"I am trying to imagine under what novel features despotism may appear in the world. In the first place, I see an innumerable multitude of men, alike and equal, constantly circling around in pursuit of the petty and banal pleasures with which they glut their souls. (...) Over this kind of men stands an immense, protective power which is alone responsible for securing their enjoyment and watching over their fate. That power is absolute, thoughtful of detail, orderly, provident, and gentle. It would resemble parental authority if, father-like, it tried to prepare its charges for a man’s life, but on the contrary, it only tries to keep them in perpetual childhood."
- Alexis de Tocqueville, "On New Despotism", 1837
"The (plundered) classes, according to the degree of enlightenment they have achieved, can propose two different ends to themselves when they (...) seek to attain their political rights: either they may wish to bring legal plunder to an end, or they may aim at getting their share of it. Woe to the nations in which the masses are dominated by this last thought when they, in their turn, seize the power to make the law! Until that time, legal plunder is exercised by the few against the many, as it is among nations in which the right to legislate is concentrated in a few hands. But now it becomes universal, and an effort is made to redress the balance by means of universal plunder. Instead of being abolished, social injustice is made general."
- Frederic Bastiat, "Selected Essays on Political Economy", 1848
"One may anticipate the nature of the future socialist society. There will be hundreds and thousands of factories in operation. Very few of these will be producing wares ready for use; in the majority of cases what will be manufactured will be unfinished goods and production goods. (...) In the ceaseless toil and moil of this process, however, the administration will be without any means of testing their bearings. (...) In place of the economy of the “anarchic” method of production, recourse will be had to the senseless output of an absurd apparatus. The wheels will turn, but will run to no effect."
- Ludwig von Mises, "Economic Calculation in the Socialist Commonwealth", 1920
"(Keynes) may only succeed in becoming the academic idol of our worst cranks and charlatans - not to mention the possibilities of the book (The General Theory) as the economic bible of the fascist movement."
- Henry C. Simons, review of "The General Theory", 22.07.1936
"Everything which might cause doubt about the wisdom of the government or create discontent will be kept from the people. The basis of unfavorable comparisons with elsewhere, the knowledge of possible alternatives to the course actually taken, information which might suggest failure on the part of the government to live up to its promises or to take advantage of opportunities to improve conditions - all will be suppressed."
- Friedrich von Hayek, "The Road to Serfdom", 1944
"The Sun editorial on Roosevelt this morning begins: "Franklin D. Roosevelt was a great man." (...) The argument, in brief, is that all his skullduggeries and imbecilities were wiped out when "he took an inert and profoundly isolationist people and brought them to support a necessary war on a scale never before imagined." In other words, his greatest fraud was his greatest glory, and his sufficient excuse for all his other frauds. It seems to me to be very likely that Roosevelt will take a high place in American popular history - maybe even alongside Washington and Lincoln. (...) He had every quality that morons esteem in their heros. It will be to the interest of all his heirs and assigns to whoop him up, and they will probably succeed in swamping his critics. "
- H. L. Mencken, "Franklin Delano Roosevelt: An Obituary", 13.04.1945
"If (democratically sanctioned) government property-rights violations take their course and grow extensive enough, the natural tendency of humanity to build an expanding stock of capital and durable consumer goods and to become increasingly more farsighted and provide for ever-more distant goals may not only come to a standstill, but may be reversed by a tendency toward decivilization: formerly provident providers will be turned into drunks or daydreamers, adults into children, civilized men into barbarians, and producers into criminals."
- Hans-Hermann Hoppe, "Democracy: The God That Failed", 2001
"A major economic downturn will decimate U.S. Federal Government finances, with exploding deficits and uncontrolled spending."
- Ron Paul, 24.04.2002
"Given the government's encouragement of lax lending practices, home prices could crash, bankruptcies would increase, and financial companies, including the government-sponsored mortgage companies, might require another taxpayer bailout."
- Mark Thornton, Mises Institute, 06.04.2004
"While the increase in taxes will cause new problems for the Greeks, other problems remain unaddressed: The huge public sector has not been substantially reduced. Wage rates remain uncompetitive as a result of strong labor unions. (...) The future of the euro is dark because there are such strong incentives for reckless fiscal behavior, not only for Greece but also for other countries."
