In defense of classical liberalism 7

A Harvard University reader of this website, who goes by the pseudonym of Adam Smythe, sent us by email this well-informed reply to the Yoram Hazony article we posted yesterday. He explores the issues with admirable intellectual rigor:

The article is interesting, though rather confused – mainly because the categories that he is trying to describe are themselves confused. In turn, I found much of his article confusing, and my response will, doubtless, further confuse the issues in question. So confused at first was I by his article that I did not know whether I wholeheartedly agreed or abjectly opposed it.

First things first: von Mises strongly believed (too much, I would say) in the right of self-determination. The comment  he made about world government mentioned in the article was predicated upon all countries first adopting his brand of liberalism. He argued that the size of a state was an irrelevancy, and that if all states happily adopted liberalism, then a world government in line with the liberal program would be favorable.

That von Mises opposed hugely bureaucratic institutions, of the kind lauded by “globalists”, is even more clear. It is true that German and Austrian 19th century liberalism did generally argue for the widespread adoption of governmental bureaucracies full of well-educated administrators; one might conclude from this that Mises, an outspoken “liberal” himself, would be in favor of a world bureaucratic government. Nothing could be further from the truth — he wrote extensively against bureaucracies in, among other things, his scathing book Bureaucracy, and was the originator of the entire intellectual opposition to the idea of “educated” planning with his essay Economic Calculation in the Socialist Commonwealth. In this respect he was opposed to his “liberal” colleagues.

The “liberal” infatuation with bureaucracies further confounds the author’s thesis that liberalism is fundamentally rationalist. Most liberals liked these bureaucracies because they could be empirically minded, and pragmatic, whereas laws originating from legislative bodies could not. Von Mises, however, generally opposed this position.

To argue that von Mises was in favor of big government, on the basis of the single comment mentioned by the author, and to further conclude that this is the backbone for the case for widespread “liberalizing” military intervention in contemporary American politics, is absurd. In particular, a man in favor of international government in general or forcible interventions by liberal states into the affairs of non-liberal ones, would not write as von Mises did in Man, State and Economy:

Liberalism knows no conquests, no annexations; just as it is indifferent towards the state itself, so the problem of the size of the state is unimportant to it. It forces no one against his will into the structure of the state. Whoever wants to emigrate is not held back. When a part of the people of the state wants to drop out of the union, liberalism does not hinder it from doing so. Colonies that want to become independent need only do so. The nation as an organic entity can be neither increased nor reduced by changes in states; the world as a whole can neither win nor lose from them.

In fact, I would say von Mises went too far in opposition to world government — he believed strongly (I believe too strongly) in the right of self-determination. Also from Man, State, and Economy):

The right of self-determination in regard to the question of membership in a state thus means: whenever the inhabitants of a particular territory, whether it be a single village, a whole district, or a series of adjacent districts, make it known, by a freely conducted plebiscite, that they no longer wish to remain united to the state to which they belong at the time, but wish either to form an independent state or to attach themselves to some other state, their wishes are to be respected and complied with. This is the only feasible and effective way of preventing revolutions and civil and international wars.

As for Hayek: it is true that Hayek broadly favored multinational trade federations, and a European trade federation in particular. He enunciated the conditions for such trade federations in an early essay from the 30’s.  Most of Hayek’s followers despised and despise the EU itself, however. (I cannot find Hayek’s point of view on the EU.) But Hayek outspokenly did not identify himself as a conservative. The AEI has an interesting piece on this:

In both cases, any discussion of world government was predicated upon the government being, in the first place, little more than a nightwatchman state. So it is wrong to read into them the kind  of technocratic “globalist” view so reviled by Trumpist or Bannonist conservatives.

The author is right insofar as he claims that von Mises and Hayek believed that liberalism and human liberty were universally good, and that all states ought to adopt liberal policies. He is wrong to suggest that these ideas lead to the conclusion that liberal states ought to forcibly liberalize illiberal ones. (Ayn Rand, however, did say that liberal states had the right — though not the obligation — to liberate illiberal states. But, she wrote, there were, in fact, no presently existing states – America included – that were “liberal” enough to have earned this right .)

The position that liberal states like America ought to forcibly liberalize illiberal states is quintessentially “neoconservative” — a philosophy which certianly borrowed some things from the liberal tradition, but, in this respect, not only parts company from its classical liberal forebears, but lies in opposition to them. In today’s world, for instance, most right-wing individuals who identify as “classical liberal” as opposed to “conservative” – Rand and Ron Paul, for example – do so in order to make it clear that they favor an isolationist foreign policy, in opposition to conservatives on this very issue.

If we are to conclude, as the author does, that America’s intervention into Iraq and Afghanistan are failures (even if we simultaneously acknowledge that postwar liberalizing of Japan, Germany, Eastern Europe, and Korea are successes), and we therefore conclude that the internationalist position on American hegemony is wrong, then we simply ought to conclude that internationalism has not worked, not that liberal ideals are wrong in general. 

You see, Mr. Hazony goes  further: not only is American military intervention as a general practice wrong, he says, but the very idea that the “virtues” of classical liberalism  — private property, free markets, and individualism — are universal, is wrong, too. This is chucking the baby out with the bathwater. The reason Iraq and Afghanistan failed is because they failed in the end to liberalize Iraq and Afghanistan, not because liberalization as an end is bad. 

The fact that some societies do not easily adopt liberal policies does not mean that liberal policies are not the right ones always to strive for. For what are the alternatives? Dictatorship, oppression, and serfdom. The problem with an interventionist foreign policy might be that, in an effort to liberalize certain nations under the rule of a dictator, say, we create a power vacuum that is filled by something even worse (think about the Muslim Brotherhood in Egypt after the toppling of Mubarak). For instance, I am the first to acknowledge that Pinochet was a superior leader of Chile to Allende, despite the fact that the latter was “liberally” elected. This is because I measure a government, always, on the scale of how liberal it is. And despite the despotic nature of Pinochet, society was governed far more liberally under him than under his deposed predecessor.

I do not at all take the (almost) relativist stance, which is advanced in the article, that we shouldn’t hold classical liberal ideals as universal. We absolutely should, even if we are pragmatic about when to urge (or force) other societies to adopt them. Our consideration should be the effectiveness of such policies, not whether the ends of liberalism are the right ones for that particular society. The answer to that question, I think, is always, “Yes. They are.” 

Now, in general, as far as I can tell, the author is somewhat bizarrely categorizing present-day ideological associations as follows (I’ve tried to offer a respective juxtaposition of each of the views):

Conservatism — Empiricism — Religion — Nationalism — International Pragmatism

(Classical) Liberalism — Rationalism — Secularism — Globalism — Interventionism.

Not just one, but every single one of these categories is disputable.

The least debatable is the association between classical liberalism and secularism versus conservatism and religion, which I think has been true historically. But there are plenty of religious classical liberals, and plenty (led by Jillian Becker) of atheist conservatives! 

