Tag Archives: Economics

Kill a cow and win a Metro


…or save the planet!

David Davis

I thought these guys, of whom I never have heard, sound amusing. As it is with all nasty, wicked and deliberate destroyers of humanity and freedom, it is time to laugh at the Enemy Class: as loudly and as profitably as possible, as that will annoy it, get it stamping about in a focussed and cruel way, and enrage the humourless buggers even more.

So we know where to Lay The Mines, then.

(Mines are good: “Princess” Diana was bad. Mines should merely not be permitted, on pain of anihilation, to specific people and States which oppose liberal Capitalist societies and individual liberty. They are thus like Nuclear Weapons. “Diana”  misunderstood the problem, probably on purpose, and therefore was deliberately answering the wrong question in view of the Enemy-Class-Media, which is now why we don’t have any mines available to us. All this will have to be the subject of another essay when I decide I am pleased to have the time.)

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David McDonagh on Keynes


The Keynesian “Revolution”
By David McDonagh

(This is the lightly revised text of a talk given to the Other LA)

We face the problem of “mind set” on this topic, as we haply do on all topics, where people tend to see what they expect to see. But note that this idea is quite distinct from seeing what we want to see, which is not humanly possible in any case at all, for we always see what seems to us to be the case.

Mark Blaug once retorted to Keynes’ statement that Ricardo had conquered England to a greater extent than had the Spanish Inquisition conquered Spain by saying that Keynes had conquered the economics profession even more successfully than Ricardo ever did.

Why did the Keynesian memes win out and how did they survive their rather clear refutation by the occurrence of stagflation during the 1970s? That is, the main problem I intend to consider below, but note that false theories are rather like human lives in that they may be very vulnerable to diseases at the infant stage, but once that is over, they can withstand attacks quite well up till old age when they, once again, seem to have weak defences. Similarly, false theories may not gain currency when they are first formed, but once a theory becomes popular, mere common sense objections will not matter much in science, or in wider academic study. This privilege against common sense is a major reason why Keynes’ theory survived the refutation of stagflation. Such objections become very potent, again, when the theory is on the decline, which can happen as a result a change in fashion, or if it is seen as being refuted by a rival paradigm, or by the external facts, –which is rather like a fatal accident.

Free, or freer, trade and state management or protectionism is often contrasted, with the latter often called socialism. Keynes favours management, never socialism, though his ideas were to a large extent shared with people like G.B. Shaw, who thought of himself as a socialist. Keynes preferred state management rather than the free market and thus belonged to the Radical-Joe-Chamberlain tradition of liberalism as opposed to that of the classical liberals, whom ebbed after Gladstone. But this means that for Keynes, as for Marx, it is really the lack of management or overall planning on the market that tends to irritate, rather than mass poverty, the problem of war [Marx] or mass unemployment [Keynes] that others thought were their main concern, though they did think they had solutions to those problems.. Keynes feels that the elite, the politicians, and others, have something to offer and he does not like the way economics has tended to be hostile towards politics or the civil service. He feels there should be some inequality in pay, but not much, and certainly not to the extent common in his own day. He admires the slow growth of taxation to curb the differences in income.

On the first page of the General Theory of Employment, Interest and Money (1936), Keynes’ main book, and the book I set out to criticise, as well as a partial critique of here, the author, oddly, openly confesses to “a solecism” (p3) but, instead of correcting it, he leaves it in the text. Has he set out to scotch grammar? That would be a very odd thing for any author to deliberately do. This solecism is (p3) that he sees the classical economists, not as Marx saw them, [viz. the authors who upheld the labour theory of value as against the ones who thought that supply and demand
were enough. Marx called the latter “the vulgar economists” as they settled for surface appearance rather than going to deep reality, which Marx took to be the proper job of any science.] but way more inclusive. Keynes sees the classical economists as being all the earlier economists. Many of those lived up to forty years after Keynes died [e.g. Hayek died in 1992 but Keynes in 1946].

The pristine classics were thrown out by “the Marginal Revolution”, which took place in the 1870s, when marginal theory replaced the labour theory of value paradigm. A few “vulgar economists”, Jevons, Menger and Walras, applied Ockham’s razor to the labour theory of value and marginal theory dispensed with the underlying reality. Keynes lets us know that he is to make a new revolution against those he terms “the classics” and he hopes it will be as complete as the one in the 1870s was.

