Archive for book reviews

George Reisman’s Monograph on Piketty’s ‘Capital in the Twenty-First Century’

Good News: George Reisman read Piketty’s Capital so you don’t have to. It seems Reisman is one of the few people who has actually read it. More good news: Reisman tells you what you need to know in a short monograph, and not in 700 pages like Piketty. The monograph is available at Amazon and at Reisman’s web site.

Jean-Baptiste Say: An Underrated Revolutionary

6802Mises Daily Thursday by Carmen Dorobăț

Jean-Baptiste Say was no mere French popularizer of the ideas of Adam Smith. As a forerunner of the Austrian School and a father of laissez-faire in France, Say’s insights continue to challenge interventionist economists to this day. Everl Schoorl’s new biography sheds new light on Say’s life and works.

How To Have Law Without Legislation

Themis 2662Mises Daily Weekend by Murray Rothbard

A stateless society is not a lawless one. Apologists for the state maintain that state-made legislation is indispensable, but in this essay, Rothbard explores Bruno Leoni’s call for a return to the ancient traditions and principles of “judge-made law” as a method of limiting the state and insuring liberty.

How Smugglers Made America

6778Mises Daily Thursday by Mark Thornton:

Smuggling in America has been around since colonial days and will continue into the foreseeable future. It has played a very prominent role, rather than a subsidiary one, through our history. Indeed it has often played a pivotal role in important events and episodes in American history.


Anarcho-Capitalists Against Ayn Rand

6754David Gordon writes in today’s Mises Daily

Oliver’s principal contribution arises from his reaction to two intellectual movements. Like many in the 1960s and 70s, he was attracted to the Objectivist philosophy of Ayn Rand. Together with several others in the Objectivist movement, though, Oliver disagreed with the political conclusions that Rand and her inner circle drew from her philosophy. “Some students of the philosophy concluded that Rand and the ‘orthodox’ Objectivists had failed to develop a political theory that followed from the more basic principles of Objectivism. It was at that time that Rand’s advocacy of limited government began to come under attack from a growing number of deviant ‘objectivists.’ The libertarian-objectivists … declared that government, limited or otherwise, is without justification, and that the only social system consistent with man’s nature is a non-state, market society, or anarcho-capitalism.”

Joseph Stiglitz on Crony Capitalism

download (2)Although Joseph Stiglitz has a reputation as one of the most prominent defenders of big government, I found much to agree with in his book, The Price of Inequality. It does appear to me that throughout the political spectrum, from left to right, there is a substantial consensus that government is the cause of many of the problems people perceive. The disagreement is over how to solve those problems.

Stiglitz sees many negative consequences from income and wealth inequality, and while I would question whether these negative consequences are as substantial as Stiglitz says, we both agree on the negative impact that government policy has in our society. Stiglitz, a critic on the political left, is in surprising agreement with David Stockman, a critic on the political right, that many of today’s economic and political problems are caused by government.

Both Stiglitz and Stockman argue that cronyism is damaging both our economic system and our democratic political system.

Criticizing the cronyism between business and government, Stiglitz (p. 59) says, “It’s one thing to win a ‘fair’ game. It’s quite another to be able to write the rules of the game–and to write them in ways that enhance one’s prospects of winning. And it’s even worse if you can choose your own referees.”

Stiglitz (p. 62) says, “It doesn’t have to be this way, but powerful interests ensure that it is.”

In a chapter titled “Why It Matters,” Stiglitz (pp. 104-105) says, “When one interest group holds too much power, it succeeds in getting policies that benefit itself, rather than policies that would benefit society as a whole. When the wealthiest use their political power to benefit excessively the corporations they control, much-needed revenues are diverted into the pockets of a few instead of benefiting society at large.”

In another chapter titled “Democracy in Peril,” Stiglitz (p. 167) says, “In this chapter we have described the construction of a political system that, though nominally based on the principle of one person one vote, has turned out to serve the interests of those at the top.” Why can’t we reform the system? Stiglitz (p. 170) says “moneyed interests have the incentives and resources to ensure that the system continues to serve their interests.”

Stiglitz has explained how the rich gain control of the political process and use it for their benefit, so the idea that more government can solve these problems that are created by government in the first place seems to be nothing more than wishful thinking. Stiglitz’s insights on the way that the 1% controls thepolitical process should lead him to the conclusion that less government means less control by the economic and political elite.

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Robert Higgs Discusses his book ‘Crisis and Leviathan’

Robert Higgs discusses his book ‘Crisis and Leviathan: Critical Episodes in the Growth of American Government’. Purchase online. 

Pragmatism and Intellectual Property

5025541044_09ab3769ba_zBy Nathan Nicolaisen

Libertarians often argue over the pragmatism of intellectual property at the expense of the ethical aspect of restricting knowledge by force. The question posed in Butler Shaffer’s A Libertarian Critique of Intellectual Property is, “…by what reasoning can the state create and enforce such interests upon persons who have not agreed to be so bound?”[i]  This is the core of all voluntary interactions, and the question of whether or not intellectual property is profitable is not critical for the libertarian. Of course there will be winners and losers by granting IP rights to some at the expense of others, but Shaffer’s point is that it is wrong to enforce contracts upon those who have not voluntarily accepted the terms.  This crucial tenet of libertarian ethics is essential in understanding why so many libertarians are opposed to intellectual property.  Few people, and even fewer libertarians, if any, contend that inventors should not be rewarded for their efforts. Rather, the chief objection to intellectual property is that inventors may not use the force of government to prevent others from peacefully employing that knowledge.