However, assuming that classical liberalism is less empirical and more rationalist as a rule is wrong. True: Ayn Rand, von Mises, and, to a lesser extent, Hayek, were fairly “philosophical”, “a priori”, or “rationalist” in their reasoning. Milton Friedman, however, was not; he and the “Chicago School” considered themselves to be (and indeed were) very empirical. Meanwhile, many “pragmatic” liberals — Herbert Spencer and William Graham Sumner, for instance, founded the liberal tradition (continued by Hayek) about societal evolution in metaphor with Darwin’s theory of species evolution. This is clearly not a viewpoint that considers values to be unchanging without reference to observed facts. I am also fairly sure that there is significant overlap between American “pragmatists” and American classical liberals of the nineteenth century. “Pragmatists” eschewed general principles on principle. Today, this is something far more associated with the political left than the political right — many on the right think of the left as deeply unprincipled, whereas they are guardians of the classical virtues; the left thinks of the right as doctrinaire, whereas it thinks of itself as pragmatic. 

Indeed, the left thinks (and to a certain extent they are right in this) that the universal “values” upheld by many on the right, stem from the right’s greater religiosity. But then for Hazony to suggest that religion is something founded more on empirical than a priori “rationalist” principles is bizarre. Indeed, religion should be eschewed on both rationalist and empirical grounds — God is an intrinsically incoherent concept, for which there has never been any shred of real-world evidence. And whereas I have seen many a fallacious rationalist justification for God, I have never seen an “empirical” one from any of the “serious” religious propagandists.

To suggest that liberalism, in its “rationalist” adherence to principle, neglects noneconomic forces, is curiously myopic. Hayek considers these institutions at great length – including family, religion, and moral precepts –  particularly in his later writings (see The Fatal Conceit, for example). And finally to suggest that somehow liberalism is associated with globalism and military interventionism, whereas conservatism is (or should be?) associated with nationalism and international pragmatism is, as I’ve described above, rather odd.

“Classical liberalism” and contemporary conservatism 0

We find this essay by Yoram Hazony peculiarly interesting, so we are posting it in full.

It was published in the Wall Street Journal two days ago on October 13, 2017.

We have long assumed that contemporary Western conservatism is “liberal” in the sense that John Locke and Adam Smith used the term. This essay enlightens us about that. We discover that we are not “classical liberals” after all.

And we are surprised to learn from Yoram Hazony that Friedrich Hayek, whom we much admire and often quote, was at one time an advocate for world government. (We have called world government “the ultimate nightmare” in an essay listed under Pages in our margin). The same goes for Ludwig von Mises. And we are less surprised but still concerned to learn that Charles Krauthammer is too.

We offer no criticism, make no comment, except to say that, like Hayek, Milton Friedman, Robert Nozick and Ayn Rand, we still “place religion outside the scope of what is essential to know about politics and government”.

Is ‘Classical Liberalism’ Conservative?

American conservatism is having something of an identity crisis. Most conservatives supported Donald Trump last November. But many prominent conservative intellectuals—journalists, academics and think-tank personalities—have entrenched themselves in bitter opposition. Some have left the Republican Party, while others are waging guerrilla warfare against a Republican administration. Longtime friendships have been ended and resignations tendered. Talk of establishing a new political party alternates with declarations that Mr. Trump will be denied the GOP nomination in 2020.

Those in the “Never Trump” camp say the cause of the split is the president—that he’s mentally unstable, morally unspeakable, a leftist populist, a rightist authoritarian, a danger to the republic. One prominent Republican told me he is praying for Mr. Trump to have a brain aneurysm so the nightmare can end.

But the conservative unity that Never Trumpers seek won’t be coming back, even if the president leaves office prematurely. An apparently unbridgeable ideological chasm is opening between two camps that were once closely allied. Mr. Trump’s rise is the effect, not the cause, of this rift.

There are two principal causes: first, the increasingly rigid ideology conservative intellectuals have promoted since the end of the Cold War; second, a series of events — from the failed attempt to bring democracy to Iraq to the implosion of Wall Street — that have made the prevailing conservative ideology seem naive and reckless to the broader conservative public.

A good place to start thinking about this is a 1989 essay in the National Interest by Charles Krauthammer. The Cold War was coming to an end, and Mr. Krauthammer proposed it should be supplanted by what he called “Universal Dominion” (the title of the essay): America was going to create a Western “super-sovereign” that would establish peace and prosperity throughout the world. The cost would be “the conscious depreciation not only of American sovereignty, but of the notion of sovereignty in general.”

William Kristol and Robert Kagan presented a similar view in their 1996 essay “Toward a Neo-Reaganite Foreign Policy” in Foreign Affairs, which proposed an American “benevolent global hegemony” that would have “preponderant influence and authority over all others in its domain”.

Then, as now, conservative commentators insisted that the world should want such an arrangement because the U.S. knows best: The American way of politics, based on individual liberties and free markets, is the right way for human beings to live everywhere. Japan and Germany, after all, were once-hostile authoritarian nations that had flourished after being conquered and acquiescing in American political principles. With the collapse of communism, dozens of countries — from Eastern Europe to East Asia to Latin America — seemed to need, and in differing degrees to be open to, American tutelage of this kind. As the bearer of universal political truth, the U.S. was said to have an obligation to ensure that every nation was coaxed, maybe even coerced, into adopting its principles.

Any foreign policy aimed at establishing American universal dominion faces considerable practical challenges, not least because many nations don’t want to live under U.S. authority. But the conservative intellectuals who have set out to promote this Hegelian world revolution must also contend with a problem of different kind: Their aim cannot be squared with the political tradition for which they are ostensibly the spokesmen.

For centuries, Anglo-American conservatism has favored individual liberty and economic freedom. But as the Oxford historian of conservatism Anthony Quinton emphasized, this tradition is empiricist and regards successful political arrangements as developing through an unceasing process of trial and error. As such, it is deeply skeptical of claims about universal political truths. The most important conservative figures — including John Fortescue, John Selden, Montesquieu, Edmund Burke and Alexander Hamilton — believed that different political arrangements would be fitting for different nations, each in keeping with the specific conditions it faces and traditions it inherits. What works in one country can’t easily be transplanted.

On that view, the U.S. Constitution worked so well because it preserved principles the American colonists had brought with them from England. The framework — the balance between the executive and legislative branches, the bicameral legislature, the jury trial and due process, the bill of rights — was already familiar from the English constitution. Attempts to transplant Anglo-American political institutions in places such as Mexico, Nigeria, Russia and Iraq have collapsed time and again, because the political traditions needed to maintain them did not exist. Even in France, Germany and Italy, representative government failed repeatedly into the mid-20th century (recall the collapse of France’s Fourth Republic in 1958), and has now been shunted aside by a European Union whose notorious “democracy deficit” reflects a continuing inability to adopt Anglo-American constitutional norms.

The “universal dominion” agenda is flatly contradicted by centuries of Anglo-American conservative political thought. This may be one reason that some post-Cold War conservative intellectuals have shifted to calling themselves “classical liberals”. Last year Paul Ryan insisted: “I really call myself a classical liberal more than a conservative.” Mr. Kristol tweeted in August: “Conservatives could ‘rebrand’ as liberals. Seriously. We’re for liberal democracy, liberal world order, liberal economy, liberal education.”

What is “classical liberalism,” and how does it differ from conservatism? As Quinton pointed out, the liberal tradition descends from Hobbes and Locke, who were not empiricists but rationalists: Their aim was to deduce universally valid political principles from self-evident axioms, as in mathematics.

In his “Second Treatise on Government” (1689), Locke asserts that universal reason teaches the same political truths to all human beings; that all individuals are by nature “perfectly free” and “perfectly equal”; and that obligation to political institutions arises only from the consent of the individual. From these assumptions, Locke deduces a political doctrine that he supposes must hold good in all times and places.

