Rothbard's Man, Economy, and State: a Memoir

Rothbard's Man, Economy, and State: a Memoir

04/13/2018Gary North

In October 1962, I was given a lifetime advantage: a copy of Murray Rothbard’s Man, Economy, and State. In the language of journalism, it was hot off the presses. It had just been published. I was sent a copy by F. A. Harper, known as Baldy, who was not bald. At the time, he ran the Institute for Humane Studies. Until early that year, he had managed the William Voker Fund. The Volker Fund had put up the money that subsidized the publication of Rothbard’s book. It was published by Van Nostrand, a small but respectable mainstream publishing house located in Princeton, New Jersey. Van Nostrand was also the publisher of a series of books that had been financed by the Volker Fund over the previous two years.

I was in my final year of college as an undergraduate. I had written to Harper the previous year about some questions I had about Ludwig von Mises’ Human Action (Yale University Press, 1949). Harper responded in a letter. I still have the fragments of that letter. For some unknown reason, I cut off the introduction to the letter, which would have had the date on it. I suspect this was in the summer of 1961.

By 1962, Harper was serving as my part-time mentor. I did not fully understand this at the time. In November 1961, he paid for me to fly to Burlingame, California, in order to spend a few hours with him. This was one of the turning points in my life, although I did not know this at the time. He gave me a copy of Israel Kirzner’s book, The Economic Point of View, which had been published by Van Nostrand in 1960. I wrote this on the front page: “presented by F. A. Harper November, 1961.” He was recruiting me. I have been grateful for this ever since. When he sent me Man, Economy and State, he was still in the process of recruiting me.

Within a few months after my visit, Harper was fired by the man who controlled the Volker Fund, Harold Luhnow, the nephew of William Volker, who died in 1947. Luhnow took over the management of the Fund in 1947. He shifted its focus from charitable activities in Kansas City, Missouri to financing the remnants of classical liberalism. In early 1962, he replaced Harper with Ivan Bierly, who had received his Ph.D. under Harper at Cornell years before. The Volcker Fund was renamed “The Center for American Studies.” That shift turned out to be crucial in my career. Bierly hired a new staff. One of the people he hired was R. J. Rushdoony. I wrote to him in the spring of 1962. I met him when he lectured for two weeks at a summer seminar sponsored by the Intercollegiate Society of Individualists. Rushdoony continued to recruit me in my senior year. He brought me to work for the Center as a summer intern in 1963, and I lived at his home. I spent the whole summer reading the basic texts of Austrian School economics, including Man, Economy, and State.

ACADEMIC GUILDS

Rothbard’s book was a masterpiece, both conceptually and rhetorically -- the art of persuasion. He had a rigorously systematic mind. He also had a stupendous memory regarding materials he had read, which he demonstrated in the book’s footnotes. He had an unmatched ability to write clearly. I mentioned this in my article in the 1988 Festschrift for Rothbard, Man, Economy, and Liberty. In my article, “Why Murray Rothbard Will Never win the Nobel Prize,” I said that he wrote much too clearly to win it.

Mises was a clear writer. But in Human Action, he offered fewer footnotes than Man, Economy, and State. He also did not use the paraphernalia of modern economics. There are no equations and no graphs in anything Mises ever wrote. The famous supply and demand scissors are absent in his books. In terms of presentation, Rothbard in Man, Economy, and State was far closer to the mainstream academic community than Mises was. But he was not close to the mainstream community with respect to the content of what he wrote. He was an academic pariah in 1962, and he remained a pariah all his life. He shared this position with Mises.

This was not a liability in the long run. One of the important points made by Thomas Kuhn’s paradigm-shifting book, The Structure of Scientific Revolutions, also published in 1962, was this: major shifts in the worldview of intellectuals are usually generated from either the fringes of an academic guild or from outside the academic guild. If they are generated from inside, they are generated from young men who are reacting against the outlook of the guild. They are on its fringes. The other source of change in perception comes from brilliant outsiders who are in no way under the authority of a particular academic guild.

Mises was funded from outside of academia. New York University paid him no salary for a quarter of a century. He retired in 1969. He may have been the oldest professor in the nation. The money to pay his salary had been put up by rich friends of Mises, most notably Lawrence Fertig, who was on the board of New York University. He donated through the Foundation for Economic Education after its founding by Leonard E. Read in 1946. The Volker Fund also put up money for Mises and Hayek at the University of Chicago. The Volker Fund had put Rothbard on its payroll, mainly to review books, beginning in the mid-1950's. Rothbard was not on any university or academic payroll in 1962. Only after the demise of the Center for American Studies in 1964 did he get his first teaching position, which was at Brooklyn Polytechnic Institute. The school did not offer an economics major. He taught budding engineers. He was on the fringes.