- Philipp Bagus, author of "The Tragedy of the Euro", 11.02.2010
Sunday, October 28, 2012
Friday, October 26, 2012
The Mental Inertia of Statist Quo Bias
The goal of propaganda is to shut down the minds of its victims. In this respect, statist propaganda has been an almost unbelievable success. It would be scarcely an exaggeration to suggest that 99% of the world population, including those who call themselves "political philosophers" or "social theorists", when confronted with a case for voluntarism, would respond with an endless stream of pro-statist-quo what-ifs, what-woulds, and who-woulds, epitomized by the immortal "without government, who would build the roads" slogan (Bryan Caplan listed some more of them here).
Notice that a voluntarist or a libertarian never responds with his or her own list of such hypotheticals. To ask "what if the government decides to set up a gulag and throw me there", "what would happen if the government decided to kill or maim thousands of civilians in some remote part of the world", or "who would protect me if the government decided to issue a warrantless order to assassinate me" would be ridiculous because these are not hypotheticals at all - this is the reality of statism.
In other words, in the context of analyzing the merits and demerits of statism the Nirvana fallacy is clearly a fallacy, but - for lack of a better term - there is no "dystopia fallacy" corresponding to it. Instead, there are dystopian facts - it would be difficult to think of a worst-case scenario that the state did not already make all too real.
In sum, this is how the situation looks like - while an honest statist would have to acknowledge that the system he supports can be likened to constant teetering on the brink of hell and occassionally falling over it, he will typically cling frantically to the belief that it is the best and only way to organize social affairs and that no logically and economically informed non-coercive alternative should replace it unless its implementation can immediately catapult us straight to heaven.
This is the power of the large-scale, institutional Stockholm Syndrome. And it is because of this power that large-scale preference changes in the direction of non-aggression, non-violence, voluntariness, and free enterprise are so comparatively rare. The only effective tool of countering its influence is to lay bare its ugly nature as often and as clearly as possible, which today, in the age of the Internet, is easier than ever before.
Notice that a voluntarist or a libertarian never responds with his or her own list of such hypotheticals. To ask "what if the government decides to set up a gulag and throw me there", "what would happen if the government decided to kill or maim thousands of civilians in some remote part of the world", or "who would protect me if the government decided to issue a warrantless order to assassinate me" would be ridiculous because these are not hypotheticals at all - this is the reality of statism.
In other words, in the context of analyzing the merits and demerits of statism the Nirvana fallacy is clearly a fallacy, but - for lack of a better term - there is no "dystopia fallacy" corresponding to it. Instead, there are dystopian facts - it would be difficult to think of a worst-case scenario that the state did not already make all too real.
In sum, this is how the situation looks like - while an honest statist would have to acknowledge that the system he supports can be likened to constant teetering on the brink of hell and occassionally falling over it, he will typically cling frantically to the belief that it is the best and only way to organize social affairs and that no logically and economically informed non-coercive alternative should replace it unless its implementation can immediately catapult us straight to heaven.
This is the power of the large-scale, institutional Stockholm Syndrome. And it is because of this power that large-scale preference changes in the direction of non-aggression, non-violence, voluntariness, and free enterprise are so comparatively rare. The only effective tool of countering its influence is to lay bare its ugly nature as often and as clearly as possible, which today, in the age of the Internet, is easier than ever before.
Sunday, October 14, 2012
Preference Change in Social Organization
Could the governments of the world reinstate slavery? Yes, they could. They possess sufficient coercive power at their disposal. But would they dare to do it? No, they would not. The prevalent social attitude toward slavery makes such an action uneconomic from the point of view of the calculus of power.
Could warlords and mafias destroy a stateless order and replace it with a statist one? Yes, they could. They might possess sufficient coercive power at their disposal. But would they dare to do it? Only if the prevalent social attitude toward statism made such an action profitable from the point of view of the calculus of power. And there is nothing inevitable as to what this attitude will be.
The pen is mightier than the sword. Ideas are stronger than violence, even that of the most organized kind. The stationary bandit is not a necessity and the defense entrepreneur is not an impossibility. To suggest otherwise is to claim that intellectual and moral progress in the area of social organization cannot happen, which, to say the least, is a historically and anthropologically dubious suggestion.