The term “classical liberal” came into use in 20th-century America to distinguish the supporters of old-school laissez-faire from the welfare-state liberalism of figures such as Franklin D. Roosevelt. Modern classical liberals, inheriting the rationalism of Hobbes and Locke, believe they can speak authoritatively to the political needs of every human society, everywhere. In his seminal work, “Liberalism” (1927), the great classical-liberal economist Ludwig von Mises thus advocates a “world super-state really deserving of the name”, which will arise if we “succeed in creating throughout the world . . . nothing less than unqualified, unconditional acceptance of liberalism. Liberal thinking must permeate all nations, liberal principles must pervade all political institutions”.

Friedrich Hayek, the leading classical-liberal theorist of the 20th century, likewise argued, in a 1939 essay, for replacing independent nations with a world-wide federation: “The abrogation of national sovereignties and the creation of an effective international order of law is a necessary complement and the logical consummation of the liberal program.”

Classical liberalism thus offers ground for imposing a single doctrine on all nations for their own good. It provides an ideological basis for an American universal dominion.

By contrast, Anglo-American conservatism historically has had little interest in putatively self-evident political axioms. Conservatives want to learn from experience what actually holds societies together, benefits them and destroys them. That empiricism has persuaded most Anglo-American conservative thinkers of the importance of traditional Protestant institutions such as the independent national state, biblical religion and the family.

As an English Protestant, Locke could have endorsed these institutions as well. But his rationalist theory provides little basis for understanding their role in political life. Even today liberals are plagued by this failing: The rigidly Lockean assumptions of classical-liberal writers such as Hayek, Milton Friedman, Robert Nozick and Ayn Rand place the nation, the family and religion outside the scope of what is essential to know about politics and government. Students who grow up reading these brilliant writers develop an excellent grasp of how an economy works. But they are often marvelously ignorant about much else, having no clue why a flourishing state requires a cohesive nation, or how such bonds are established through family and religious ties.

The differences between the classical-liberal and conservative traditions have immense consequences for policy. Establishing democracy in Egypt or Iraq looks doable to classical liberals because they assume that human reason is everywhere the same, and that a commitment to individual liberties and free markets will arise rapidly once the benefits have been demonstrated and the impediments removed. Conservatives, on the other hand, see foreign civilizations as powerfully motivated — for bad reasons as well as good ones — to fight the dissolution of their way of life and the imposition of American values.

Integrating millions of immigrants from the Middle East also looks easy to classical liberals, because they believe virtually everyone will quickly see the advantages of American (or European) ways and accept them upon arrival. Conservatives recognize that large-scale assimilation can happen only when both sides are highly motivated to see it through. When that motivation is weak or absent, conservatives see an unassimilated migration, resulting in chronic mutual hatred and violence, as a perfectly plausible outcome.

Since classical liberals assume reason is everywhere the same, they see no great danger in “depreciating” national independence and outsourcing power to foreign bodies. American and British conservatives see such schemes as destroying the unique political foundation upon which their traditional freedoms are built.

Liberalism and conservatism had been opposed political positions since the day liberal theorizing first appeared in England in the 17th century. During the 20th-century battles against totalitarianism, necessity brought their adherents into close alliance. Classical liberals and conservatives fought together, along with communists, against Nazism. After 1945 they remained allies against communism. Over many decades of joint struggle, their differences were relegated to a back burner, creating a “fusionist” movement (as William F. Buckley’s National Review called it) in which one and all saw themselves as “conservatives”.

But since the fall of the Berlin Wall, circumstances have changed. Margaret Thatcher’s ouster from power in 1990 marked the end of serious resistance in Britain to the coming European “super-sovereign”. Within a few years the classical liberals’ agenda of universal dominion was the only game in town — ascendant not only among American Republicans and British Tories but even among center-left politicians such as Bill Clinton and Tony Blair.

Only it didn’t work. China, Russia and large portions of the Muslim world resisted a “new world order” whose express purpose was to bring liberalism to their countries. The attempt to impose a classical-liberal regime in Iraq by force, followed by strong-arm tactics aimed at bringing democracy to Egypt and Libya, led to the meltdown of political order in these states as well as in Syria and Yemen. Meanwhile, the world banking crisis made a mockery of classical liberals’ claim to know how to govern a world-wide market and bring prosperity to all. The shockingly rapid disintegration of the American family once again raised the question of whether classical liberalism has the resources to answer any political question outside the economic sphere.

Brexit and Mr. Trump’s rise are the direct result of a quarter-century of classical-liberal hegemony over the parties of the right. Neither Mr. Trump nor the Brexiteers were necessarily seeking a conservative revival. But in placing a renewed nationalism at the center of their politics, they shattered classical liberalism’s grip, paving the way for a return to empiricist conservatism. Once you start trying to understand politics by learning from experience rather than by deducing your views from 17th-century rationalist dogma, you never know what you may end up discovering.

Mr. Hazony is president of the Jerusalem-based Herzl Institute. His book “The Virtue of Nationalism” will be published next year by Basic.


(Hat-tip to our reader and commenter, Cogito)

Socialism must always fail 0

Yet another socialist state – Greece – finds itself insolvent. When will they ever learn?

Quotations from Socialism: An Economic and Sociological Analysis, by Ludwig von Mises –

Wherever Europeans or the descendants of European emigrants live, we see Socialism at work to-day; and in Asia it is the banner round which the antagonists of European civilization gather. If the intellectual dominance of Socialism remains unshaken, then in a short time the whole co-operative system of culture which Europe has built up during thousands of years will be shattered. For a socialist order of society is unrealizable. All efforts to realize Socialism lead only to the destruction of society. Factories, mines, and railways will come to a standstill, towns will be deserted. The population of the industrial territories will die out or migrate elsewhere. The farmer will return to the self-sufficiency of the closed, domestic economy. Without private ownership in the means of production there is, in the long run, no production other than a hand-to-mouth production for one’s own needs.


All rational action is economic. All economic activity is rational action. All rational action is in the first place individual action. Only the individual thinks. Only the individual reasons. Only the individual acts.


The average man is both better informed and less corruptible in the decisions he makes as a consumer than as a voter at political elections.


When we call a capitalist society a consumers’ democracy we mean that the power to dispose of the means of production, which belongs to the entrepreneurs and capitalists, can only be acquired by means of the consumers’ ballot, held daily in the market-place. 

Posted under Capitalism, Commentary, Economics, liberty, Socialism by Jillian Becker on Monday, July 6, 2015

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A birthday to celebrate 9

Today is the anniversary of the birth of the great Austrian economist and political philosopher, F.A.Hayek.

This tribute to him comes from Investor’s Business Daily, by Gerald P. O’Driscoll Jr., senior fellow at the Cato Institute:

Hayek’s work, whether on economics, politics or law, focused on the ineluctable problems of uncertainty and incomplete information. In economics articles going back to the 1930s, he analyzed the price system as a mechanism for communicating information to buyers and sellers about the intensity of preferences for goods and their relative scarcity. He concluded that the information does not exist anywhere in its entirety and could not be centralized. … Socialist (really communist) societies relying on centralized planning would be characterized by gross economic inefficiencies.

Hayek was vindicated by subsequent events. The power of this argument is lost today on policymakers engaged in “planning lite,” attempts to allocate credit to favored industries and pick winners.