Mises and Rothbard were outsiders. That was their great advantage. This was not clear to me in 1963, but after I read Kuhn’s book in 1968, I understood. The economics guild had no control over either of them. Neither of them published in professional journals. Rothbard had published a few essays, but after 1960 he never bothered again. He made a wise decision. He did not have to conform to what any editor believed.

CLARITY AS A STANDARD

I have always appreciated clarity of exposition. In 1963, as today, I was of the opinion that an author had two primary responsibilities: accuracy and clarity. Persuasion is in third place. Rothbard was tremendous at all three. In this sense, he became my literary model. To the extent that I am known for my writing, I gained this skill more from Rothbard than anybody else.

In 1966, I took a graduate seminar on the American Revolution from Douglass Adair. He had been the editor of The William and Mary Quarterly. He had personally transformed it from a journal that published regional memorabilia into the premier journal of colonial history. He told us that he always used this criterion for screening manuscripts. If an article did not stand on its own merits without the footnotes, he would not publish it. He said that the footnotes were important to validate the thesis, but if the article was heavily dependent on the footnotes to make its point, it was not worth publishing. That impressed me at the time. I see in retrospect that everything scholarly/academic that Rothbard ever wrote would have qualified for publication in terms of Adair’s rule.

Adair made another observation. He said that every scholar would benefit from a year of editing a scholarly journal in his field. Why? Because he would discover how few of his colleagues have the ability to write clearly.

Rothbard had a huge advantage over his peers. He was the master of clarity in the field of economics. He was even more clear than Hazlitt. As a friend of Hazlitt's, I guarantee you that Hazlitt would have been the first to admit this. He was a humble man. For a man who achieved so much, he was an astoundingly humble man. He had an enormous respect for Rothbard.

F. A. Hayek was a clear writer, but as he admitted, he was not a systematic thinker. He divided schools of thought into two groups: systematizers and puzzlers. Hayek called himself a puzzler. In economic thought, this is clearly seen in Austrian School economics from the beginning. Carl Menger and Eugen Böhm-Bawerk were systematizers. Friederich Wieser was a puzzler. Not many people have ever read Wieser. Puzzlers are harder to read than systematizers.

Hayek gained attention in the English-speaking academic world beginning in the early 1930's. Mises was not well-known in academia outside of Austria. Hayek is still the best known Austrian School economist. He won the Nobel Prize in 1974. But Hayek never wrote a treatise on economics.

Henry Hazlitt was a clear writer. He was rhetorically gifted. He had the ability to sustain long, complex arguments, as he demonstrated in his refutation of Keynes, The Failure of the “New Economics.” It was published in 1959. We never see it footnoted in any scholarly journal. There are few people who have ever read it. Hundreds of thousands of people have read his little masterpiece, Economics in One Lesson (1946), but he wrote it in just a few months, and it is not systematic in the way that treatises are supposed to be. It was not meant to be a treatise. It was meant to be a popular book that introduced people to free-market principles. It succeeded. Nothing that Hazlitt ever wrote was a comprehensive treatise.

In 1949, the world of economic theory was waiting for a clear, comprehensive, systematic treatise.

PIECES OF THE ECONOMIC PUZZLE

Most of the pieces of the economic puzzle had been lying around in an unorganized pile ever since Adam Smith's Wealth of Nations (1776). They had been refined and trimmed by Carl Menger in 1871 in his Principles of Economics. The British economist Alfred Marshall in 1890 attempted to put the pieces together in his Principles of Economics, but as is true of so many British thinkers, he was something of a puzzler, not a systematizer. The British intellectual tradition is inductivist, not deductivist. It does not begin with first principles. The pieces in his textbook did not fit together well because they were not systematically based on methodological individualism in the way that Human Action is.

I will now make an admission. It was not until just a few years ago that I recognized what should have been screamingly obvious to me and everybody else. Human Action was the first comprehensive treatise on economics. This may seem like a preposterous statement, but if you look back over the books on economics prior to Human Action, there is no book that starts at the beginning – the acting individual – and develops a comprehensive theory of all aspects of the market process in terms of just a few principles, which Mises called axioms and corollaries. No other economist called them axioms and corollaries. That was what made Mises unique.

Rothbard was an a priorist (deductivist) in epistemology, just as Mises was. In 1962, this made a grand total of two economists. In Man, Economy, and State, Rothbard laid out the chapters of the book in a systematic fashion. From Chapter 2 on, each chapter is a development of the previous chapter. This is what a prioristsare supposed to do. They start with axioms, and they develop the axioms, point by point. Mises had done the same thing in Human Action. Rothbard did it with greater precision. He also did it with greater clarity.

The first person to understand the uniqueness and comprehensive nature of Human Action was Rothbard. He saw this in 1949. This gave him an edge over all of his contemporaries. That is why Man, Economy, and State, which took him over a decade to write, was so important to my generation of budding economists. He systematized what was already a systematic introduction to economic theory. He made it easier for us to grasp the importance of what Mises had done.

