Outsourcing Capitalist Risk is Beneficial!

I’m undergoing the equivalent of fingernails on the chalkboard, but to my brain. I’m preparing a lengthy review of JacobinMag founder Bhaskar Sunkara’s new book The Socialist Manifesto. This means I have to read it. I’m reading it so you don’t have to.

One of the things I will elaborate on is that the same facts are subject to completely opposite interpretations between the socialist and the capitalist. For instance, Sunkara writes (he’s an engaging writer, even if his cuteisms are annoying to me, a self-described sophisticate):

Capitalism isn’t the consumer products you use every day, even if those commodities (wet wipes, tobacco, hair wigs) are produced in capitalist workplaces. Nor is capitalism the exchange of goods and services through the market. There have been markets for thousands of years, but, as we will see, capitalism is a relatively new development. The market under capitalism is different because you don’t just choose to participate in it—you have to take part in it to survive. Your ancestors were peasants, but they weren’t any less greedy than you. They had their little plot of land, and they grew as much crop as possible on it. They ate some of it, and then they gave a chunk of the remainder to a local lord to avoid getting killed. Any leftover product they often took to town and sold at the market.


But you, pasta sauce proletarian, face a different scenario. You might’ve said that you’re into locally sourced, sustainable food on your Tinder profile, but you don’t own any land. All you have is your ability to work and various personal effects that I originally listed here in great detail but have since been removed by my editor.


By virtue of owning a place of work, a boss has something any would-be employee needs. Without land to sow, your labor power by itself isn’t going to produce any commodities. So you rent yourself to Mr. Bongiovi, mix your labor with the tools he owns and the efforts of the other people he’s hired, and in return receive a wage, which is really just a way to get the resources you need to survive.

What he is describing is mostly accurate. Before capitalism, people used to produce their own food and trade whatever they produced beyond what they wanted to consume. But while Sunkara explains that capitalism was a regression from this better scenario, capitalist theorists (especially in the Austrian School) explain this as the crowning achievement of social development. This is because one is no longer required to actually take on the burden’s of capital ownership and the risks associated with employing this resources unwisely. Rather, one gets to participate in the production of goods and services without contributing any capital at all! In other words, this fundamental and inherent task of an indirect exchange economy is outsourced to someone else entirely and you get fronted wages despite the uncertain nature of the future profitability of today’s production.

Sunkara says that you have to take part in it in order to survive. Well we certainly have to do something in order to survive. Man does not live in a reality where bread and wine float into one’s mouth. But rather than having to actually manage and care for the productive capacity of the land that Sunkara wishes the proletariate owned, all you need to do is come to the situation with “your ability to work and various personal effects.” In other words, Sunkara despairs that “all we have” under capitalism is abilities and skills, not capital goods. But this is a feature! We don’t actually have to bring capital goods to the table in order to participate and receive the means for sustenance and wealth acquisition. We bring nothing but ourselves and yet profit immensely in receiving the benefits of a modern standard of living.

Far from being a devastation, this seems to me the greatest achievement of modern life. Despite of course, governments around the world undermining its successes and true fruition.


Casey on Kirk and Burke

Having just committed the libertarian faux pas of publishing a favorable review of a Russell Kirk book, now might be a good time to consider some things that Gerard Casey has written about Kirk and his intellectual muse, Edmund Burke. In Freedom’s Progress, Casey writes,

The basic principles of conservatism were laid out in various of his writings by Russell Kirk… In The Politics of Prudence, we are presented with 10 principles: 1. the moral order is enduring – human nature is a constant and moral truths are permanent; 2. conservatives adhere to custom, convention and continuity; 3. conservatives believe in prescription, that which has been established by immemorial usage; 4. conservatives are guided by the principle of prudence; 5. conservatives pay attention to the principle of variety – equality before the law levels all ranks – in all other respects inequality is the norm; 6. conservative are chastened by their principle of of imperfectibility – no perfect social order is attainable, utopias are not in sight and are not to be sought; 7. freedom and property are closely linked; 8. conservatives uphold voluntary community and oppose involuntary collectivism; 9. conservatives see the need for prudent restraints on power and on human passions; and 10. conservatives understand that permanence and change must be recognised and reconciled.