Even if we ignore the ethical and moral objections, however,  numerous problems arise in the application of intellectual property laws. For example, how do we properly credit long-dead inventors for providing us with their discoveries?  Do we track down their offspring and pay royalties?  If it’s impractical to grant perpetual IP rights, then exactly how long should they last? Patent term length in the United States is twenty years while copyrights last seventy years after the last surviving author’s death.[ii]  What makes it right to grant patents for twenty years, but not nineteen?  What happens at seventy years that makes copyrights invalid at seventy years and one day?  The question seems trivial, but is nevertheless revealing.  If IP rights are truly rights, they must be inviolable and universal, unconstrained by time and place and not established by the arbitrary laws by the state.

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John Rawls and Market Anarchy

Immigration Protest at White HouseDavid Gordon writes in today’s Mises Daily: 

Gary Chartier in this impressive book has put readers doubly in his debt. Chartier strikes at the heart of the vastly influential political philosophy of John Rawls. Libertarians can only applaud him for this, but we have even more reason to be grateful to Chartier. Having neatly dispatched Rawls, Chartier goes on to offer a strong defense of market anarchy.

There is, I fear, a problem with what I have just said. Chartier would not agree with my description of what he has accomplished. Although, as he tells us, “I am not a Rawlsian,” (p. x) he does not aim to refute Rawls. To the contrary, he aims to show that Rawls’s system, suitably modified, leads to market anarchy. I do not think that he succeeds in showing this; but it is in his attempt to do so that he in fact refutes Rawls.

DiLorenzo Reviews Stockman’s ‘The Great Deformation’

books (1)From the Summer 2013 issue of the Quarterly Journal of Austrian Economics.

[The GreaDeformation: The Corruption of Capitalism in America by David A. Stockman,  New York: Public Affairs Books, 2013, 742 pp.]

Reviewed by Thomas DiLorenzo

The Great Transformation is a Human Action-sized treatise about how the Fed over the past several decades has generated economic instability in far more ways than even the Austrian Business Cycle theory contends, primarily for the benefit of Wall Street One-Percenters at the expense of the rest of society. It has cemented into place neo-mercantilism as the American economic system. In many ways the book can be thought of as “Human Action for Financial Markets” (which is not to suggest that Mises would agree with everything in the book). It is a treasure trove of ideas for future research on financial markets and regulation from an Austrian perspective. David Stockman not only cites Mises and Hazlitt, among other Austrians, but is also a severe critic of the supposedly free-market ChicagoSchool of monetarism and its patron saint, Milton Friedman. In fact, he pins a large share of the blame for the corruption of American capitalism on Friedman as a preeminent defender of the Fed with his utopian and cultish “monetary rule.” (If anything defined twentieth-century monetarism, it was Friedman’s “monetary rule” of 3 percent monetary growth per year, administered presumably by what Stockman calls monetary “eunuchs”).

The main theme of The Great Deformation is stated clearly on the first page of the introduction, where Stockman explains how “fiscal cliffs as far as the eye can see” are “the result of the capture of the state, especially its central bank, the Federal Reserve, by crony capitalist forces deeply inimical to free markets and democracy.” This statement suggests a great irony in that it was the “Chicago School” economists who championed the “capture theory of regu­lation” with regard to such industries as interstate trucking and airlines, but ignored the biggest and most important regulatory capture of all—the creation of the Fed.

Stockman’s unique background and experience have allowed him to write authoritatively and with great knowledge the mountain of lies—about “too big to fail,” Reaganomics, the New Deal, and the antics of the Fed—that have been employed by Washington’s central planners who have succeeded in essentially destroying much of American capitalism and replacing it with putrid political cronyism. This is a man who was once a member of Congress and the director of the U.S. Office of Management and Budget during the first four years of the Reagan administration. Since then, he has been a consummate Wall Street insider, first with Salomon Brothers and then as a private equity investor with The Blackstone Group. He is also very well read in economics and economic history. It is doubtful that any other human being has a comparable combination of talents. Only David Stockman could have written this book, in other words.


Part I debunks the lies perpetrated by Washington to justify the bailouts of Wall Street (and other industries) in the wake of the “Great Recession” that was created by the Greenspan Fed with the “help” of myriad other federal government policies. For example, there was never any reason for the government to bail out Goldman Sachs. After being handed $10 billion the company “swiveled on a dime and generated a $29 billion financial surplus” which included $16 billion in salary and bonuses just three months after the bailout to supposedly “save it from extinction.”