Mises put together pieces of the puzzle. Rothbard took that completed puzzle and made it more palatable for younger economists who wanted to see graphs. Fortunately, he never used an equation. That would have sullied the product.

Rothbard never claimed uniqueness for his book. He fully understood that it was a derivative product. But as an introductory treatise that uses the paraphernalia of the modern economic textbook, Rothbard’s book is more serviceable than Mises’s book. In 1962, the enormous volume of his footnotes represented a survey of almost everything that had been published in the journals over the last 50 years. I have never seen anything like it. Admittedly, this dates the book. But that was inevitable, given Rothbard’s strategy. He wanted to introduce the basics of Austrian economic thought, and he wanted it within a framework of the sweep of economic opinion as of 1960 or thereabouts.

CONCLUSION

I don’t know if younger scholars read Man, Economy, and State before they read Human Action. In retrospect, I’m not sure whether I finished Man, Economy and State before I finished Human Action. I do know that I read quite a bit of Human Action in 1961. I wrote to Harper about the book in 1961. But I don’t remember if I read the whole book before the summer of 1963. I had finished both books by late August 1963. But there is no question in my mind that Rothbard opened the categories of economics more clearly to me than Mises had done. Rothbard’s literary style and his approach to economics was exactly what I needed in 1963. His book gave me an edge on my contemporaries. It shaped my work dramatically both in graduate school and subsequently. I even wrote a term paper for a course in apologetics – the philosophical defense of Christianity – on Rothbard’s epistemology. That was in 1964.

If someone has never read any economics, and he wants to start at the top, I recommend that he read Human Action first. But if he is in graduate school as an economics major, he probably would be wise to read Man, Economy and State first. If you like supply and demand graphs, read Rothbard’s book first. If you don’t like graphs, read Mises first.

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"Medicare for All" Would Copy the Bad Features of the UK's Government-Run System

The so-called Green New Deal is only tangentially related to climate issues.

It’s best to think of it as the left’s wish list, and it includes a paid leave entitlementgovernment jobsinfrastructure boondoggles, and an expansion of the already bankrupt Social Security system.

But the most expensive item on the list is “Medicare for All,” which is a scheme concocted by Bernie Sanders to have the government pay for everything.

Would this be a good idea? In a column for Forbes, Sally Pipes of the Pacific Research Institute explains that government-run healthcare in the United Kingdom has some very unfriendly features.

Nearly a quarter of a million British patients have been waiting more than six months to receive planned medical treatment from the National Health Service, according to a recent report from the Royal College of Surgeons. More than 36,000 have been in treatment queues for nine months or more. …Consider how long it takes to get care at the emergency room in Britain. Government data show that hospitals in England only saw 84.2% of patients within four hours in February. …Wait times for cancer treatment — where timeliness can be a matter of life and death — are also far too lengthy. According to January NHS England data, almost 25% of cancer patients didn’t start treatment on time despite an urgent referral by their primary care doctor. …And keep in mind that “on time” for the NHS is already 62 days after referral.

If this sounds like the VA health care system, you’re right.

Both are government run. Both make people wait.

And both produce bad outcomes. Here’s some of the data from the British system.

Unsurprisingly, British cancer patients fare worse than those in the United States. Only 81% of breast cancer patients in the United Kingdom live at least five years after diagnosis, compared to 89% in the United States. Just 83% of patients in the United Kingdom live five years after a prostate cancer diagnosis, versus 97% here in America.

Just like I told Simon Hobbs on CNBC many years ago.

The best part of Sally’s column is that she explains how the flaws in the U.K. system are being copied by Bernie Sanders and other supporters.

Great Britain’s health crisis is the inevitable outcome of a system where government edicts, not supply and demand, determine where scarce resources are allocated. Yet some lawmakers are gunning to implement precisely such a system in the United States. The bulk of the Democratic Party’s field of presidential candidates — including Senators Kirsten Gillibrand, Kamala Harris, and Elizabeth Warren — co-sponsored Senator Bernie Sanders’s 2017 “Medicare for All” bill. That plan would abolish private insurance and put all Americans on a single government-run plan… Britons face long waits for poor care under their country’s single-payer system. That’s not the sort of healthcare model the American people are looking for.

The bottom line is that Medicare for All would further exacerbate the third-party payer problem that already plagues the health care system.

And that means ever-escalating demand, rising costs, and inefficiencies.

There are only two ways of dealing with the cost spiral. One option is huge tax increases, which would result in a massive, European-style tax burden on the lower-income and middle-class taxpayers.

Taxpayers in the U.K. endure higher burdens than their counterparts in America, But they also suffer from the second option for dealing with the cost spiral, which is rationing.

Some of the data was in Ms. Pipes’ column.