Libertarians may adhere to none, some, or all of these principles. This libertarian: recognises an enduring moral order and the constancy of human nature; grants the heuristic and presumptive value of custom, convention, continuity and prescription; whole-heartedly recognises and values the differences that make a difference; ruefully recognises (in others) and confesses (in himself) human imperfectibility, and neither expects nor seeks the fantasy of a utopia, for here we have no abiding city; willingly grants – indeed, insists upon – the close connection between freedom and property; rejects involuntary collectivism and welcomes the creation and sustaining of voluntary communities; recognises prudence as the first of the cardinal virtues, sees restraint as a form of social capital and, as such, the foundation of the moral individual, civil society and political order; and is happy to seek a balance between permanence and change.

Regarding Burke, Casey adds,

Edmund Burke thought that manners mattered more than law and even more than morals, inasmuch as both law and morals in large measure depend upon manners. [Burke wrote] “Manners are of more importance than laws. Upon them, in great measure, the laws depend. The law touches us but here and there, and now and then. Manners are what vex or sooth, corrupt or purify, exalt or debase, barbarize or refine us, by a constant, steady, uniform, insensible operation, like that of the air we breathe in. They give their whole form and colour to our lives. According to their quality, they aid morals, they supply them, or they totally destroy them.”


We do not produce and maintain our manners primarily by some process of detached reason. They arise naturally from social relations. Such judgment as they embody is a kind of pre-reflective judgment, what Burke calls ‘prejudice.’ Manners, as prejudices, allow us to act swiftly and surely and rightly without the need for agonised reflection and reasoning. At the root of manners is the notion of restraint, of limitation, of delayed gratification, and its produce is a kind of social capital, just as the product of fiscal delayed gratification and restraint is economic capital. Burke contrasts this form of ordered liberty with mere license, which is the freedom to do whatever one wants to do without regard to circumstances.”

He adds,

I believe that a civilized existence requires both freedom and order; that just as a sound economy requires capital which is produced by saving and delayed gratification: “the essential mechanism of societal preservation is not inspiration but restraint.” [David Mamet] Freedom without order is like a sudden explosive release of energy, pointless and destructive; order without freedom is like the body in the library, a lifeless corpse. Freedom and order together are necessary to produce a living, vital society.


…When manners decline as the result of cultural decay, then the law (or rather legislation) rushes in to fill the vacuum. Matters that in a culturally rich society are dealt with by informal sanctions, such as speech that is intended to be crude, insulting and hurtful, now have to be overtly regulated by laws with consequent intrusions upon our liberty. But the law is a blunt and crude instrument and such micro-regulation is both ineffective and stifling. Man does not live by legislation alone. A society replete with minute and detailed legislation is a society whose stock of social capital has declined and is declining. This, I suggest, is an accurate account of many contemporary Western societies. Whether these societies can replenish their social capital is a matter for conjecture. Some societies have done so in the the past – but others have not, and have perished.

It’s not uncommon for libertarians to scoff at conservatives and the concerns they raise about society, questions that Kirk, and Burke before him, addressed more articulately than most. But Casey, whose libertarian credentials are unassailable, offers good reasons for libertarians to consider the importance of the non-political, and even non-rational, elements of our life, without which libertarianism isn’t likely to last for very long.


Is Transgenderism Breeding a New Kind of Domestic Terrorist?

Folks, we’ve a problem. After Playboy published an accusation of a budding pipeline between the Christian homeschool movement and domestic terrorism (what used to be called crime, but DT is better for hysteria purposes), there was another shooting:

The two students accused of opening fire at the STEM School in a Denver-area suburb, killing one classmate and injuring eight others May 7, were charged with murder and multiple counts of attempted murder Wednesday.

The suspects, Devon Erickson, 18, and Maya McKinney, a 16-year-old transgender student who goes by the name Alec, were formally charged in court with more than a dozen counts, including first-degree murder, attempted murder, theft, arson, and possession of weapons on school grounds.