The Great Recession was in large part the consequence of such a policy. The Fed’s balance sheet is loaded up with housing finance paper. In “Ben Bernanke Versus Milton Friedman,” historian Jeffrey Rogers Hummel argues that the Fed has evolved from monetary authority to a credit allocator.

Hayek first began evolving his information argument in his monetary analysis. In 1932, he questioned whether deliberate monetary management could avoid economic fluctuations.

Friedman later developed the argument against discretionary monetary policy in a series of articles that detailed the information problems confronting a central bank. His argument later became encapsulated as the “lags” in monetary policy — i.e., the unpredictability of when the effects of monetary policy actions will be felt. Monetary policymakers give lip service to Friedman’s arguments, but ignore them in practice.

Hayek deftly summed up his argument on information in his 1988 book, The Fatal Conceit:

The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.

A market economy is a complex order, the outcome of societal evolution that confounds efforts to redesign it. The central tenet of classical liberalism was summed up by George Smith in his brilliant book, The System of Liberty:

Laissez faire in all spheres, personal, social and economic, was the fundamental presumption of liberalism — its default setting, so to speak — and all deviations from this norm stood in need of justification.

In America, by linguistic legerdemain, progressives transformed the meaning of liberalism into nearly the opposite of what it originally meant. Progressives became liberals, and true liberals lost their identity. Hence, we have the peculiar use of conservative to denote in America what had once been liberal thought.

So when Hayek wrote a famous essay on “Why I Am Not a Conservative,” he confabulated some American conservatives. He was not attacking American conservatism. Instead, he was combating the transplantation to America of a “European type of conservatism, which (is) alien to the American tradition.” That European conservatism upheld tradition and status over liberty and innovation.

Hayek argued there, and elsewhere, that liberalism must be the political philosophy of principles. Its central principle is individual liberty.

Hayek provided a much-needed program for American conservatives today. They must stand for free markets and free people. Free markets and free trade must be seen as the economic core of an opportunity society that provides hope for all. …

Hayek was born in Vienna at the high point of the global liberal economic order comprising free markets, free trade and capital movements, and the classical gold standard. That glorious edifice ended with World War I. So for decades he was arguing against the tide of history. Yet he lived long enough to be vindicated. His words, written over the course of much of the 20th century, constitute a message for today.

On the centenary of Hayek’s birth, May 8, 1999, Barun S. Mitra wrote a tribute to him, published by the Liberty Institute, India.

We quote from it:

Today, a wide range of people has acknowledged his contribution all over the world. From philosophers like Karl Popper, Robert Nozick … to political leaders like Ronald Reagan, Margaret Thatcher and Vaclav Klaus, to Nobel laureate economists like Milton Friedman, James Buchanan … and countless others. As the iron curtain was being built in the aftermath of World War II, Ludwig Erhard, the finance minister of West Germany turned to Hayekian ideas to rebuild his country. Half a century later when the iron curtain collapsed, leaders in many countries in Eastern Europe again turned to Hayek in their attempt to rebuild their societies. And Hayek is reportedly available on the bookshelf of even the Chinese Prime Minister.

If today, the world is witnessing a perceptible change in thinking, it is in no small amount due to the legacy of Hayek. …

No wonder commemorative events are being organised in London, Paris, Vienna, Washington, D.C., Montreal, Eastern Europe, and Central America. The Adam Smith Institute in the United Kingdom has named him the man of the century. …

Hayek was more than a Nobel Prize winning academic. He was an intellectual giant, who was also a gentleman to the core. The man, who went on to become one of the greatest champions of liberty, had begun his life as a young soldier in the Austro-Hungarian Empire and sent to the Italian front in 1917. An academic, whose “controversial ideas” were eventually recognised by the Nobel committee in 1974, Hayek was also an activist who was among the founders of the Mont Pelerin Society in 1948. This was an organisation dedicated to pursuing the intellectual battle against all forms of authoritarianism and tyranny at a time when it was fashionable to call oneself socialist. Today, it has hundreds of members, including many Nobel laureates, spread across all the continents. He inspired many to take up intellectual activism like the late Sir Anthony Fisher, the British businessman who founded the Institute of Economic Affairs in London in 1955. Over the years, IEA, an independent think tank, has produced countless policy papers and books on contemporary issues, and is recognised to have contributed to changing the popular perception that made the Thatcher revolution possible in Britain in the 1980s

Hayek was born in Vienna, Austria, on May 8, 1899, to August Edler von Hayek & Felicitas von Hayek. Even as a teenager, he was interested in philosophy, economics and ethics. But his studies were interrupted as he was called for military duty in 1917, and saw action on the Italian front. On his return from service he went back to college. In the 1920s Hayek was part of that heady circle in post-war Vienna, a group which featured some of the greatest minds of the century. He earned two doctorates, one in law and another in political science. He studied economics under Ludwig von Mises, one of the greatest exponents of the Austrian School. He left for England in 1931 worried about the rise of the Nazis in Germany. Hayek mainly taught at the London School of Economics, but had short spells at universities around world including, Cambridge, Chicago, Stanford, Tokyo, and Freiburg.

Hayek was one of those few fortunate people who lived to see the tumultuous events that shook the socialist empire, and be vindicated. In a letter written in 1989, he noted, “the ultimate victory of our side in the long dispute of the principles of the free market.” He must have been saddened at the enormous cost, both human and material, that was paid in pursuit of a doomed experiment.

Hayek died in  Freiburg on 23 March 1992.

Dispersed knowledge

In the 1930s, Hayek was the principal opponent Keynes. In various scholarly publications – Monetary Theory of Trade Cycle (1933), The Pure Theory of Capital (1941) – he had pointed out that business cycles are caused by monetary mismanagement in [government]. This contribution of Hayek was noted by the Nobel committee. Subsequent events have completely vindicated Hayek. Concerned about the stability of value, he wrote a radical essay in the 1976, “The Denationalisation of Money”, where he argued that it was a serious mistake to allow governments to monopolise the legal tender. He called for the freedom of the individuals to trade in whatever media of exchange they thought best.

Hayek emphasized that division of labour and division of knowledge were complimentary. Every individual possessed some specialized and local knowledge that was particular to his situation and preferences. Yet, the market, through the competitive price system, successfully coordinated all these bits of knowledge. Prices provide the incentive to invest in certain areas, and the information regarding the possible opportunities. Hayek explained, “We must look at the price system as such a mechanism for communicating information if we want to understand its real function… … The most significant fact about this system is the economy of knowledge with which it operates, or how little the individual participants need to know in order to be able to take the right action.” …

Spontaneous order

Hayek also developed the idea of “spontaneous order” to describe the progress of civilizations. Language, customs, traditions, rules of conduct, have all evolved without any conscious design, and without that freedom societies may not have evolved beyond primitive levels, he held. Advancement of society was dependent upon no one overall “plan” being imposed over the actions and plans of the individuals making up the society. Building on Adam Smith’s “invisible hand”, Hayek showed that planning need not necessarily lead to order and lack of a guiding hand need not degenerate in to chaos.

[Hayek wrote:]

It is largely because civilization enables us constantly to profit from knowledge which we individually do not possess, and because each individual’s use of his particular knowledge may serve to assist others unknown to him in achieving their ends, that men as members of civilized society can pursue their individual ends so much more successfully than they could alone.