If you want more examples (and some horrifying examples), you can click stories from 20172016201520142013, and 2012.

Originally published at International Liberty. 
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Will Democrats Rally Behind a Herman Cain Fed Nomination?

04/04/2019Tho Bishop

According to multiple reports, Donald Trump is preparing to nominate Herman Cain to fill one of the two vacant positions on the Federal Reserve’s Board of Governors.

Cain, the former CEO of Godfathers Pizza and a meme-friendly  2012 presidential candidate, shares several similarities to Stephen Moore, who was also nominated last month. To their credit, neither man comes from the arena of economic groupthink that persists among many central bankers. Both also owe their nomination to the strong personal relationship they both have with Trump, which is why the administration isn’t worried about their past superficial criticism of the low interest rate policy the president has made clear he desires.

While Moore has been criticized strongly within beltway circles since his nomination, it will be interesting to see how Trump critics handle Mr. Cain. After all, he has the one quality Elizabeth Warren and other Democrats have chosen to focus on when it comes to a Federal Reserve nominee: he isn’t a white guy.

For several years now, Warren and other Democrats have been pounding the table for greater diversity at the Fed. As a letter from 2016 states:

Given the critical linkage between monetary policy and the experiences of hardworking Americans, the importance of ensuring that such positions are filled by persons that reflect and represent the interests of our diverse country, cannot be understated. When the voices of women, African-Americans, Latinos, and representatives of consumers and labor are excluded from key discussions, their interests are too often neglected.

If the view point of Warren and her colleagues truly is that simply skin color and experience are important to the Federal Reserve considering the interests of Americans broadly, it would make sense for them to celebrate this nomination. Here we would have the first African American Fed governor in several decades, who rose up from a working class background to become an American success story.

Should Cain be nominated, anything short of grand applause from Democrats will only highlight how shallow the emphasis on superficial “diversity” truly is.

The additional irony here is that Trump’s desire to stack the deck with his own allies actually serves the policy goals of progressive groups. For example, Fed Up, a left-populist organization policy that has been part of the larger push to emphasize “Fed diversity,” has been pounding the table against interest rate increases for years. In theory, a Governor Herman Cain that is loyal to Trump’s vision should check the two largest boxes the organization has been promoting.

Of course, there is a real tragedy connected to this superficial push for “diversity,” as it is precisely the interventionist monetary policy advocated by politicians like Warren and groups like Fed Up that do real damage to minority communities. While Fed Chair Jerome Powell  took time to visit the historically black college of Mississippi Valley State this February, his speech failed to highlight how the Fed’s post-2008 monetary policy has disproportionally hurt black communities due to the fact African Americans are less likely to be invested in a juiced up stock market. Or how the Fed-fueled housing bubble was particularly damaging to black communities.

So while Herman Cain does check a diversity box for the Federal Reserve, he is unlikely to bring the far more important ideological diversity to America’s central bank that is desperately needed. On the bright side though, at least he isn’t Marvin Goodfriend. 

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Banks' Unrealized Losses Soon to Be Realized

04/04/2019Doug French

The timing of Jerome Powell’s appearance on “60 Minutes,” along with Janet Yellen and Ben Bernanke, is curious. Scott Pelley asked no penetrating questions, so nothing was learned. Fed Chairs aren’t known to hit the interview circuit. Bernanke appeared during the crisis to reassure the nation that the central bank can and will fix anything and everything.

Donald Trump (aka "Individual 1") tweeted in January:

 

The folks at GNS Economics, in their Q-Review 1/2019 report, contend, contrary to the president, “the global economic recovery since 2009 has not been real. It has been achieved with massive debt and monetary stimulus, which has created an economy where normal rules of the market economy do not apply.”

The emphasis of the GNS report is the economy’s fragility. The economy “is unable to stand on its own without ongoing massive debt and monetary stimulus.”

Powell and the ECB’s Draghi recent U-turns back to monetary stimulus support this notion. If central banks exist for anything it’s to keep commercial banks in business. Forget about full employment and a strong currency, the Fed’s job is to keep the banks open. And, when rates were normalizing or heading upward last year, what was it doing to U.S. bank balance sheets?

Wolf Richter at WolfStreet.com provides the highlights from the FDIC’s Quarterly report, and mentions a doozy of a detail—”US Banks Report $251 billion of ‘Unrealized Losses’ on Securities Investments in 2018, the Most Since 2008: FDIC”

These are “paper losses” so far and, as Richter explains, don’t impact bank bottom lines. Richter writes,

“Unrealized losses” are losses on securities that dropped in value but that the banks have not yet sold. In other words, they’re “paper losses.” Every quarter in 2018 brought steep unrealized losses: Q1: $55 billion; Q2: $66 billion; Q3: $84 billion; and Q4: $46 billion.