Could warlords and mafias destroy a stateless order and replace it with a statist one? Yes, they could. They might possess sufficient coercive power at their disposal. But would they dare to do it? Only if the prevalent social attitude toward statism made such an action profitable from the point of view of the calculus of power. And there is nothing inevitable as to what this attitude will be.
The pen is mightier than the sword. Ideas are stronger than violence, even that of the most organized kind. The stationary bandit is not a necessity and the defense entrepreneur is not an impossibility. To suggest otherwise is to claim that intellectual and moral progress in the area of social organization cannot happen, which, to say the least, is a historically and anthropologically dubious suggestion.
Saturday, September 22, 2012
An Argument that Statism is an Amoral Philosophy
Let us start from a rather uncontroversial assumption that there exist so-called thick moral terms, i.e., terms whose very use implies a definitionally necessary moral evaluation of their content. Think of terms such as generosity and charity. It is logically impossible for there to be evil generosity or wicked charity. Or think of terms such as theft, counterfeiting, and Ponzi scheming. It is logically impossible for there to be benevolent theft, praiseworthy counterfeiting, or laudable Ponzi scheming.
In other words, there exist certain terms whose descriptive content implies a logically necessary moral assessment. Of course, this by itself does not constitute an argument for moral objectivity, since we differ in our application of these terms to various instances of human action. This, however, is not relevant to my argument here.
Now, let us ask a statist - that is, a believer in the desirability of the state and its institutions, including the ones mentioned in the latter part of this sentence - what conditions would need to hold for him to be able to justifiably accuse the IRS of stealing the money of private individuals, the Fed of counterfeiting money, or the Social Security Administration of engaging in a Ponzi scheme.
It seems to me that the statist can offer two relevant answers to this question, both of which leave him in a very uncomfortable position. First, given that the descriptive content of the above morally negative terms appears to match quite well the nature of the activities performed by the above state institutions, and assuming that the statist wishes to avoid the conclusion that the institutions whose existence he finds morally desirable engage in inherently immoral activities, he might suggest that it is definitionally and logically impossible for the IRS to steal, for the Fed to counterfeit, and for the SSA to engage in Ponzi schemes. In other words, he might suggest that the very nature of these institutions logically precludes describing their activities in these thick moral terms.
However, since redefining the terms in question so as to make them morally positive or morally thin whenever they are applied to the institutions of the state and their activities would be a semantically arbitrary move, it logically follows that the statist believes that moral categories do not apply to our judgments regarding at least some of the fundamental institutions of the state and their activities. In other words, the statist is logically compelled to conclude that he finds their existence desirable for reasons that are amoral, that is, immune to considerations of morality.
Alternatively, he might suggest that the thick moral terms mentioned above - theft, counterfeiting, and Ponzi scheming - apply only to illegal activities, while the activities performed by the IRS, the Fed, and the SSA are legal. This, however, implies that the only relevant moral difference here is that the state issued a certain declaration (the declaration of legality) with respect to its institutions and their activities, while it did not issue the same declaration with respect to the selfsame activities of private individuals and private organizations. This, in turn, implies that declaring something as legal (by the state, since, presumably, it is a matter of definition that only the state can issue such declarations) means removing the object of declaration from the realm of moral judgment and thus immunizing it to considerations of morality. In sum, the logical conclusion of this train of thought is that legality is an amoral, or, worse still, an amoralizing concept.
Hence, regardless of which of the abovementioned two answers the statist decides to choose, it turns out that the justification of his choice has to be ultimately grounded in amoral reasons. In other words, it turns out that, contrary to some prominent anti-statist arguments, the philosophy of statism in its cognitively faultless form seems to be based not so much (or not exclusively) on hypocrisy or general immorality, but on amorality.
In other words, there exist certain terms whose descriptive content implies a logically necessary moral assessment. Of course, this by itself does not constitute an argument for moral objectivity, since we differ in our application of these terms to various instances of human action. This, however, is not relevant to my argument here.
Now, let us ask a statist - that is, a believer in the desirability of the state and its institutions, including the ones mentioned in the latter part of this sentence - what conditions would need to hold for him to be able to justifiably accuse the IRS of stealing the money of private individuals, the Fed of counterfeiting money, or the Social Security Administration of engaging in a Ponzi scheme.