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Wall Street and Main Street in Fiction and Film

6647Ryan McMaken writes in this weekend’s Mises Daily

Contemporary readers will likely find Younkins’s later chapters most interesting where he coversWall Street (1987) and its 2010 sequel, Wall Street: Money Never Sleeps. In the 1987 film especially, we find a fairly sophisticated examination of the role of the investor and the corporate raider in actually building value for the stockholders in a company. Wall Street’s Gordon Gekko (Michael Douglas) certainly is motivated by greed, as he explains in his famous ”Greed is Good” speech, but that greed leads him to seek to rid the company of lazy and ineffective managers who are bleeding the company dry and generally wasting resources.

Similar themes are explored in the play Other People’s Money and its film version (1991) that examines a situation in which the founders of companies are emotionally attached to their enterprises. In such cases, the founders may be shortchanging the stockholders, who are also the owners of the company. The role of “Larry the Liquidator” (Danny DeVito) in this case is to help the complacent stockholders demand they earn a return on their investment.

How Time and Uncertainty Can Make Us “Antifragile”

6635David Howden writes in today’s Mises Daily

An applied example relevant to the present financial crisis would involve looking for those institutions that have been strengthened by current affairs. The crisis has taken its toll on many aspects of the financial services industry, but some general types of products have proven surprising resilient, or antifragile. Governments with prudent fiscal policies — e.g., Germany, Switzerland and Singapore — have fared well and indeed been strengthened as finances deteriorate in more profligate countries. Investment funds capitalizing on what were once unorthodox strategies, such as gold and other precious metal holdings, have out-performed more traditional investments as the financial crisis worsens. Readers of this journal will also notice that their stock in Austrian economics has increased in value over the past decade. Question begging and failed policies developed through more mainstream theories have led many former outsiders to the ranks of Austrian economists. An unwanted event caused an offsetting positive outcome in all these scenarios. That is what being antifragile is about.


booksI’ve recently read Peter Schweizer’s book, Extortion: How Politicians Extract Your Money, Buy Votes, and Line Their Own Pockets.  The book offers a solid account of the way politicians use their political power to extract money from interest groups for the benefit of the Permanent Political Class.

Interest group activity is often viewed as bribery: interests offering campaign contributions and other benefits to legislators to get legislators to pass legislation those groups favor.  Schweizer argues that the reality is the opposite: legislators hold out on putting legislation up to a vote unless interest groups who support it pay up; or worse, legislators threatening to pass legislation that will harm those interests, unless they pay the legislators to kill the legislation.

Payment typically comes in the form of “contributions” to campaign coffers, and Schweizer explains in detail how legislators are able to convert funds for their personal benefit, using lots of real-world examples.  In addition to personal consumption, legislators can hire friends and relatives, and can extort firms to hire their friends and relatives.

The book explains how the legislative process really works.  It is the antidote to what is typically taught in public school civics classes.  The book offers numerous examples, and is well-documented and footnoted.  Every American should read this book.

Walter Block Is Still Defending the Undefendable

6624Mark Thornton reviews Walter Block’s new book in today’s Mises Daily:

Walter Block is at his finest when he subjects the most loathsome jobs and nastiest behaviors to a logical and libertarian scrutiny. Block’s Defending the Undefendable has needled and irritated an entire generation of readers and compelled many to re-examine long-held beliefs in favor of the logic of libertarianism. Now comes volume 2,Defending the Undefendable: Freedom in All Realms (with a foreword by Ron Paul) that promises more such irritation for future generations.

The introduction is a short course in libertarianism. Block explains that libertarianism is a political philosophy that shows when the use of coercion is justified or not justified. The book examines 30 cases that are often seen as illegal, immoral, or unethical. Block analyzes each case by subjecting it to a libertarian standard, and ultimately exonerates each from punishment by government.



The Dao of the Austrian Investor

6615Mark Thornton writes in today’s Mises Daily

As a young trader in the bond pit at the Chicago Board of Trade, the author was lucky enough to come across Hazlitt’s Economics in One Lesson and Mises’s Human Action. He found in these books a theoretical explanation for the otherwise perplexing world of primary markets at the Chicago Board of Trade. He later partnered with Nassim Taleb of Black Swan fame and later still opened his own firm to employ his concept of “Austrian Investing.”

In a similar manner, he shows how fire-suppression policies of the government are like government intervention in the economy. Fire-suppression policy aims to put out most forest fires as soon as possible. This can lead to too much underbrush so that fires can become catastrophic is scope. This is an illustration from nature of the havoc caused by government intervention meddling in nature’s competition. In the economy, the government’s central bank can try to suppress recessions and deflation, but this can result in catastrophic depressions, like the Great Depression. As Rothbard showed in his America’s Great Depression, President Hoover’s interventions to suppress deflation and depression only made things worse.

210 Great Economists

I just came across a new book, Economic Thinkers: A Biographical Encyclopedia, edited by David Dieterle. I was suspicious when I saw Bernanke and Greenspan on the book cover, but the book covers a wide range of economists in terms of time and philosophical outlook. Each of the entries is meant to provide an introduction to the “economic thinkers” for the general reader. I counted about 30 Austrians in the book and only three living economists associated in some way with the Austrian school; Robert Ekelund, Hans Hoppe, George Reisman.