When interest rates go up, bond prices fall. Everything will be oakey-dokey if banks can hold the securities until maturity and are repaid in full. However,

if banks are forced to sell those bonds during a liquidity crunch, as happened during the Financial Crisis, the “unrealized losses” become real losses.

Richter points out that America’s banks hold nearly half a trillion in US Treasuries. That’s quite a concentration of debt extended to a borrower that on its books is $22 trillion in debt. Off balance sheet liabilities are multiples of that amount and the country’s budget deficit is running over a trillion a year. Government debt can never be repaid, only refinanced. This is referred to as Ponzi finance.

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Mr. Wolf concludes,

So, it’s still a good time to be a bank – especially since $251 billion “paper losses” don’t need to be included in net income. But loan-loss provisions are starting to indicate that the credit cycle has turned, and that banks are preparing little by little for the next phase in the cycle.

The next phase may turn those paper losses into real ones. Powell’s TV appearance and sudden change of policy signals the turn is near.

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Wages: The Anti-Capitalist and Pro-Capitalist View

04/01/2019George Reisman

[formatted from this twitter thread- ed.]

I present two conflicting theories of how the standard of living of the average wage earner rises: the prevailing, anti-capitalist theory, and my own, pro-capitalist theory.

Keep in mind that every law ultimately rests on the threat to kill violators. That is the threat made against all who forcibly resist lesser punishment, such as paying a fine or going to prison.

Thus, the prevailing theory of how wages rise is essentially that the government tells businessmen and capitalists, raise wages or we’ll kill you.

The prevailing theory of how the work week shortens is that the government tells businessmen and capitalists, shorten the work week or we’ll kill you.

The prevailing theory of how child labor is eliminated is that the government tells businessmen and capitalists, stop employing children or we’ll kill you.

The prevailing theory of how working conditions improve is that the government tells businessmen and capitalists, improve working conditions or we’ll kill you.

Now here’s my theory:

Businessmen and capitalists are continuously striving to introduce new and improved products and more efficient methods of production. They are impelled to do this by virtue of the profit motive.

To the extent that the businessmen and capitalists succeed, the supply of products is increased relative to the supply of labor, which causes the prices of products to fall relative to wage rates. This means a rise in the buying power of wages, i. e., a rise in “real wages.”

As real wages rise, more and more workers are put in a position in which they can afford to work in jobs that pay less but offer shorter hours. In fact, they become able to afford to take reductions in pay in greater proportion than the reduction in hours. Wage cuts in greater proportion than the reduction in hours make it positively profitable for employers to offer shorter hours. E.g., instead of two 12-hour shifts, it becomes more profitable to have three 8-hour shifts at lower hourly wages.

As the real wages of workers rise, not only do their hours shorten, but also the need for a financial contribution from their children diminishes. Thus, as capitalism progresses, the age at which children go to work rises. Since 1780, it’s gone from 4 to over 24 in many cases.

Furthermore, as the real wages of workers rise, they are more and more put in a position in which they can afford to take jobs that pay less but offer better working conditions, and, by the same token, refuse to take jobs that offer poor conditions.

Because of the height of real wages in capitalist countries, wage earners are routinely able to refuse to take jobs with poor conditions, except at such a premium in wage rates that it is usually much cheaper for employers to pay the cost of improving the conditions.

In sum, without government intervention, capitalism operates to raise wages, shorten hours, end child labor, and improve working conditions.

I turn now to a brief account of the effects of imposing the prevailing, anti-capitalist, gun-slinger, we’ll-kill-you theory of how the standard of living of the average wage earner rises.

Imposing wage rates above the free-market level causes unemployment. Insofar as those forced into unemployment in one field then add to the supply of labor in other fields, wage rates in those fields drop. An arbitrary inequality in wages is created. And skills are wasted.

Forcibly raising wage rates at the bottom of the skill-ladder, as do minimum-wage laws, forces the displaced workers into unemployment. These workers were already earning a wage below the now prescribed minimum and being employed elsewhere would require a yet-lower, illegal wage.

Forcibly reducing hours reduces production and causes higher prices. Even if the average worker’s hourly wage is increased to the point of leaving his weekly wage unchanged, the rise in prices reduces his real wages. Poor people are gunned into being poorer than they need to be.

Denying parents the ability to obtain a financial contribution from their children makes desperately poor families poorer still.

Forcibly improving working conditions diverts take-home pay into paying for the improvements and thus can literally take food off the table of poor workers’ families.

In sum, the so-called do-gooders are not at all do-gooders. They are EVIL-doers. They have an imperious mentality as far removed from reality as Marie-Antoinette’s and go about like drunken fools urging the government to brandish its weapons, not knowing who or what might be hit.

To learn about every aspect of the case for capitalism, read my ​Capitalism: A Treatise on Economics.