The reader might realise that this is not a solecism at all, but an anachronism, i.e. an error of history rather than of grammar. The reader still might think it mighty odd that the author sees an error of any kind, but still leaves it in. But is it an error of any kind? After all, Plato seems to have been quite right when he says that no one can deliberately err. Is it not, rather, a clever and deliberate ploy that Keynes is here using, a device similar to the use that Nelson made of his blind eye? He is going to use this “solecism” device to pretend to see only what he wants to see. But no one can ever quite do that, if they remain sane.

Here we can see what sort of an author we are dealing with in Keynes. Richard Whately once said that “it makes all the difference in the world whether a man puts the truth in the first place or in the second place” and Keynes openly puts the truth in the service of his aims, and he aims to be revolutionary in theory even if he wants to remain Fabian and gradual in practice. But this “revolutionary” ploy does not mean that Keynes was insincere in what he wanted to say, but only that he was impatient to say it and that he also sought to dismiss the opposition; permanently.

It is fairly clear from reading the book that Keynes is largely attacking only one author, Arthur Cecil Pigou (1877-1959), and only others economists in so far as they agree with Pigou, so he has no need for an anachronism at all to do that. But Keynes clearly wants to say it is “the classics” that he rejects –he wants a revolution in theory to render his variously differing forerunners utterly defunct. And what he says, even of Pigou, ignores many things that Pigou says, even in the main book, _The Theory of Unemployment_ (1933), that Keynes, repeatedly, cites in this 1936 book.

Pigou repeatedly mentions the term “involuntary unemployment” in that 1933 book, for example, but Keynes, repeatedly, says that none before him even thought of that concept. Many authors conclude that Keynes had not read much, owing to him saying that “the classics” did not say this, or did not say that; when they so very clearly did. My guess is that he was quite well read in economics; even though he had values that were always in complete opposition to what he saw as the anarchy that the economists, though usually unwittingly, embraced. He rightly saw that economics was largely biased against politics and state planning. Marx with the same objection,
set out to be not only a hostile critic of economics, but also a supposed revolutionary to replace the market with moneyless communism. Keynes thought that money was vital and he was content with political demand management by means of inflation. He rather hoped that most of bourgeois society would go on much as before, but with the civil servants taking the place of the capitalist class in organising savings by taxation and so dealing with the problem of investment whilst unemployment might be cured by the stimulus of extra money in demand management. His epigones, in true Tory hyperbole, claimed that he saved the market from the Marxist threat, a brutum fulmen if ever there was one, rather like the imaginary wrath of God.

In any case, inflation is not really a stimulus, no more than is alcohol, though both may feel like it, for it destroys the power of money to relate to the real economy thus, ironically, destroying effective demand overall. This is the main fault in the Keynesian outlook; its main idea is false.

The ploy worked. Almost the whole of economics adopted the results of this “solecism” after 1936. This was “the Keynesian Revolution”, though Keynes did develop new terms in the theory of demand management, though little of the substance was unknown in the 150 years before Keynes, even if it was given a modern guise. But Keynes thought his forerunners, like Malthus, were misunderstood.

Oddly, the result in the textbooks fell out of Keynes’ hands and retained a few ideas he most hated, like equilibrium, as it owed almost as much to John Hicks, and others, many of whom did not fully comprehend Keynes.

Using his “solecism” ploy, Keynes said that the classics had no idea of the possibility of mass unemployment owing to Say’s Law, itself also redefined by Keynes. He described Say’s Law as maintaining that there was nothing for the entrepreneur to do, as supply exactly created its own demand automatically rather than merely boosting general demand with the coordination problem being the task of the entrepreneur, as Say, and most others before 1936, had it. Keynes also held that David Ricardo certainly had no knowledge of trade cycles, or of mass unemployment. Every economist after 1936, or very nearly everyone, took all this as the gospel truth, which it ironically was, for the Christian gospels, also, were more concerned with the message than with the truth, and they too were mere make believe. But their adherents were sincere, or at least convinced.

An illustration of the “mind set” that resulted after 1936 is shown by Thomas Sowell in _Black Education: Myth and Tragedies (1972). Sowell had copies of Robert Heilbroner’s _The Worldly Philosophers (1953), one of the many economists who adopted most, if not all, of the Keynesian outlook, on every desk, opened where Heilbroner says that Ricardo says nothing about the trade cycle, together with Ricardo’s _Principles of Political Economy and Taxation (1817) opened on the page where Ricardo begins his discussion of that topic. Sowell asked the class to read a bit of both books before asking them if what Heilbroner said about Ricardo was true. To his astonishment, they all replied that what Heilbroner said was true. When Sowell, flabbergasted, asked them why, he was told, in reply, that Heilbroner would not have written so if it is was not indeed the case.