It seems to me that the statist can offer two relevant answers to this question, both of which leave him in a very uncomfortable position. First, given that the descriptive content of the above morally negative terms appears to match quite well the nature of the activities performed by the above state institutions, and assuming that the statist wishes to avoid the conclusion that the institutions whose existence he finds morally desirable engage in inherently immoral activities, he might suggest that it is definitionally and logically impossible for the IRS to steal, for the Fed to counterfeit, and for the SSA to engage in Ponzi schemes. In other words, he might suggest that the very nature of these institutions logically precludes describing their activities in these thick moral terms.
However, since redefining the terms in question so as to make them morally positive or morally thin whenever they are applied to the institutions of the state and their activities would be a semantically arbitrary move, it logically follows that the statist believes that moral categories do not apply to our judgments regarding at least some of the fundamental institutions of the state and their activities. In other words, the statist is logically compelled to conclude that he finds their existence desirable for reasons that are amoral, that is, immune to considerations of morality.
Alternatively, he might suggest that the thick moral terms mentioned above - theft, counterfeiting, and Ponzi scheming - apply only to illegal activities, while the activities performed by the IRS, the Fed, and the SSA are legal. This, however, implies that the only relevant moral difference here is that the state issued a certain declaration (the declaration of legality) with respect to its institutions and their activities, while it did not issue the same declaration with respect to the selfsame activities of private individuals and private organizations. This, in turn, implies that declaring something as legal (by the state, since, presumably, it is a matter of definition that only the state can issue such declarations) means removing the object of declaration from the realm of moral judgment and thus immunizing it to considerations of morality. In sum, the logical conclusion of this train of thought is that legality is an amoral, or, worse still, an amoralizing concept.
Hence, regardless of which of the abovementioned two answers the statist decides to choose, it turns out that the justification of his choice has to be ultimately grounded in amoral reasons. In other words, it turns out that, contrary to some prominent anti-statist arguments, the philosophy of statism in its cognitively faultless form seems to be based not so much (or not exclusively) on hypocrisy or general immorality, but on amorality.
Wednesday, September 19, 2012
The Problem of Involuntary Human Authority
I have no problem with voluntary authority, such as that wielded by politically unconnected company bosses, presidents of free clubs and associations, heads of non-coercive religions, etc.
Likewise, I have no problem with involuntary divine authority - I find it perfectly reasonable to believe that rebelling against the authority of an all-powerful being on whom the existence of the Universe depends is, like rebelling against the "authority" of fundamental physical constants, logically futile.
What I do find very problematic is involuntary human authority, which, as far as I can tell, is the perfect vehicle for the most immoral, unscrupulous and grasping human instincts, and the source of the majority of our most serious social problems. Following de Molinari and his successors, I believe that a thorough rejection of the principle of involuntary human authority is a necessary condition, perhaps the necessary condition, for the advancement from barbarism to civilization.
Likewise, I have no problem with involuntary divine authority - I find it perfectly reasonable to believe that rebelling against the authority of an all-powerful being on whom the existence of the Universe depends is, like rebelling against the "authority" of fundamental physical constants, logically futile.
What I do find very problematic is involuntary human authority, which, as far as I can tell, is the perfect vehicle for the most immoral, unscrupulous and grasping human instincts, and the source of the majority of our most serious social problems. Following de Molinari and his successors, I believe that a thorough rejection of the principle of involuntary human authority is a necessary condition, perhaps the necessary condition, for the advancement from barbarism to civilization.
Monday, September 17, 2012
A Short Logico-Conceptual Derivation of the Austrian Prescription Against Recession
Value destruction is the depletion of the sources of value. Value conservation is the replenishment of the sources of value. Value creation is value conservation plus the addition of new sources of value.
Income can be allocated along the following three margins: consumption expenditures, savings, and hoardings. These three margins correspond, respectively, to the following three uses: consumption, investment, and hedging against uncertainty.
Consumption is utility-increasing value depletion, as opposed to waste, which is utility-decreasing value depletion. Investment is value conservation (capital reaccumulation) or value creation (capital accumulation).
In the world of imperfect information, investment requires entrepreneurship (successful uncertainty bearing), which, in turn, requires the existence of generally reliable price signals (the preconditions of sound economic calculation) and capitalist regime certainty (reliable institutional protection of property rights and contracts).
An economic recession is a period marked by systemic, large-scale waste (capital consumption and malinvestments) caused by the preceding distortion of price signals, especially interest rates (signals that coordinate production over time, i.e., coordinate savings with investment).