Regarding Erickson:

The social media posts by a suspect in the STEM School Highlands Ranch shooting in Colorado included opposition to “Christians who hate gays,” criticism of President Trump, and support for the left-wing Occupy Democrats.

Hmm. I don’t frequent legacy porn sites like Playboy, so I have not seen an equally hysteric headline about these trends, but nevertheless, I’m venturing out onto a branch to suppose the hysteria is all in one direction.

Obviously, of course, to prevent people from missing my point, the title of this here post was a reference to the PB article. Everything’s about pushing a narrative, not about honest commentary. But you knew that.

As an aside, I did notice that the first link regarding the STEM shooting announced that Colorado has it as an illegality for sub-21 year olds to possess a gun. So I’m not sure how it is conceivably possible that a mentally unstable murderer got his/her/whatever’s hands on it. Puzzles galore.


Sowell on Mill’s Conception of Freedom

Thinking over the ongoing intra-libertarian feud between right and left libertarians, I was reminded by this quote by Thomas Sowell regarding John Stuart Mill, who I think exemplifies the left-libertarian attitude:

“Mill’s On Liberty has often been seen – mistakenly – as a plea for greater freedom of all from government, when it was in fact a plea for differential exemption of the annointed from social criticism. That is, the annointed should judge and influence the benighted, but not vice-versa. Mill saw government in the England of his day as no longer a major threat to freedom. It was the social ‘tyranny of the majority’ and ‘the despotism of Custom’ that he opposed in On Liberty.

What he considered to be desirable was that individuals be free to do as they like ‘without detriment to their estimation’ in the eyes of others. Today, that is called being ‘nonjudgmental’ – and, very often in practice, it too is a principle applied selectively as between the annointed and the benighted.”

Granted, it would be difficult, to the point of impossibility, to identify a single cause that separates right and left libertarians. But, undoubtedly, one of the most prominent points of departure is this difference of opinion on the desirability of social pressure.


The Art of Rhetoric

Libertarians complain a lot about people not being persuaded, but I wonder how much of that is due to libertarians not being persuasive. This essay is a really good look at rhetoric as an essential art in the process of argumentation.

“For the most obvious truth about rhetoric is that its object is the whole man. It presents its arguments first to the rational part of man, because rhetorical discourses, if they are honestly conceived, always have a basis in reasoning. Logical argument is the plot, as it were, of any speech or composition that is designed to persuade. Yet it is the very characterizing feature of rhetoric that it goes beyond this and appeals to other parts of man’s constitution, especially to his nature as a pathetic being, that is, a being feeling and suffering. A speech intended to persuade achieves little unless it takes into account how men are reacting subjectively to their hopes and fears and their special circumstances.”

Libertarians often treat their audiences almost with a sense of disdain, as if they’re put out that the masses are holding on to ideas that the libertarians have dialectically proven false. Weaver’s nod to rhetoric as the art of understanding the causes of your audience’s beliefs, and using that understanding to frame convincing arguments, is badly needed in libertarian argumentation.


Abortion as the Elite’s Sacrament

I cannot for the life of me understand how elitist liberals in New York and Los Angeles can be so upset about one deep southern, conservative state nearly banning abortion within its borders. This is an area of the country they are only too happy to piss on every other day of the year. So why is it so crucial that no state actually go this far in banning abortion? Because Leftism is a totalitarian religion and abortion is its sacrament.


Do you get an opinion on abortion if you don’t have a uterus?

Yes, because ethical positions, including those related to legal rights, are not dependent on the individual containing a certain anatomical or biological makeup. Ethics and rights are objective fields of study which means that mankind, having in common the ability to reason and employ logic, is able to think and speak to them without actually being within the purview of their application. In fact, this is the role of a judge or arbitrator in society. He uses objective standards and applies them to a specific situation, regardless of whether they pertain to him. And in fact, it is even preferable if the judge is outside the situation, since he is less prone to be distracted by the emotions and feelings that sway objective application of ethics.

But also, back at the ethical subjectivists: do you get an opinion on what people without uterus’s get an opinion on, if you have a uterus?

People tend to make the most absurd arguments these days. Mark that one down in the anti-democracy column.