I will say a bit about the myth of “revolution” in general. The word “revolution” is today a bit of romance jargon, and Keynes realised this, but he felt a dire need to make “the classics” defunct. He saw economic theory as part of the problem, not only of mass unemployment but also of the barbaric anarchy of modern times. Keynes knew there could be no actual fresh beginning, but something like one seemed to be needed. “Revolution” is actually just empty jargon, a constituted blank, which is often imposed on an account of the facts by the historians. When the vicar finds out that a couple indulges in sex before marriage he feels he has discovered yet another instance of
sin, but the idea that it is a sin is part of his ideology rather than the facts he has discovered about the couple in question.

The jargon word “revolution” clearly has a history and it was first used by the Whigs in 1688. It was taken from geometry, and it was, back then, used in the exact opposite of how it was used in 1789 by the Romantics and as how it is still largely used today. It was used to mean a return to the beginning of the drawing of a circle, to complete the revolution, and this meant exactly the same as “reactionary”, a reaction against recent innovation and an attempted return to the status quo ante. The idea was that James II had gone one half of a revolution away from how things should be, and that they needed to go back to how things were before he reigned, back before 1685. But in 1789 in France, the idea emerged with the new meaning being more like going off on a tangent than in
completing the revolution, for it introduced the current meaning of going on to a new epoch and leaving the past completely behind. But Keynes was right to think that gradualism was the case and that no event makes for a completely new beginning. At least he got one idea right.

Good Economics, Standard Theology


Bruce Porteus

WILL  THERE  BE  A  GLOBAL  ECONOMIC  COLLAPSE,   OR  RECOVERY?

Will there be a global economic collapse, or can the world’s economy be saved from a total
melt-down? Will the current stimulus packages work? Will there be an economic recovery?

These questions are now being asked by many business leaders, politicians and economists
around the world. There appears to be little agreement on what will happen as the unprecedented
economic crisis continues, in spite of optimistic forecasts from some world leaders. This article will
explain the causes of the current economic crisis, and what the outcome will be, in simple,
layman’s terms.

Firstly, let’s look at the causes of the current crisis. For over 30 years the Anglo-Saxon nations
(USA, Canada, Australia, UK, New Zealand) and a few other countries have been spending
considerably more money than they earned from exporting goods and services, accumulating large
current account deficits internally, and massive external debts internationally. To finance these
external debts they have borrowed money from creditor nations, in particular Japan and China. This
has allowed the Anglo-Saxon nation’s financial institutions to have the capital to continue growing
their economies, enabling them to finance costly wars and still import consumer goods to satisfy
their self-indulgent life-styles. They have continued to expand their currency supply in order to
maintain economic growth, but that caused an escalation of property prices, and growth in
borrowings to finance domestic consumption. Up to now they have been fortunate to avoid being
affected by the high inflation that normally follows an increase in the money supply, without a
corresponding increase in productivity. This was, in part, made possible by switching to the
purchase of imported goods and services produced by low-wage countries and paid for with the ever
increasing supply of US dollars.

The problem arises when Federal Reserve Notes (U.S. dollars) accumulate in foreign hands. A
Federal Reserve Note is an I.O.U. and rather unstable as it floats against the arbitrage basket of
international currencies. The only alternative for these nations to avoid being overexposed to
unbacked dollars which might tank at any moment, is to purchase United States Treasury
Certificates which are (so far) considered safer as they are rated (so far)”triple A.” Either way, other
nations are trusting that these I.O.U.’s will one day be useful for the purchase of goods, services or
other more stable currencies. The purchase of these Treasuries (loan certificates) by foreign nations
repatriates the dollars which are then spent domestically or overseas again.a vicious circle.

This inflow of money borrowed by the Anglo-Saxon nations has allowed them to maintain generous
state-funded welfare programs that have directly contributed towards undermining the role of the
family as the foundation of a successful society. This has encouraged people to look to the State
for their needs, rather than the extended family accepting responsibility for other family members,
sapping the drive and willingness of their people to compete in a competitive world. Socialism by
stealth in Western nations has done so much to destroy the family structure, the foundation from
which all successful societies are built. An increasing amount of Western Government revenues are
drained into providing expensive welfare programs such as health care, pensions, benefits for the
unemployed and inadvertently encouraging single parent families, but leaving little money for
investment into infrastructure and provide capital to develop their economies. Asians culture
encourages the extended family to accept responsibility of caring for other family members in times
of misfortune, paying for their education and health care, rather than the State. Most Asians accept
the premise that unless you work, you go hungry – sadly in the West it is expected by many that
the State will provide, regardless if one works or not.