To get out of a recession, malinvested and overconsumed capital has to be, respectively, reinvested and reaccumulated, which requires entrepreneurship and its preconditions, listed two paragraphs above.
Uneven inflation of the money supply in the world of imperfect information falsifies economic calculation, discourages saving (and thus investment), and distorts the intertemporal structure of production. Deficit spending weakens the system of reliable institutional protection of property rights and contracts and diminishes the value of hoardings, thus creating regime uncertainty.
Hence, inflation and deficit spending discourage investment and prevent entrepreneurship, consequently prolonging recessions, as well as encourage capital consumption and malinvestment, consequently deepening recessions.
Qua policy advisors, Austrian economists suggest that the things to do in a recession is to avoid inflation and eliminate deficit spending. Qua policy advisors, (New) Keynesian economists suggest that the things to do in a recession is to generate inflation and engage in deficit spending.
Thus, qua policy advisors, Austrian economists suggest getting out of recessions via value conservation (and eventual value creation), while (New) Keynesian economists suggest prolonging and deepening recessions via continued value depletion. QED.
Income can be allocated along the following three margins: consumption expenditures, savings, and hoardings. These three margins correspond, respectively, to the following three uses: consumption, investment, and hedging against uncertainty.
Consumption is utility-increasing value depletion, as opposed to waste, which is utility-decreasing value depletion. Investment is value conservation (capital reaccumulation) or value creation (capital accumulation).
In the world of imperfect information, investment requires entrepreneurship (successful uncertainty bearing), which, in turn, requires the existence of generally reliable price signals (the preconditions of sound economic calculation) and capitalist regime certainty (reliable institutional protection of property rights and contracts).
An economic recession is a period marked by systemic, large-scale waste (capital consumption and malinvestments) caused by the preceding distortion of price signals, especially interest rates (signals that coordinate production over time, i.e., coordinate savings with investment).
To get out of a recession, malinvested and overconsumed capital has to be, respectively, reinvested and reaccumulated, which requires entrepreneurship and its preconditions, listed two paragraphs above.
Uneven inflation of the money supply in the world of imperfect information falsifies economic calculation, discourages saving (and thus investment), and distorts the intertemporal structure of production. Deficit spending weakens the system of reliable institutional protection of property rights and contracts and diminishes the value of hoardings, thus creating regime uncertainty.
Hence, inflation and deficit spending discourage investment and prevent entrepreneurship, consequently prolonging recessions, as well as encourage capital consumption and malinvestment, consequently deepening recessions.
Qua policy advisors, Austrian economists suggest that the things to do in a recession is to avoid inflation and eliminate deficit spending. Qua policy advisors, (New) Keynesian economists suggest that the things to do in a recession is to generate inflation and engage in deficit spending.
Thus, qua policy advisors, Austrian economists suggest getting out of recessions via value conservation (and eventual value creation), while (New) Keynesian economists suggest prolonging and deepening recessions via continued value depletion. QED.
Friday, September 14, 2012
The Late Roman Stage of Modern Western Civilization, Or the Tytler Cycle Revisited
You want economic growth? Print a lot of colored paper tickets or create a lot of virtual bookkeeping entries. You are in debt? Inflate it away (see above) or go into more debt. You lived beyond your means? Live even more beyond your means. You want to save for the bad days in the face of impending crisis? Spend everything on luxuries instead. You did a good job of serving the needs of others? Expect confiscation. You did a bad job of serving the needs of others? Expect bailout. You live by your own means? Expect calls for confiscation. You live at the expense of others? Expect calls for empowerment. You want peace and stability? Try to police the whole world. The world erupts in war and chaos because it doesn't want to be policed? Police it even more methodically. Your political meddlings distorted the world economy? Meddle in it even more fervently. And so it goes.
Yes, this is the common wisdom of modern Western civilization. And yes, it indicates as clearly as possible that the modern Western civilization is in its late Roman stage once again. And while it is not yet certain that it will share the fate of Rome, this scenario is now more probable than not.
Yes, this is the common wisdom of modern Western civilization. And yes, it indicates as clearly as possible that the modern Western civilization is in its late Roman stage once again. And while it is not yet certain that it will share the fate of Rome, this scenario is now more probable than not.
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