Why the Publication Needs a Name Change

You’ve heard it said several times, here it is again: the publication’s name can’t be Austro Libertarian forever. The site can– and should – remain with this name. The publication, however, needs a separate name. As we continue to grow and raise funds and, one day, perhaps years down the road, seek to compete with JacobinMag, we need a broader appeal. Not in content, but in marketing and positioning. Here is my thinking on this matter:

Austro Libertarianism is a glorious phrase. This was re-instilled in my mind as I’ve been obsessing over the name of the Magazine itself. For one thing, it captures the “one-two punch” against statism that I mentioned in the Spring Issue’s editorial, Our Biases and Inclinations.  For another, it has a historical moment of creation (the late 20th century, United States) and, unlike “liberal” and “liberty” and even “libertarianism” itself, hasn’t been very corrupted yet. 

If this publication is going to reach a wider swath of people than the current libertarian echo-chamber, the title itself needs to be less ideologically daunting. Of course, the content within the magazine should never, and will never, betray principles– ideological or otherwise. I’ll see to it that it remains pure. But Austro Libertarian as a phrase appeals only to those that are already aware of the development of the theory; who are already in the camp and who therefore are predisposed to this type of content. This puts an immediate and everlasting ceiling on our reach. 

I’m not against echo-chambers in the least. I think they are important for the development of the “remnant” for the strength and betterment of those who want to grow themselves within the doctrines of our ideals. But the purpose of this magazine is to reach people that are looking for alternatives in ideas and who, quite frankly, are put off by the left-libertarian domination of the libertarian world. Or perhaps it’s not even a left-libertarian domination alone; perhaps it is also a weakening of the libertarian himself as a social participant. 

To create better libertarians, we need to reach better people. Libertarianism, of course, is for all who are willing to come to terms with the ideas; it does not turn anyone away except those who demand that the propositions themselves be altered and betrayed. But outside of the theory itself rests the realities of the social context in which libertarianism seeks to be applied. In this light, we need better thinkers, contemplators, and socially competent men and women to hold the tide against an impending social upheaval that brings the tendencies of collectivism, cultural revolution, and dystopian egalitarianism. We need to appeal to people beyond the libertarian movement as it has become. 

And who, outside of the libertarian movement, such as it is, is going to rush to the support of a publication called Austro Libertarian?

So I’ve thought about other options. “Liberty” as a title is overused and a bit tired out. “Freedom” has been taken over by boomer neocons. “Libertarian quarterly” suffers from the presumptions about the libertarian personality that dominates (perhaps with some unfortunate justification) the world outside the libertarian community. I thought about “The Austrian” but a much better Institution already uses that and it would be horrible to encroach. “Misesian” is lovely, but too focused. With reference to Nock, “Remnant” was suggested, but it is already being employed by two other organizations. 

I thought about Faire as in Laissez-Faire. I thought about The Physiocrat, because it sounds cool. I thought about Aristoi (H/T to Trey Smith for this) because it appeals to our anti-democratic mob tendencies. I thought about The Capitalist (sounds like a business magazine), and Capitaliste (French). Meh, not quite.

Then I thought about more mundane and sophisticated: “Ideas.” “Discourse.” “Reflections.” “Commentary.” I feel like we’d have to be in a different place in life to live up to these. Few want, or deserve, “commentary and reflections” from a Californian in his 20s.

Three others have stood out to me more than the above:

Precipice, from my recent articles on the fact that the failure of Government interventionism as a social arrangement is completely falling apart. As socialism, nationalist conservatism, and other tendencies rise to fill the gap of Center-Left Establishmentarian, I feel that the Western world is on the precipice of something much different than we are used to in the west. Would that capitalism and traditionalist decentralism be the solution, though admittedly, this is unlikely.  Nevertheless, we sit on the precipice of Interventionism’s failures.

Then there’s Palisade. This has more of a “defend the walls,” “just save the books,” the “barbarians are at the gates” feel to it. Perhaps it’s a bit audacious. As if we are actually going to do anything about it.