Formatted from Twitter: @GGReisman
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Holcombe: Capitalists, Not Socialists, Pose the Greatest Threat to Capitalism

In the 1940s, economist Friedrich Hayek said in his book, "The Road to Serfdom," that the road to serfdom was socialism. Economist Joseph Schumpeter, in "Capitalism, Socialism, and Democracy," feared that socialism would displace capitalism even though capitalism was a better system.

In the 21st century, self-proclaimed socialists like Sen. Bernie Sanders (I-Vt.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.) are keeping the fears of Hayek and Schumpeter alive. Those fears are misplaced. The biggest threats to capitalism aren’t socialists, they are capitalists. 

While socialists float aspirational ideas for a better society, capitalists conspire with the political class to enact policies that benefit the political and economic elite at the expense of the masses.

The result is that business profitability increasingly comes from political connections rather than by satisfying the demands of consumers, undermining free markets and the capitalist system. 

This is widely recognized, if not widely understood. People talk about cronyism, corporatism, the division between the 1 percent and the 99 percent and the threats of the military-industrial complex. In my recent book, I call this phenomenon "political capitalism" and explain how it undermines the market system and threatens capitalism. 

When capitalists tout pro-business policies, they inevitably are talking about policies that use trade barriers and regulatory impediments to give themselves advantages over competitors.

Read the full article at The Hill

Watch Dr. Holcombe's talk on Political Capitalism from this year's AERC:

Political Capitalism: How Economic and Political Power is Made and Maintained | Randall Holcombe

 

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The Human Action Podcast

03/29/2019Jeff Deist

We hope you enjoy a new Mises Institute podcast series, focused on Austrian theory in-depth — with the best PhDs discussing core books and core topics. We encourage listeners to look past the white noise and learn — or relearn — real economics. The ultimate goal is introducing more and more people to original sources, from Menger forward.

These are 60+ minutes in length, and unique (we think) in the podcast world. Please subscribe, rate, and review!

 Available on iTunes, YouTubeStitcherSoundcloudGoogle PlaySpotify, Overcast and via RSS 

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One Reason the Modern Left Keeps Winning: They Think Long Term

03/28/2019Ryan McMaken

The Mises Institute is notable for publishing articles supporting a number of radical views, including, among other positions:

  • Abolition of the central bank.
  • Radical reductions in military spending and military action overseas.
  • Radical decentralization of political power through secession, nullification, or robust federalism.
  • Adoption of untrammeled free trade.

These positions all reflect positions held by liberal schools of though in the past, whether the Manchester School, the American Anti-Federalists, or the French Liberal School . In various times and places, these views have even met with varying degrees of success.

Nevertheless, to the modern ear, these views sound incredibly radical, and the end goals generally sound exceedingly unlikely to be realized in the near future.

And yet, this is where advocates for freedom and free markets usually take a wrong turn.

For some reason, many non-leftists, whether libertarians, conservatives, or milquetoast centrists, embrace the notion that a position on public policy ought not be expressed unless there is chance that it can be realized in the very near future.

I hear this often from critics, and see it often in the comments section on mises.org, or in social media. The routine is usually the same:

  1. The author expresses support for a change in public policy that would significantly change the status quo.
  2. A reader expresses agreement with the sentiment.
  3. The same reader than contends that achieving this goal is unlikely in the short term.
  4. The same reader then asserts one shouldn't even bother expressing support for this position because it's unlikely to be realized in the short term.

The final sentiment usually looks something like this: "That's a fine idea, but it's not gonna happen, so just forget it!" Another variation is "people don't agree with you right now, and it's hopeless to try to convince people otherwise, so just give up."

Rothbard: What We Can Learn from the Abolitionists

Note that in this way of thinking, the attitude is to immediately declare defeat and to abandon the goal because achieving this goal looks to be difficult. As far as I can tell, this is a very common attitude.

This sort of knee-jerk defeatism helps offer a clue as to why enemies of the left tend to adopt a pessimistic and paranoid point of view. They have trouble even imagining success, let alone attempting to achieve it.

This attitude, of course, is the opposite of that used by a variety of successful political movements — including that of the abolitionists.

In an article for the Libertarian Review in 1968, Murray Rothbard looked at the methods of the abolitionists for insights on how to pursue policy goals that appear seemingly impossible at first.

Rothbard noted that from the early days of the abolition movement, the end goal appeared far-fetched and extremely unlikely. Thus, the only immediate victories to be hard were small and piecemeal.

A gradualist method was forced on the abolitionists. But, as Rothbard noted, the goal was never gradualist. It was always for immediate and total abolition:

William Lloyd Garrison was not being “unrealistic” when, in the 1830s, he raised the glorious standard of immediate emancipation of the slaves. His goal was the proper one, and his strategic realism came in the fact that he did not expect his goal to be quickly reached. Or, as Garrison himself distinguished,

Urge immediate abolition as earnestly as we may, it will, alas! be gradual abolition in the end. We have never said that slavery would be overthrown by a single blow; that it ought to be, we shall always contend. (The Liberator, August 13, 1831)

Similarly, for those who want a radical reduction in state power today, they must adopt a similar posture: always maintain the explicit and public goal of radical change, while accepting small and gradual victories.