This characteristic of the market where order seemed to develop quite spontaneously, along with dispersed nature of knowledge, raises one of the most fundamental questions on the utility of government intervention in the economy to achieve a particular end. The institutions created by government decree to provide direction to such intervention would under the best of circumstances simply be overwhelmed by the sheer volume of knowledge that they will need to process.

In contrast, the market routinely brings to order millions of evaluations undertaken by each individual participant. Hayek showed that progress arises from a continuous process of “discovery” wherein a variety of producers and consumers experiment with a wide range of possible opportunities to make profit. Most such experiments fail in the marketplace, and the innovators bear the cost taking the risk. But some succeed, and the benefits are enjoyed by all. That is the reason why in a free market, voluntary trade creates a win-win situation for all participants. …

The Road to Freedom

Hayek also published works more accessible to a wider public, which included books such as The Road to Serfdom (1944) and The Constitution of Liberty. The former has been nominated by journals like London’s Time Literary Supplement as one the noteworthy books of this century. Dozens of unauthorised editions of it were known to be in circulation among the underground activists in the Eastern block during the cold war. This book has now been published in many languages across the world. …

Then Mitra, looking at Hayek’s ideas from an Indian perspective, points out that India would have done well to have learnt what he taught:

We are concerned that after fifty years of independence, poverty is so wide spread, and as a measure to speed up the process of redistribution of wealth, we thought it prudent to abolish right to property as a fundamental right. Hayek had cautioned all those years ago that “The system of private property is the most important guaranty of freedom, not only for those who own property, but scarcely less for those who do not.”

We want “social justice”, while Hayek warned that “There is all the difference in the world between treating people equally and attempting to make them equal”, and to attempt otherwise would only contribute to social collision. “Equality before the law and material equality are therefore not only different but are in conflict which each other; and we can achieve either one or the other, but not both at the same time”, wrote Hayek.

The world has had a bitter experience in the 20th Century. The dreams of a socialist-collectivist utopia were shattered by economic collapse and degenerated into tyrannical police states. According to historian Thomas Sowell, if one was to mark the time when the intellectual tide began to turn against the ideal of socialism then it was with Hayek’s [The Road toSerfdom. …

While the world is marking his centenary now, the next century could well belong to him. And ideas do change the world. Let us hope that the intellectual tide in favour of Hayek will become a tidal wave in the next millenium. Hayek’s Road to Serfdom may actually help pave the road to freedom for all of us.

If only!

The sweet poisonous idea that will never die 1

“Everything brought forward in favor of Socialism during the last hundred years, in thousands of writings and speeches, all the blood which has been spilt by the supporters of Socialism, cannot make Socialism workable.” – Ludwig von Mises, 1922.

Socialism/Communism is sweetly attractive to certain minds and temperaments. It is also fatally poisonous.

The quotation from the great Austrian School economist von Mises occurs in an article by Jean Kaufman at her website Neo-Neocon. Her article makes the point that Socialism/Communism can never be destroyed as a temptation to some people. But the arguments against it must be unremittingly pursued. Better that it be understood through reason than suffered in experience.

Communism/Socialism is an idea whose time has always come, ever-fresh and ever-new. It keeps rearing its ugly head wearing a new mask, like some vampire who keeps returning in a new guise. But can’t we finally drive a stake through its wretched heart? …

The rhetoric of Socialism/Communism has intrinsic appeal to certain groups of people and some members of each group are always likely to fall under its spell: the guilt-ridden wealthy and/or their even-more-guilt-ridden spawn, the poor who feel they’ve been screwed by society, the politically and economically naive intelligentsia who feel they know better than others, the religious and/or idealistic who want everyone to be loving and good and selfless, and those who just like the idea of power and control over others and plan to be the ones in charge.

Combine all that natural appeal with the undeniable propagandist skill of the left — including their willingness to lie in the most brazen manner — and you have an even greater effect. And then combine all of that with ignorance of history and economics, our culture’s reluctance to teach the young our good points and its eagerness to harp on our bad ones, and the fact that people only tend to really learn something through bitter and personal experience.

The wonder is that more people don’t believe that Socialism/Commmunism is the answer to the world’s prayers, not that so many succumb to it in the first place. Never imagine that the fight, especially in the intellectual and educational and propaganda spheres, can be over. It would be too bad if each generation had to learn the lesson through personal suffering rather than in the realm of ideas.


Post Script: In an earlier guise, the sweet poisonous idea was called Christianity. It has often been pointed out that Communism/Marxism is a Christian heresy.

Posted under Commentary, communism, Marxism, Socialism by Jillian Becker on Saturday, February 8, 2014

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The libertarian ideal 2

This is from a fine article by Jonah Goldberg at Townhall:

Definitions vary, but broadly speaking, libertarianism is the idea that people should be as free as possible from state coercion so long as they don’t harm anyone.

Or as we put it in our Articles of ReasonMy liberty should be limited by nothing except everyone else’s liberty.

The job of the state is limited to fighting crime, providing for the common defense, and protecting the rights and contracts of citizens. The individual is sovereign, he is the captain of himself.

It’s true, no ideal libertarian state has ever existed outside a table for one. And no such state will ever exist. But here’s an important caveat: No ideal state of any other kind will be created either. …

Ideals are …  goals, aspirations, abstract straight rules we use as measuring sticks against the crooked timber of humanity.

In the old Soviet Union, Mao’s China, Pol Pot’s Cambodia and today’s North Korea, they tried to move toward the ideal communist system. Combined, they killed about 100 million of their own people. That’s a hefty moral distinction right there: When freedom-lovers move society toward their ideal, mistakes may be made, but people tend to flourish. When the hard left is given free reign, millions are murdered and enslaved. Which ideal would you like to move toward?  …

How statism/collectivism  ever came to be an ideal is puzzling enough, but that there are millions who still want it after those calamitous experiments Jonah Goldberg names, remains to us a mystery beyond all comprehension.

It’s a little bizarre how the left has always conflated statism with modernity and progress. The idea that rulers – be they chieftains, kings, priests, politburos or wonkish bureaucrats – are enlightened or smart enough to tell others how to live is older than the written word. And the idea that someone stronger, with better weapons, has the right to take what is yours predates man’s discovery of fire by millennia. And yet, we’re always told that the latest rationalization for increased state power is the “wave of the future.”

That phrase, “the wave of the future,” became famous thanks to a 1940 essay by Anne Morrow Lindbergh. She argued that the time of liberal democratic capitalism was drawing to a close and the smart money was on statism of one flavor or another – fascism, communism, socialism, etc. What was lost on her, and millions of others, was that this wasn’t progress toward the new, but regression to the past. These “waves of the future” were simply gussied-up tribalisms, anachronisms made gaudy with the trappings of modernity, like a gibbon in a spacesuit. 

The only truly new political idea in the last couple thousand years is this libertarian idea, broadly understood. The revolution wrought by John Locke, Edmund Burke, Adam Smith and the Founding Fathers is the only real revolution going. And it’s still unfolding. …

We would add that this revolution has been advanced in thought further by Ludwig von Mises, Friedrich Hayek, Robert Nozick, and (more popularly) Ayn Rand, to name just some of the later philosophers of individual freedom.

What made the American experiment new were its libertarian innovations, broadly speaking. Moreover, those innovations made us prosper. …

I’m actually not a full-blown libertarian myself, but it’s an ideal I’d like America to move closer to, not further away from as we’ve been doing of late – bizarrely in the name of “progress” of all things.