Finally, Paradigm. Rothbard once described Mises as the paradigm for our age. We live under conditions of a leftist-statist narrative. Capitalism has failed. Property rights are backward and bigoted. Democracy is the hope of the world.

To quote Rothbard:

Basically, [Thomas Kuhn] states that scientists, in any given area, come to adopt a fundamental vision or matrix of an explanatory theory, a vision that Kuhn calls a “paradigm.” And whatever the paradigm, whether it be the atomic theory or the phlogiston theory, once adopted the paradigm governs all the scientists in the field without being any longer checked or questioned — as the Whig model would have it.

The fundamental paradigm, once established, is no longer tested or questioned, and all further research soon becomes minor applications of the paradigm, minor clearing up of loopholes or anomalies that still remain in the basic vision. For years, decades, or longer, scientific research becomes narrow, specialized, and always within the basic paradigmatic framework.

But then, gradually, more and more anomalies pile up; puzzles can no longer be solved by the paradigm. But the scientists do not give up the paradigm; quite the contrary, increasingly desperate attempts are made to modify the particulars of the basic theory so as to fit the unpleasant facts and to preserve the framework provided by the paradigm.

Only when anomalies pile up to such an extent that the paradigm itself is brought into question do we have a “crisis situation” in science. And even here, the paradigm is never simply discarded until it can be replaced by a new, competing paradigm which appears to close the loopholes and liquidate the anomalies.

Hence, it is all the more easy for philosophers or social scientists to fall into tragically wrong and fallacious paradigms, and thus to lead themselves down the garden path for decades, and even centuries. For once the sciences of human action adopt their fundamental paradigms, it becomes much easier than in the physical sciences to ignore the existence of anomalies, and therefore easier to retain erroneous doctrines for a very long time.

But if one believes, as the present author does, that the fundamental paradigms of modern, 20th-century philosophy and the social sciences have been grievously flawed and fallacious from the very beginning, including the aping of the physical sciences, then one is justified in a call for a radical and fundamental reconstruction of all these disciplines, and the opening up of the current specialized bureaucracies in the social sciences to a total critique of their assumptions and procedures.

The answer — which obviously cannot be documented in the compass of this article — is simply and startlingly this: that Ludwig von Mises offers to us nothing less than the complete and developed correct paradigm of a science that has gone tragically astray over the last half century. Mises’s work presents us with the correct and radically divergent alternative to the flaws, errors, and fallacies which a growing number of students are sensing in present-day economic orthodoxy.

Many students feel that there is something very wrong with contemporary economics, and often their criticisms are trenchant, but they are ignorant of any theoretical alternative. As Thomas Kuhn has shown, a paradigm, however faulty, will not be discarded until it can be replaced by a competing theory. Or, in the vernacular, “you can’t beat something with nothing.” And “nothing” is all that many present-day critics of economic science can offer.

But the work of Ludwig von Mises furnishes that “something”; it furnishes an economics grounded not on the aping of physical science, but on the very nature of man and of individual choice. And it furnishes that economics in a systematic, integrated form that is admirably equipped to serve as a correct paradigmatic alternative to the veritable crisis situation — in theory and public policy — that modern economics has been bringing down upon us. It is not exaggeration to say that Ludwig von Mises is the Way Out of the methodological and political dilemmas that have been piling up in the modern world. But what is needed now is a host of “Austrians” who can spread the word of the existence of this neglected path.

I personally like Precipice or Paradigm. As in, Paradigm: An Austro-Libertarian Publication. Email me: cjay.engel90 [at] gmail [dot] com with suggestions or whether any of the above interest you.


The 97% Statistic on Climate Change

If you aren’t reacting like this to climate reports, are you even woke?

I always hear the alleged statistic that 97% of scientists believe in man made global warming– which is now “climate change” because the experts couldn’t predict the temperature trends, the financial crisis, Hillary’s defeat…. Anyways, I am summarizing the problems with that statistic for my own future reference, and for yours. You’re welcome.

I will quote from John Kerry, as he summarizes the claim succinctly: “97 percent of climate scientists have confirmed that climate change is happening and that human activity is responsible… they agree that, if we continue to go down the same path that we are going down today, the world as we know if will change– and it will change dramatically for the worse.”