Rothbard quotes Aileen Kraditor who writes:

It follows, from the abolitionist’s conception of his role in society, that the goal for which he agitated was not likely to be immediately realizable. Its realization must follow conversion of an enormous number of people, and the struggle must take place in the face of the hostility that inevitably met the agitator for an unpopular cause. ... The abolitionists knew as well as their later scholarly critics that immediate and unconditional emancipation could not occur for a long time. But unlike those critics they were sure it would never come unless it were agitated for during the long period in which it was impracticable. ...

To have dropped the demand for immediate emancipation because it was unrealizable at the time would have been to alter the nature of the change for which the abolitionists were agitating. That is, even those who would have gladly accepted gradual and conditional emancipation had to agitate for immediate and unconditional abolition of slavery because that demand was required by their goal of demonstrating to white Americans that Negroes were their brothers. Once the nation had been converted on that point, conditions and plans might have been made. ...

Their refusal to water down their “visionary” slogan was, in their eyes, eminently practical, much more so than the course of the antislavery senators and congressmen who often wrote letters to abolitionist leaders justifying their adaptation of antislavery demands to what was attainable. ...

This position then has the added benefit of — as small gradual victories are achieved — constantly pressuring the "moderates" and pushing their "middle" ever more in the desired direction. Rothbard continues:

From a strictly strategic point of view, it is also true that if the adherents of the “pure” goal do not state that goal and hold it aloft, no one will do so, and the goal therefore will never be attained. Furthermore, since most people and most politicians will hold to the “middle” of whatever “road” may be offered them, the “extremist,” by constantly raising the ante, and by holding the pure or “extreme” goal aloft, will move the extremes further over, and will therefore pull the “middle” further over in his extreme direction. Hence, raising the ante by pulling the middle further in his direction will, in the ordinary pulling and hauling of the political process, accomplish more for that goal, even in the day-by-day short run, than any opportunistic surrender of the ultimate principle.

It is important to accept partial victories, however, without sending the message that a partial victory is sufficient:

In our view, the proper solution to this problem is a “centrist” or “movement-building” solution: namely, that it is legitimate and proper to advocate transition demands as way stations along the road to victory, provided that the ultimate goal of victory is always kept in mind and held aloft. In this way, the ultimate goal is clear and not lost sight of, and the pressure is kept on so that transitional or partial victories will feed on themselves rather than appease or weaken the ultimate drive of the movement.

Thus, suppose that the libertarian movement adopts, as a transitional demand, an across-the-board 50 percent cut in taxation. This must be done in such a way as not to imply that a 51 percent cut would somehow be immoral or improper. In that way, the 50 percent cut would simply be an initial demand rather than an ultimate goal in itself, which would only undercut the libertarian goal of total abolition of taxation.

Note also that the abolitionists recognized the importance of "demonstrating" the rightness of their position, and in that the public needed to be "converted." Unlike modern conservatives and a great many libertarians, the abolitionists did not assume that those who disagreed with them would always disagree with them. It is not uncommon to hear, however, the assumption among many conservatives and libertarians that trying to explain to people the rightness of the pro-freedom position is a lost cause. For people who think like this, the only hope is to preserve the status quo for as long as possible — although this is obviously a losing battle. The mere thought of expanding the popularity and prominence of their position is assumed to be outlandish. Needless to say, an ideological group that thinks like this will always be a group of losers.

Unfortunately, many on the side of freedom and free markets have completely lost sight of the value of the abolitionist way of doing things. This leads to any number of self-defeating views. Some maintain that one must remain totally agnostic about all policy changes unless that change brings about total and immediate victory in all respects. Thus we hear about some libertarians who refuse to support any tax cut, so long as the tax cut  is not a 100% tax cut. Another unfortunate result might be quietism in which some assert it's pointless to say anything at all because short term victory appears unlikely — so better to just give up now. Still others won't bother with any sort of activistm if victory will require more than a few months of effort.

Note, of course, that the modern left doesn't think this way.

Consider the matter of health care, for example. For years, leftists advocated for ever-greater government intervention in healthcare. Indeed, Obamacare had originally been put forward in the form of Hillarycare back in the early 1990s. This itself came after many years of activism in favor of government-controlled healthcare.

Hillarycare was defeated, but the left continued to agitate endlessly for "universal healthcare" of one type or another. Nor did this effort even stop when Obamacare was adopted. For many on the left, Obamacare wasn't universal enough. So, five minutes after Obamacare was signed into law, the next step for the left was devised: "Obamacare is a step in the right direction," they said, "but the next step is now single-payer healthcare!"

