — and was therefore dismal.

An essay he published the following year, in which he defended his proposal to re-enslave Jamaicans [!], included the stirring sentence, “Respectable Professors of the Dismal Science, soft you a little!”

No examples can be found of his using the phrase in any other way.

So how did this myth about the coining of the D-S phrase get started? The whitewashing, not to coin a pun, of Carlyle’s image must have had something to do with it. Some of the racist statements in the abovementioned essays are truly vile. But, otherwise, no one seems to know how the transmutation took place.

The originator of the D-S phrase was making grudging reference to a science that liberates. I myself will continue to use the phrase with that meaning in mind.