Same goes for us.

Here we go again 1

The incessant drumbeat of anti-Semitism— often rooted in anti-Zionist prejudice against Israel and all who publicly identify with the Jewish state and Jewish identity — throughout Europe is inciting violence that can no longer be ignored. The problem here is not just al-Qaeda sympathizers such as the Toulouse shooter or the importation of Jew-hatred from the Middle East that have taken root among French Muslims. It is the way that such views have melded with attacks from intellectuals on Zionism, Israel and its supporters in such a way as to dignify the sordid hatred flung at Jews on the streets of Europe. There is a long and dishonorable history of anti-Semitism in France, but what we are witnessing now is an updated version of traditional bias that is casting a shadow over the future of the Jewish community there. … It is difficult to envision much of a future for Jews in Europe. – Jonathan S. Tobin at Commentary-Contentions, July 6, 2012

In recent weeks, I have heard those who have cast doubt on Iran’s intentions. They said that when Iran’s leaders declare that they will wipe Israel off the map, they really mean something else in Persian. It would be interesting to hear what they think of the Iranian Chief-of-Staff’s remarks yesterday: ‘Iran is committed to the complete destruction of Israel.’ This is clear and simple. Iran’s goals are clear. It wants to annihilate Israel and is developing nuclear weapons to realize this goal. Iran threatens Israel, peace and the entire world. Against this malicious intention, the world’s leading countries must show determination, not weakness. – Benyamin Netanyahu, Prime Minister of Israel, 21 May, 2012

In pursuit of a world without nuclear weapons, the president finalizes plans to decimate our nuclear deterrent and reduce our warhead count beyond even treaty commitments … with the goal “in the longer term, of eliminating nuclear weapons”. This plan stems from a Nuclear Posture Review conducted by an administration committed to a world without nuclear weapons, particularly American ones, based on two fraudulent conclusions, one that Cold War weapons are no longer needed in a post-Cold War world, and the weapons, not the tyrants who would use them against us, are the real threat.  – From an IBD editorial, July 6, 2012

Lord Dannatt, the former head of the Army, has described as “risky” plans to reduce the service to its smallest size since the Napoleonic wars. – From the Telegraph, July 7, 2012

The following is from Omnipotent Government by Ludwig von Mises, 1944, re-published by the Ludwig von Mises Institute. It is subsection 5 of Chapter VIII, Anti-Semitism and Racism: Anti-Semitism as a Factor in International Politics. 

(Ludwig von Mises, free-market economist of the Austrian School, was one of the most eminent classical liberal thinkers of the last century.)

It was a very strange constellation of political forces that turned anti-Semitism into an important factor in world affairs.

In the years after the first World War Marxism swept triumphantly over the Anglo-Saxon countries. Public opinion in Great Britain came under the spell of the neo-Marxian doctrines on imperialism, according to which wars are fought only for the sake of the selfish class interests of capital. The intellectuals and the parties of the Left felt rather ashamed of England’s participation in the World War. They were convinced that it was both morally unfair and politically unwise to oblige Germany to pay reparations and to restrict its armaments. They were firmly resolved never again to let Great Britain fight a war. They purposely shut their eyes to every unpleasant fact that could weaken their naïve confidence in the omnipotence of the League of Nations. They overrated the efficacy of sanctions and of such measures as outlawing war by the Briand-Kellogg Pact. They favored for their country a policy of disarmament which rendered the British Empire almost defenseless within a world indefatigably preparing for new wars.

But at the same time the same people were asking the British government and the League to check the aspirations of the “dynamic” powers and to safeguard with every means—short of war—the independence of the weaker nations. They indulged in strong language against Japan and against Italy; but they practically encouraged, by their opposition to armaments and their unconditional pacifism, the imperialistic policies of these countries. They were instrumental in Great Britain’s rejecting Secretary Stimson’s proposals to stop Japan’s expansion in China. They frustrated the Hoare-Laval plan, which would have left at least a part of Abyssinia independent; but they did not lift a finger when Italy occupied the whole country. They did not change their policy when Hitler seized power and immediately began to prepare for the wars which were meant to make Germany paramount first on the European continent and later in the whole world. Theirs was an ostrich policy in the face of the most serious situation that Britain ever had to encounter.

The parties of the Right did not differ in principle from those of the Left. They were only more moderate in their utterances and eager to find a rational pretext for the policy of inactivity and indolence in which the Left acquiesced lightheartedly and without a thought of the future. They consoled themselves with the hope that Germany did not plan to attack France but only to fight Soviet Russia. It was all wishful thinking, refusing to take account of Hitler’s schemes as exposed in Mein Kampf. The Left became furious. Our reactionaries, they shouted, are aiding Hitler because they are putting their class interests over the welfare of the nation. Yet the encouragement which Hitler got from England came not so much from the anti-Soviet feelings of some members of the upper classes as from the state of British armament, for which the Left was even more responsible than the Right. The only way to stop Hitler would have been to spend large sums for rearmament and to return to conscription. The whole British nation, not only the aristocracy, was strongly opposed to such measures. Under these conditions it was not unreasonable that a small group of lords and rich commoners should try to improve relations between the two countries. It was, of course, a plan without prospect of success. The Nazis could not be dissuaded for their aims by comforting speeches from socially prominent Englishmen. British popular repugnance to armaments and conscription was an important factor in the Nazi plans, but the sympathies of a dozen lords were not. It was no secret that Great Britain would be unable, right at the outbreak of a new war, to send an expeditionary force of seven divisions to France as it did in 1914; that the Royal Air Force was numerically much inferior to the German Air Force; or that even the British Navy was less formidable than in the years 1914–18. …

The problem which Great Britain had to face was simply this: is it in the interest of the nation to permit Germany to conquer the whole European continent? It was Hitler’s great plan to keep England neutral at all costs, until the conquest of France, Poland, Czechoslovakia, and the Ukraine should be completed. Should Great Britain render him this service? Whoever answered this question in the negative must not talk but act. But the British politicians buried their heads in the sand.

Given the state of British public opinion, France should have understood that it was isolated and must meet the Nazi danger by itself. The French know little about the German mentality and German political conditions. Yet when Hitler seized power every French politician should have realized that the main point in his plans was the annihilation of France. Of course the French parties of the Left shared the prejudices, illusions, and errors of the British Left. But there was in France an influential nationalist group which had always mistrusted Germany and favored an energetic anti-German policy. If the French nationalists in 1933 and the years following had seriously advocated measures to prevent German rearmament, they would have had the support of the whole nation with the exception of the intransigent communists. Germany had already started to rearm under the Weimar Republic. Nevertheless in 1933 it was not ready for a war with France, nor for some years thereafter. It would have been forced either to yield to a French threat or to wage a war without prospect of success. At that time it was still possible to stop the Nazis with threats. And even had war resulted, France would have been strong enough to win.