The 97% statistic originally came from a 2013 study led by John Cook.

First of all, as Alex Epstein clearly explains in his book the Moral Case for Fossil Fuels (highly recommended), there is so often a bait and switch going on in discussions regarding the 97%. Regardless of the actual number (which we will get to), Cook’s study said absolutely nothing about going down the current path, the world as we know it changing, and, especially, the world changing for the worse. That’s just typical fear mongering: taking a single statistic and exaggerating and broadening its application for political gain.

Now, here is how Cook got to the 97%. He first surveyed 11,944 abstracts– just the abstracts, not the papers themselves (much less getting a statement from the authors)– from papers that had to do with global warming, based on a simple search for the matched topics “global warming” or “global climate change.”

The results of the abstracts (got this from here):

Then he took categories 1 and 2 (those who had a strong opinion that man is causing global warming) and compared it to categories 6 and 7 (those who had a strong opinion against the claim that man is causing global warming). The ratio here is 986 papers vs. 24; or 97%.

Okay… so does this mean 97% of climate scientists agree?; that is, there is a solid consensus? Sure, if you leave out the fact that there are about 8,000 (!!) without an opinion/uncertain. If you account for them (and why shouldn’t we?), the new percentage comes in closer too… 10%. Hard to get the crowds going with that.

And of course, to be more than fair, if you could also stretch the thesis by looking at the ratio of categories 1-3 compared to those 4-7, which is around 33%. Still, not worth bragging about that’s for sure.

There’s also some other highly relevant bits of information. First, as Neil Frank mentions here, the reason why there were only 24 papers published by those who strongly disagree with the “consensus” (lol) in the first place was because literally thousands of papers were denied entry into the very database of papers that Cook et al were searching! Frank refers both to this book of published emails relating to this academic scandal and one Kenneth Richard who documented many papers over 2014-2016 that “challenge[d] the hypothesis that CO2 has been the primary driver of recent global warming.”

However, you don’t have believe there was a cover up (I do, for the record), to realize that regardless, there were 1000’s of papers that did not enter into Cook’s math at all, all of which were likely in categories 6 and 7.

Thus, it is profoundly unscientific to state “97% of climate scientists agree that….” It is more honest and accurate to say “97% of 1,010 papers, taken from a set of 11,944, which was a politically limited set to begin with, agree or mostly agree with the “consensus.” In which case, “consensus” here is like saying there is a consensus that John Mcafee should be elected President.

Thus, here’s how to respond to Barack Obama’s following Tweet.

Besides the above refutation of the 97%, “scientists” is the broadest description of the authors of these papers anyways. Think of all the science professionals who research outside the bounds of climate-related science. The 97% is a completely made up number. And, most importantly, zero percent (ZERO!!!) of the paper abstracts were considered in terms of their “danger” or threat to human life, civilization, or the economy.


Sneak Peek!

It’s getting closer. I’m ecstatic, and tense. I have a grand vision for where this ought to be– not necessarily this current Spring Issue, which is basically done, but the publication as a whole. If I can pull this off, it will have a staggering impact, and circulation. The name of the publication will probably need to change at some point. It’s a ceiling on the potential. But it’s fine for now.

Also, we are thinking of doing a little funding drive where people can pledge to buy a subscription for someone important in our circles; you know, people like Tom Woods, Bob Murphy, Ron Paul, etc. We will have a list of such people and one person can purchase a subscription for them; and we will send the magazine, with a note from the sponsor directly to them! Planning this for next week.

In any case, Ben’s article looks great! Thanks for the support to everyone who wants to see this happen. More announcements to come!



AL Accepting Bitcoin, Gift Subscriptions, and other Miscellaneous Notes

We accept Bitcoin now, because we are trying to be forward looking (as we print physical magazines LOL). We accept Bitcoin for both one-time site contributions, because we understand the extent to which you believe in our project, and for subscriptions to the Magazine itself. AustroLibertarian.com/Support has the necessary Bitcoin address information. Any other questions can be done at AustroLibertarian.com/Contact. We will expand our crypto support in the near future, but we had a lot of requests for this so we panicked and threw it up there like the desperate weirdos we are.