One of the results of the current economic crisis is that the Anglo-Saxon Governments no longer
have revenue to support their expensive welfare programs; just at the time when there are the
greatest financial demands being placed on them. An aging population, escalating health-care
costs, growing unemployment is blowing out government budgets, causing unsustainable deficits.
Meanwhile the Asian countries, not burdened with such extravagant welfare programs, have been
able to use taxation revenue to invest into developing their domestic economies. As a result the
Anglo-Saxon nations have become less competitive in the global market-place than the Asian
economies. Added to this, the lack of domestic savings by the Anglo-Saxon nations has made
them dependent on borrowing from those countries that have large current account surpluses,
causing them to slip further behind in maintaining the standard of living that their people still expect
to enjoy.

The end result has been a gradual break-down of the social fabric of western society till today they
are crime-ridden, diseased, over-indulgent, debt-ridden and self-destructive. The Anglo-Saxon
nations are now so heavily indebted to their overseas creditors, that even an increased amount of
export revenues would not enable them to service their external debts. However with falling exports
and large current deficits, it is only a matter of time before they slide into bankruptcy, unless they
are able to operate with a current account to service and repay their international debts. The flow of
US dollars into Asia has enabled their economies to obtain the capital to finance their domestic
growth and accumulate overseas reserves. In turn, lending their surplus capital back to the
Anglo-Saxon nations has allowed these countries to obtain the financing to purchase more imports
from Asia. This arrangement has worked well up to now for all concerned, but is not sustainable.
However, it is proving very difficult for the Anglo nations to expand exports to the rest of the world
during a global economic recession which is causing a lack of overseas export markets for their
goods and services.

Up to now the USA has been in the fortunate position of having the US dollar as the world’s reserve
currency, and being able to print dollars to finance its deficits, avoiding the need to borrow in other
currencies. As long as the global demand for dollars to finance world trade remains, it has been in
everyone’s interest to continue with this arrangement and retain the US dollar as the world’s reserve
currency. Over the last decade surplus dollars have been recycled back to the American banking
system, creating surplus liquidity in the Anglo-Saxon nations, and encouraging their banks to adopt
loose lending practices to generate paper profits from loans to domestic customers.

The current economic crisis was triggered when American and UK banks accumulated bad debts
from reckless lending, as their customers began defaulting on their loans. This quickly led to a
chain-reaction of banks defaulting and the need for government intervention to bail them out. This
has led to the current global economic crisis we now have.

In an attempt to avoid a total economic collapse, the governments of UK and USA have created
trillions of dollars of credit to inject into their banking system to save their banks from collapsing, as
well as guaranteeing deposits. This was intended to allow the banks to continue lending to prevent
their economies from going into free-fall, and government revenues collapsing. It appears this may
be working, although the banks have still not written off trillions of credit card debts and real estate
loans. The real question is, where has all the money gone that was lent though the bank’s bad
debts which have been written off? This money is still in circulation, but much of it is not
recoverable from those who have defaulted on their loans. What has happened to this money? It
has not just vaporised. Much of this money remains in circulation outside the USA and is now
controlled by foreigners.

Another difficulty faced by the Anglo-Saxon nations is that trillions of dollars have been written off of
their equity and property markets, wiping out much of the collateral from their banking system. Still
not accounted for are the trillions (possibly quadrillions) of dollars involved in the derivatives markets
– a sleeping time bomb ready to explode at any moment. In effect this has resulted in much of the
wealth of Anglo-Saxon nations disappearing, lowering the standard of living, slashing government
revenues, and will inevitably result in widespread poverty.

The Federal Reserve policy of creating new currency to replace toxic bank loans is like putting fuel
on the fire. In the short-term it may prevent the US economy from unravelling, but in the long term it
will be disastrous. It will result in run-away inflation as money looses value. Admittedly the US does
not have much choice – if they had not propped up their financial institutions, the economy would
have unravelled already, collapsing government revenues, and dragging the world into a depression.
They would not have had the revenue to service their national debt. Either way, the economy
collapses. The option of printing currency to inflate the money supply in an effort to stimulate
consumer demand and maintain economic activity is a very risky one, and will eventually lead to
erosion of the fiat value of the currency and uncontrollable inflation. Governments flooding markets
with currency to revive economic growth without increasing goods and services will only result in the
collapse of the currency.