But then something amazing and unexpected happened. Those nationalists who for more than sixty years had been fanatically anti-German, who had scorned everything German, and who had always demanded an energetic policy against the Weimar Republic changed their minds overnight. Those who had disparaged as Jewish all endeavors to improve Franco-German relations, who had attacked as Jewish machinations the Dawes and Young plans and the Locarno agreement, and who had held the League suspect as a Jewish institution suddenly began to sympathize with the Nazis. They refused to recognize the fact that Hitler was eager to destroy France once and for all. Hitler, they hinted, is less a foe of France than of the Jews; as an old warrior he sympathizes with his French fellow warriors. They belittled German rearmament. Besides, they said, Hitler rearms only in order to fight Jewish Bolshevism. Nazism is Europe’s shield against the assault of World Jewry and its foremost representative, Bolshevism. The Jews are eager to push France into a war against the Nazis. But France is wise enough not to pull any chestnuts out of the fire for the Jews. France will not bleed for the Jews.

It was not the first time in French history that the nationalists put their anti-Semitism above their French patriotism. In the Dreyfus Affair they fought vigorously in order to let a treacherous officer quietly evade punishment while an innocent Jew languished in prison.

It has been said that the Nazis corrupted the French nationalists. Perhaps some French politicians really took bribes. But politically this was of little importance. The Reich would have wasted its funds. The anti Semitic newspapers and periodicals had a wide circulation; they did not need German subsidies. Hitler left the League; he annulled the disarmament clauses of the Treaty of Versailles; he occupied the demilitarized zone on the Rhine; he stirred anti-French tendencies in North Africa. The French nationalists for the most part criticized these acts only in order to put all the blame on their political adversaries in France: it was they who were guilty, because they had adopted a hostile attitude toward Nazism.

Then Hitler invaded Austria. Seven years earlier France had vigorously opposed the plan of an Austro German customs union. But now the French Government hurried to recognize the violent annexation of Austria. At Munich—in coöperation with Great Britain and Italy—it forced Czechoslovakia to yield to the German claims. All this met with the approval of the majority of the French nationalists. When Mussolini, instigated by Hitler, proclaimed the Italian aspirations for Savoy, Nice, Corsica, and Tunis, the nationalists’ objections were ventured timidly. No Demosthenes rose to warn the nation against Philip [of Macedon]. But if a new Demosthenes had presented himself the nationalists would have denounced him as the son of a rabbi or a nephew of Rothschild.

It is true that the French Left did not oppose the Nazis either, and in this respect they did not differ from their British friends. But that is no excuse for the nationalists. They were influential enough to induce an energetic anti Nazi policy in France. But for them every proposal seriously to resist Hitler was a form of Jewish treachery.

Germany openly prepared a war for the total annihilation of France. There was no doubt about the intentions of the Nazis. Under such conditions the only policy appropriate would have been to frustrate Hitler’s plans at all costs. Whoever dragged in the Jews in discussing Franco-German relations forsook the cause of his nation. Whether Hitler was a friend or foe of the Jews was irrelevant. The existence of France was at stake. This alone had to be considered, not the desire of French shopkeepers or doctors to get rid of their Jewish competitors.

That France did not block Hitler’s endeavors in time, that it long neglected its military preparations, and that finally, when war could no longer be avoided, it was not ready to fight was the fault of anti-Semitism. The French anti-Semites served Hitler well. Without them the new war might have been avoided, or at least fought under much more favorable conditions.

When war came, it was stigmatized by the French Right as a war for the sake of the Jews and by the French communists as a war for the sake of capitalism. The unpopularity of the war paralyzed the hands of the military chiefs. It slowed down work in the armament factories. … Thus the unbelievable happened: France disavowed its past, branded the proudest memories of its history Jewish, and hailed the loss of its political independence as a national revolution and a regeneration of its true spirit.

Not alone in France but the world over anti-Semitism made propaganda for Nazism. Such was the detrimental effect of interventionism and its tendencies toward discrimination that a good many people became unable to appreciate problems of foreign policy from any viewpoint but that of their appetite for discrimination against successful competitors. The hope of being delivered from a Jewish competitor fascinated them while they forgot everything else, their nation’s independence, freedom, religion, civilization. … The secret weapon of Hitler is the anti Jewish inclinations of many millions of shopkeepers and grocers, of doctors and lawyers, professors and writers.

The present war would never have originated but for anti¬Semitism. Only anti-Semitism made it possible for the Nazis to restore the German people’s faith in the invincibility of its armed forces, and thus to drive Germany again into the policy of aggression and the struggle for hegemony. Only the anti-Semitic entanglement of a good deal of French public opinion prevented France from stopping Hitler when he could still be stopped without war. And it was anti-Semitism that helped the German armies find in every European country men ready to open the doors to them.

Mankind has paid a high price indeed for anti-Semitism.

The disastrous end of the welfare state 6

The following extracts are from an essay on the failure of the welfare state in Europe by James Roberts and J.D. Foster:

Europe’s socialist (or “social democratic”) welfare state is collapsing under the load of unsustainable debt. There is no chance European politicians will ever make good on the many costly and unfunded entitlements they have promised their citizens.

The fundamental problem in the European Union is a monetary policy failure. In conjunction with the debilitating effects of the social welfare state, this has led to a broad economic collapse among the lesser states — notably the PIIGS (Portugal, Ireland, Italy [though not really a a “lesser state” – JB] , Greece, and Spain), but also some of the EU’s newer members — and it threatens to envelop the greater states.

For years, this collapse among the lesser states was disguised by debt accumulation — countries would borrow (at de facto concessionary interest rates) to overcome their inability to generate adequate income by producing and selling. The lack of actual and prospective growth combined with growing debt burdens has led to a long-term solvency crisis, which has been bubbling up of late into a series of liquidity crises.

The monetary and fiscal situation in the EU is increasingly unmanageable, as the debt burdens grow and growth prospects diminish further. …

The vision of a “euro zone” was ill-conceived from the start. It is now increasingly acknowledged that Brussels’ lack of control over social spending, especially in the PIIGS, doomed it from the beginning. Agreements (e.g., the Maastricht Treaty) to stay within EU member government spending targets were routinely flouted, even by the largest EU countries. …

The strong got stronger, while others, like Italy and Greece, stood still or even retreated on policies that would have sustained their international competitiveness. …

Southern Europeans kept borrowing in low-interest-rate euros (which simultaneously inflated housing bubbles in their countries) until, in Margaret Thatcher’s words, their socialist governments “ran out of other peoples’ money!” As a result, some of Europe’s large private banks now hold toxic quantities of sovereign debt issued by the PIIGS and are threatened with extinction through serial defaults …

For decades now, one of the most tragic costs of the European welfare state has been Europe’s structural unemployment, especially among the young, combined with welfare payments that turned unemployment into an acceptable — even desirable — status, while stripping those affected of their dignity and sense of responsibility. The recent riots in the U.K. are an ominous reflection of this failure.

One of the key questions now is: How much longer will workers and taxpayers in Germany and other relatively more fiscally prudent countries in northern Europe be willing to work into their late 60s to subsidize (via eurozone bailouts and managed defaults) their neighbors in southern Europe so that the latter can retire early in their 50s on generous state-funded pensions and go to the beach? 

How many times does it have to be proved that socialism does not work?

Free-market economists – the giants among them, von Mises, Hayek, Milton Friedman – demonstrate in theory that socialist economics cannot work. Their reasoning is not hard to follow, and entirely convincing. We human beings can use our faculty of reason – unique to our species –  to save ourselves from having to try out risky ideas in reality. But millions among us want to keep trying out the failed redistributive policies of socialist economics, experimenting with real lives, courting disaster over and over again.