Also! Your buddy called. He wants a subscription. No, not for Christmas– that’s too far away. For his birthday, which is tomorrow. You forgot didn’t you? Well that’s why we’re here to remind you. At AustroLibertarian.com/Magazine there are gift subscription options so you can be the freak who buys people libertarian magazines (but secretly you’ll be more popular than Ferris Bueller).

What else? Oh yes. I was on Tom Woods’ Show and Bob Murphy republished our conversation as well. In the same day. What are the odds (if you can answer this you get a lifetime subscription)?

Finally, my article on the Memification of Hans Hoppe got a ton of shares and Brent Ancap, a popular Hoppe memer, responded in favor of my thoughts. It was a good response, a solid reflection, and we both hope it does good. You can credit us if we all wake up in Libertarian Paradise tomorrow. If not, blame Nick Sarwark.

That’s all for now. Now get back to your libertarianing.


Mises on State Control of a Specific Business: It’s Not Necessarily Socialism

Referencing this quote from Interventionism: An Economic Analysis, so I can link to it later.

One thing more must be noted. If within a society based on private ownership of the means of production some of these means are publicly owned and operated, this still does not make for a mixed system which would combine socialism and private property. As long as only certain individual enterprises are publicly owned, the remaining being privately owned, the characteristics of the market economy which determine economic activity remain essentially unimpaired. The publicly owned enterprises, too, as buyers of raw materials, semi-finished goods, and labor, and as sellers of goods and services, must fit into the mechanism of the market economy; they are subject to the same laws of the market. In order to maintain their position they, too, have to strive after profits or at least to avoid losses.

When it is attempted to mitigate or eliminate this dependence by covering the losses of such enterprises by subsidies out of public funds, the only accomplishment is a shifting of this dependence somewhere else. This is because the means for the subsidies have to be raised somewhere. They may be raised by collecting taxes; the burden of such taxes has its effects on the market, not on the government collecting the tax; it is the market and not the revenue department which decides upon whom the tax falls and how it affects production and consumption. In these facts the domination of the market and the inescapable force of its laws is evidenced.


Myth: Austrians teach that the creation of new money causes the business cycle.

From my five myths about Austrian Economics:

Myth: Austrians teach that the creation of new money causes the business cycle.

This is a common one, but it technically misunderstands the Misesian view of the business cycle. In my amateur estimation, people misunderstand this point because they have not accurately grasped the Misesian taxonomy of money. In a lecture titled “Money, Credit, and the Business Cycle,” published in a Mises collection called The Free Market and Its Enemies: Pseudo-Science, Socialism, and Inflation, Mises writes:

If the fiduciary media [money substitutes that are not backed by the commodity money– see the above linked taxonomy] appear on the loan market, as an additional supply of loan money, there is another effect also [besides price inflation]; the increased supply causes, immediately and temporarily, a reduction in the rate of interest. […T]he rate of interest is affected by an increase in the amount of money appearing on the loan market. An increase in the amount of money appearing on the loan market brings about a drop in the monetary rate of interest. How does this readjustment take place? This is the problem of the trade cycle.

The “trade cycle,” also known as the Business Cycle is a product, not merely of money creation, but money creation which appears first on the loan market. Only a falsified increase in loanable funds can affect the interest rate and it is precisely this tampering with the interest rate that encourages entrepreneurs to presume, against the reality of things, that there is enough savings in the economy to fund their production efforts.

The creation of new “dollars” (or whatever) that goes directly to consumer spending will not, other things being equal, lead to the business cycle. Thus, schemes like UBI may cause rises in consumer prices, but to the extent that the money is given directly by the Treasury (or even some central bank scheme) to the consumer without first entering the loan market, it does not cause the boom-bust cycle. The boom-bust cycle, the peculiar historical set of circumstances in which the entire economy experienced a period economy-wide growth, followed by economy-wide failure, is something distinct– and is a more modern phenomenon that occurred more frequently with the practice of fractional reserve banking, especially as this was supported by the establishment of central banks.