So what happens next? The flood of money that has been injected into global markets may lead to
temporally restoring consumer confidence and spending for a short period. Sadly, the imbalances
that have led to the current crisis have not been addressed. Nothing has been done to correct the
imbalance of global trade between the Anglo-Saxon nations and Asia. The Asian nations continue
to accumulate more and more US dollars from exports and income from their investments. The flow
of capital from the West into Asia to finance imports continues. The outcome can only result in one
thing – a total collapse in the value of the currencies of the Anglo-Saxon nations.

The coming collapse of the US dollar will result in significant readjustment of global economic and
military power. It will result in the end of the Anglo-Saxon nations’ dominance of the global
economy. They will be replaced by two significant economic power blocks (Asia and the EU) filling
the vacuum created by their collapse. It will also be a time of further economic turmoil, followed by
political upheaval. It will lead to the end of many of the democratic freedoms which we have today,
replaced by authoritarian regimes regulating the global economy. Not only will there be a denial of
political, economic and social freedom, but also religious freedom. These institutions will be
replaced by authoritarian institutions regulating how people live their lives, denying much of the
individual freedom that we have come to accept today.

There is general agreement amongst many world leaders that the free-market unregulated
economic model advocated by the USA can no longer continue. In its place they are advocating
what UK Prime Minister Gordon Brown calls a “new world economic order”. What is planned is to
have much greater controls on the movement of money, where and how capital is used – controls on
speculation in futures, derivatives, commodity trading, etc. Technology available today will enable a
single world currency supported by one global central bank, to control both the supply and
movement of money around the world. This is being advocated by Germany and France under the
pretence of controlling tax avoidance and regulating markets, in reality it will go much further than
this – controlling the movement of money and all commercial transactions, with a cashless society
where governments can monitor all commercial and personal transactions.

The Euro is the only currency large and strong enough to replace the US dollar as a world reserve
currency, or a new world currency. Germany is the one country which has sufficient currency
reserves to underpin the confidence in the Euro allowing it to become the new global reserve
currency, having been for years the world’s largest exporter. Increasingly German dominance is now
dictating the direction of Europe – all that is lacking is the leadership.

The EU lacks a leader who can unite the various competing political and nationalistic factions to
enable decisions to be reached to bring about a cohesive economic policy and revive the European
economies. As the economic crisis spreads throughout Europe, unemployment continues to grow,
and political unrest becomes more severe, the need for the appearance of a strong leader will
create a power vacuum into which someone will surely step. Europe now desperately needs a
modern-day Napoleon, Hitler or a revived Holy Roman Emperor who can save the continent from
economic and political disintegration – a strong and commanding personality who can unite the EU
and lead it to economic recovery. Yet unity cannot happen unless the present disparate political
structures that currently exist are reformed, and the proposed new constitution adopted. The
materialization of a single leader that can unite the various European nations into a unified United
States of Europe, who has the ability to revive their economies, and provide the decisive leadership
required to lead them out of this crisis is the obvious necessity.

The fate of the Anglo-Saxon nations now looks extremely bleak. The collapse of their currencies will
be followed by total economic collapse. They will be unable to repay their international debts. They
will slide into bankruptcy. There will be wide-spread poverty, starvation, great suffering of their
people as their nations slide into insolvency. Disease will become wide-spread. Many
drug-dependant people will perish. Crime will spiral out of control, as a total break-down in law and
order develops. Most jobs will disappear. Governments will have no revenue to continue functioning
or pay for public servants or services. They will no longer have the income to maintain their defence
forces.

Throughout history empires rise, declined and collapse. The coming collapse of the Anglo-Saxon
Empire will happen quickly – this group of nations will disintegrate, which will result in the reshaping
of the political and economic landscape of the world. Without the stabilising influence these nations
have had on the world, many of the freedoms we take for granted today will disappear. The
Anglo-Saxon nations originally had a value system based on the Bible, but as they have rejected
the teachings of the Bible and the Law of God, so has their influence in the world declined. Now
these nations are facing total economic collapse, not economic recovery as many hope. They are
now being cursed for rejecting the teachings of the Bible and the Law of God.