Roberts and Foster grimly point out:

For the U.S., Europe is the ultimate object lesson — a warning of what happens when government is allowed to run wild, with the resulting loss of liberty, and fiscal debt.

An object lesson. A warning. But Obama, his circle of advisers and appointees, and the millions who persist in voting for socialism – aka “stimulus”, “entitlements”, “taxing the rich”  – remain obstinately deaf and blind to it.

The same old New Elite 0

In an article for the Washington Post, Charles Murray writes about a “new elite”, and what the Tea Party thinks of it.

That a New Elite has emerged over the past 30 years is not really controversial. That its members differ from former elites is not controversial. What sets the tea party apart from other observers of the New Elite is its hostility, rooted in the charge that elites are isolated from mainstream America and ignorant about the lives of ordinary Americans.

He finds “some truth” in the Tea Party view:

There so many quintessentially American things that few members of the New Elite have experienced. …

Taken individually, members of the New Elite are isolated from mainstream America as a result of lifestyle choices that are nobody’s business but their own. But add them all up, and they mean that the New Elite lives in a world that doesn’t intersect with mainstream America in many important ways. When the tea party says the New Elite doesn’t get America, there is some truth in the accusation.

We think there is a lot of truth in it. That this elite is isolated and ignorant as charged, could not be better demonstrated than by the vicious calumnies and petty sneers that its members (see the Murray article for who they are) direct at Sarah Palin (for examples go here): they are characterized by snobbery.

A point on which we wholly disagree with Murray is the very point which he says is not controversial. We do not agree that the elite he writes about is essentially new. He is speaking of an intellectual elite, a grandly educated elite. They marry among themselves so that they bequeath to their progeny not only money but also their superior genes. He gives figures to show that most of its members are planted firmly in the political left, but does not say that their leftism defines them: he names conservatives that belong among them too. The fault he finds with them all is that they are out of touch with ordinary people.

There have always been just such elites, and – with individual exceptions – they have probably always been out of touch with ordinary people. (Did Plato socialize with hoi poloi?) And they have always married among themselves.

What’s particularly dangerous about the present elite is precisely its predominant leftism. And that danger in such a class is not new. The important Austrian School economist Ludwig von Mises wrote in his book Socialism, which was first published in English in 1936:

The intellectuals, not the populace, are moulding public opinion. It is a lame excuse of the intellectuals that they must yield to the masses. They themselves have generated the socialist ideas and indoctrinated the masses with them. … The intellectual leaders of the peoples have produced and propagated the fallacies which are on the point of destroying liberty and Western civilization .

The intellectuals alone are responsible for the mass slaughters which are the characteristic mark of our [20th] century.

But he also writes that –

They alone can reverse the trend and pave the way for a resurrection of freedom.

Not mythical “material productive forces”, but reason and ideas determine the course of human affairs.

And he concludes with a statement that goes to the heart of our present predicament:

What is needed to stop the trend towards socialism and despotism is common sense and moral courage.

Both of which are plentifully possessed by Sarah Palin and the Tea Party.

There’s nothing wrong with an intellectual elite. We could not do without one. What is wrong with the one America’s got is that it is holds wrong opinions. Its members, or most of them, have not learnt the lessons of the 20th century. And that means that intellectuals though they be, they are not intelligent – a distinction which Thomas Sowell makes at the start of his book Intellectuals and Society:

The capacity to grasp and manipulate ideas is enough to define intellect, but not enough to encompass intelligence, which involves combining intellect with judgment and care in selecting relevant explanatory factors and in establishing empirical tests of any theory that emerges.

Socialism was empirically tested for decades in Soviet Russia and Maoist China, and is still being tested in impoverished Cuba and hungry North Korea, and if socialists (or “progressives”, or “redistributionists”, or “community organizers”) cannot draw a lesson from its utter failure to better the lot of mankind, they are  proving themselves not just unintelligent but dimwitted, or intentionally evil, or both.

Burn, socialism, burn 1

Obama says there should be a limit to how much money anyone should make. He and the “progressive” majority in Congress are trying, step by step, to turn America into a European-style socialist state. Only the state, they believe, can be extravagant, taking money from people who’ve earned it and will earn it in the future, and using it to extend and tighten the power of government. Austerity must be imposed on the people. Let them eat less, feel colder, do without cars. Let them have only the medical treatment and the education government will allow them to have. Limit the amount of wealth any individual may acquire. Profit is a dirty word. Tax, tax, and tax again.

It is a recipe for disaster.

Europe is experiencing the disaster. It is seeing its socialist dream go up in flames on the streets of Athens.

What cannot work, won’t work. Socialism, like all Ponzi schemes, can seem to be working for a time, but must fail. In a favorite word of the Left (applying it where the Left would not) Socialism is “unsustainable”.

Capitalism is sustainable. Capitalism is beautiful. A cornucopia. “The incredible bread machine”.  It’s what Adam Smith called “the natural order of liberty”. It could also be called “the system of mutual benefit”.

You want the means to keep yourself alive? Provide something – goods, labor, services, ideas – that others want to buy. You want to live comfortably? Provide more of it. You want to live luxuriously? Provide it better than anyone else does. Both a seller and a buyer you will be. A buyer wants the thing he buys more than he wants the money he pays for it, just as the seller wants the money more than the thing he is parting with.

How can you know what others want? Put what you have to offer on the market and see if it sells. The right price for it is the best price you can get. The free market signals what traders need to know. As the great free-market economists, most notably von Mises, Hayek, and Milton Friedman have explained over and over again, government interference with price controls, minimum wages, rationing, compulsory purchase, bailouts, distort the signals and harm the economy.

Whether idealists and moralists like it or not, human nature is selfish. It has to be. If we were not selfish we would not eat when we’re hungry, warm ourselves when we’re cold, acquire what we need, protect ourselves from enemies. Without selfishness, the human race would not have survived. (It is not only or purely selfish. Individuals can and do choose to act unselfishly too – once they have seen to the needs of their survival.)

The Marxist idea of “from each according to his ability and to each according to his need” ignores human nature. Any attempt by government to put the formula into effect by creating the welfare –  or “entitlement“ – state invariably handicaps, suppresses, and impoverishes the nation.

Capitalism is the reverse of that idea. It is a system that encourages each to contribute according to his self-determined need, to be rewarded according to how ably he does it. From each according to his need and to each according to his ability would be a fair description of how the natural order of liberty works.

To satisfy bare need is a poor political aim. It reflects a pinched, narrow, joyless, life-quelling mentality. “O, reason not the need!” King Lear pleads, “our basest beggars
are in the poorest thing superfluous.” Generally speaking, in practice, the only way to be sure of having enough of anything is to have too much of it. Profit is a very good thing. It is only when people have extra money and extra time that they can invent new things. And those who produce things that improve the lives of multitudes, things that millions of people want to own and use, are doing far more for the general good than the most generous philanthropist could ever possibly do. Bill Gates with his Microsoft (though he seems not to realize it but to hold some silly lefty views) has actually done more for mankind than all the charities that have ever existed put together.

That is why it’s reasonable to propose that there is no sin of greed. There is a sin of envy. Envy is the raw material of socialist idealism. But wealth, Mr Obama, is not a problem. Poverty is a problem. And your socialist policies will cause it on a massive scale. Let us be free to work for our own maximum profit. Let us have abundance. Let us have feasts, fatness, generosity, might, novelty, and splendor.

Jillian Becker   May 11, 2010