Advocates for ever-greater government control of the healthcare system didn't even skip a beat. Immediately after achieving a partial victory, the drive toward the next goal continued unabated.

It's not hard to see why the left is regarded my many of optimistic and visionary while the right as seen as adrift and lacking any discernable goals whatsoever. Meanwhile, many conservatives and libertarians search constantly for a reason to give up and quit — and to encourage others to do the same.

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Watch AERC Live

03/22/2019Mises Institute

Keynote AERC lectures and selected panels can be watched live at mises.org/live

Our online schedule includes (Central Time Zone):

Friday

9:15-10:15 A.M. | The F.A. Hayek Memorial Lecture (Sponsored by Greg and Joy Morin)

Randall Holcombe (Florida State University) | Political Capitalism: How  Economic and Political Power Is Made and Maintained

10:30 A.M. – Noon | Panel on Remembering the Interwar Right

David Gordon (Mises Institute), Brion Mcclanahan (Abbeville Institute), Paul Gottfried (Elizabethtown College)

1:30 – 2:30 P.M | The Henry Hazlitt Memorial Lecture (Sponsored by Hunter Lewis)

Robert Luddy (Captiveaire) Henry Hazlitt’s Long-Term Economic | Thinking: Foundation of Entrepreneurial Excellence 

2:45 – 4:15 P.M. | Panel: 100th Anniversary of Nation, State, and Economy

Thomas Dilorenzo (Loyola University Maryland), Joseph Salerno (Mises Institute, Auburn University, and Pace University), Nikolay Gertchev (Ichec Brussels Management School), Jörg Guido Hülsmann (University of Angers)

4:30 – 5:30 P.M. | The Ludwig Von Mises Memorial Lecture (Sponsored by Yousif Almoayyed) 

Michael Rectenwald (New York University, Retired)  Libertarianism(s) Versus Postmodernism and ‘Social Justice’ Ideology

Saturday

9:00 – 10:00 A.M. | the Lou Church Memorial Lecture (Sponsored by the Lou Church  Foundation)

Daniel Ajamian (San Diego, California) The Cost of Enlightenment

1:00 – 2:30 P.M. | Paper Panel: Socialism

Rafael Acevedo  (Texas Tech University), Yuri Maltsev (Carthage College),  Edward Fuller (Palo Alto, California

2:45 – 3:45 P.M. | the Murray N. Rothbard Memorial Lecture (Sponsored by Don Printz)

David Dürr (University of Zurich) The Inescapability of Law:  and of Mises, Rothbard, and Hoppe

4:00 – 5:30 P.M. | Panel: The Significance of Hans-Hermann Hoppe (Sponsored by Steve and  Cassandra Torello)

David Gordon (Mises Institute),  Mark Thornton (Mises Institute and Auburn University),  N. Stephan Kinsella (Kinsella Law Group, Property and Freedom Society), Thomas Dilorenzo  (Loyola University Maryland),  Jörg Guido Hülsmann (University of Angers),  Joseph Salerno (Mises  Institute, Auburn University, Pace University)

Response: Hans-Hermann Hoppe (Property and Freedom Society,  Mises Institute)

Photos available here.

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Block: How I Profess My Libertarianism to My Students

03/19/2019Walter Block

I am a professor (I teach economics at Loyola University New Orleans). In my view, this means I should profess something. I would be bland and uninteresting to my students if all I did was offer them all sides of every controversial issue in an even-handed way, so that none of them even had a clue as to where I stood on any topic. Of course, I would be derelict in my duty if I only offered my own viewpoint. As John Stuart Mill says in his “On Liberty” (paraphrase) “if you only know your own side of an argument, you don’t even know that, since all views are contrasted with all others.”

I thus feel obligated to acquaint my students with a plethora of viewpoints.

So, what do I profess? Austrian economics and libertarian political economy. I offer to my students all sides of an issue, but within five minutes of my first lecture they can readily discern precisely where I stand.

Read the full article at Real Clear Markets.

Walter Block
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Just Sayin'

A Blockchain Study Finds 0.00% Blockchain Success Rate . The study reported also reported 0 vendor call backs when asked for evidence of implementation.

Though Blockchain has been touted as the answer to everything, a study of 43 solutions advanced in the international development sector has found exactly no evidence of success.

Three practitioners including erstwhile blockchain enthusiast John Burg, a Fellow at the US Agency for International Development (USAID), looked at instances of the distributed crypto ledger being used in a wide range of situations by NGOs, contractors and agencies. But they drew a complete blank.

"We found a proliferation of press releases, white papers, and persuasively written articles," Burg et al wrote on Thursday. "However, we found no documentation or evidence of the results blockchain was purported to have achieved in these claims. We also did not find lessons learned or practical insights, as are available for other technologies in development."

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