Bruce Porteous

Bruceporteous50@yahoo.co.nz

1 May, 2009

Enemies of What State? « Little Alex in Wonderland


 

Enemies of What State?

Posted by Kevin Carson on 29 March 2009

Kevin Carson

On the economic fascism of  crony capitalism and irrational American common sense.

19 Mar 09 | C4SS

There are all too many people in American politics whose real concern, concealed behind all the “free market” rhetoric, is not so much “statism” per se as statism that benefits the wrong class of people. A good example: it was quite amusing to hear some Republicans, during yesterday’s Congressional hearings on the AIG bonuses, wringing their hands over the prospect of “interfering with the management of private business” and “altering the terms of contracts.” Last night Rachel Maddow ran clips of some of the very same people, last December, crowing about how they were forcing the UAW to renegotiate it’s contract and accept lower wages in return for bailout loans to the auto industry.

Another example: I don’t advocate Social Credit or greenbackism, but I don’t understand the reasoning of those who object to either as an increase in statism over the present system.

By way of background, Social Credit is a proposal to remedy corporate capitalism’s chronic tendency toward overinvestment and overproduction by periodically depositing a sum of interest-free new money, equivalent in aggregate to the demand shortfall, in the citizenry’s bank accounts. Greenbackism is a proposal that countercyclical deficit spending, rather than being financed by interest-bearing debt in the form of government bonds, should simply take the form of directly spending money into existence by the Treasury.

It seems to me the sticking point, if there is one, should be at the idea of government as regulator of the money supply by creating fiat money, or of deficit spending to meet demand shortfalls, in the first place. But these things are overwhelmingly accepted in principle by the mainstream public. So the sticking point about Social Credit and greenbackism can only be the sacred principle that the fiat money must be specifically lent into existence at interest, and that deficit spending must be financed by government bonds.

The problem is not the function itself, but only carrying it out in a way that doesn’t enable a class of coupon-clippers to skim the cream off the top.

It also seems to me, on the other hand, that if these basic functions are accepted in principle, it makes it more statist–not less–to compound the injury by doing it through private accomplices, and empowering them to charge interest for the function, rather than simply doing so directly.

It’s just another instance of a broader phenomenon, what the Libertarian Alliance’s Sean Gabb calls “economic fascism.” Economic fascism is his term for the phony regime of “privatization” advocated by such organizations as the Adam Smith Institute. It doesn’t get government out of the business of performing particular functions. It just delegates the function to nominally “private” corporations that perform the function with public money, with government protection from free market competition, and with a guaranteed profit for performing the function (on the regulated utility’s “cost-plus” model).

Under this vulgar libertarian model of “free market reform,” the only thing that matters is the comparative percentages of functions which are carried out by nominally “private” and nominally “public” organizations–not the substance of things. But it seems to me that if a corporation receives its revenue from the government, is protected from competition by the government, and is guaranteed a profit by the government, it IS the government. The only significance of the entity’s profit is to increase the overall cost of performing the function, and thus increase the total injury to the taxpayer.

And while we’re at it, let’s be honest about something. Given the existence of a corporate economy on the present model, countercyclical government spending is absolutely essential to prevent its collapse. Those who advocate a return to the Reaganism and Thatcherism of the ’80s, or the cowboy capitalism of the ’90s, absent high government spending, are either delusional or disingenuous. Reagan was the biggest Keynesian of them all.

There are only two alternatives: to eliminate the existing–statist– structural causes of overinvestment and underconsumption, or to continue adding new layers of statism to counter the chronic crisis tendencies. Either more and more statism, or forward to anarchy.

The American corporate economy has been statist to its core since its beginnings in the late 19th century. There wouldn’t even be a national market at all, or national corporations serving it, had it not been for the land grant railroads and other subsidies to long-distance shipping that made possible artificially large firms and market areas. There wouldn’t be stable oligopoly markets had it not been for the cartelizing effect of patents, or the stabilizing effects of the Clayton and FTC Acts’ restrictions on price warfare.

To repeat, the system was statist from its beginnings. There are all too many on the Right who like to refer to a mythical “free market” system that prevailed before 1932, and to pretend that the “statism” only began when government started intervening on behalf of workers and consumers. But in fact, all the “progressive” interventions of government under the New Deal were secondary, aimed at ameliorating the side-effects of the prior interventions that created corporate capitalism in the first place. Had it not been for the secondary, ameliorative interventions, corporate capitalism as we know it would have collapsed in the 1930s.

Returning to my earlier point: if we are to have statism at all, and we are reduced to quibbling between Democrats and Republicans over what kind of statism it is to be, I make no secret of the fact that I prefer the kind of statism that weighs less heavily on my own neck.

If phony “free market” Republicans accept NLRB certification of unions in principle, and only want to quibble over the Employee Free Choice Act because it makes it easier to certify unions without harassment, intimidation and punitive firing of organizers–well, why would I, a worker, prefer a system of certification that suits the bosses’ interest?

If we’re going to talk about a genuine free market labor regime, then let’s eliminate the Wagner Act–and with it Taft-Hartley’s prohibitions on sympathy and boycott strikes, and its mandatory arbitration and cooling off periods. Let’s eliminate the Railroad Labor Relation Act’s provisions that prevent transport workers turning local and regional disputes into general strikes. In short, let’s eliminate all the legal prohbitions on the tactics that unions were using to win before Wagner was ever passed.

But if we’re going to have government certification of unions, let’s have a form of certification that fulfills its stated purpose–determining the intention of workers–as accurately and automatically as possible.

Likewise, if we’re going to have a welfare state, let’s eliminate the costly and intrusive welfare bureaucracies and spend the same amount of money on a guaranteed income. If we’re going to have a regulatory state, let’s eliminate all the agencies and replace their functions with pigovian taxation of negative externalities.

My goal is the abolition of the state. I would welcome all these things tomorrow, if I thought they were genuine steps toward the abolition of the state altogether the day after tomorrow. They certainly wouldn’t be net increases in statism.

C4SS Research Associate Kevin Carson is a contemporary mutualist author and individualist anarchist whose written work includes Studies in Mutualist Political Economy and Organization Theory: An Individualist Anarchist Perspective, both of which are freely available online. Carson has also written for a variety of internet-based journals and blogs, including Just Things, The Art of the Possible, the P2P Foundation and his own Mutualist Blog.

Enemies of What State? « Little Alex in Wonderland

F A Hayek: the 1978 UCLA interviews….


David Davis

….with main portal to them on the Ludwig von Mises Institute blog.

Here is the archive in pdf.

For newer readers who may not have swum in libertarian, or in Austrian-School-economic waters for very long, you can find out about Friedrich Hayek here, and why he was a key classical liberal/libertarian philosopher.

Here also is stuff which some of you might like about Ludwig von Mises.

Darling prepares the printing press: watch out for rising inflation


Kevin Dowd

This has not been a good week for the economy. Yesterday, we had the announcement of another bank bailout, only three months after the Prime Minister’s famous boast about saving the financial system (”We now only saved the world”, he announced to amused MPs back in October. “Please not again”, would be my response.) This is bad news and confirms that the last one didn’t work.

The bad news today is potentially much worse. The UK Chancellor, Alistair Darling, has authorised the Monetary Policy Committee of the Bank of England to consider printing money. Mr. Darling prefers not to call it that – he prepares the euphemism ‘quantitative easing’; the difference between the two policies is however trivial, and both amount to debauching the currency. Mr. Darling dare not call it for what it really is, however, for fear that the public might realise what he really doing. They will, in time.

So the Bank of England is now authorise to (in effect) print up to £50 billion to purchase corporate assets. This might not sound much given the other numbers being bandied around these days, but this is in fact a great deal considering that it is the monetary base we are talking about. The  most recent figure for the monetary base is about £95 billion, so this amounts to an authorisation to increase the base by over 50%. (I suppose it could be worse – the Federal Reserve in the United  States has already increased the base by over 100% since the late Summer, but that doesn’t give any comfort.)

Why does the base matter? As any monetary textbook will matter, increase the monetary base, and in time all the nominal values in the economy – the other monetary aggregates and prices too – should all evenually rise in line. Other things being equal, a rise in the base of 50% means, in time, a rise in prices of 50%. (Unless the increase in the base is reversed before it feeds through the system, and I suspect there is little chance of that.)

The danger, now, is that the MPC will tire of relying merely on interest rates and bailouts, and then take the fatal next step that the Chancellor has authorised them to take.

Just because the frying pan is hot does not make it a good idea to jump into the fire – as the citizens of Zimbabwe will no doubt confirm.

So watch out for rising inflation.

Meanwhile, one shudders what they will come up with tomorrow.

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