Thursday, December 17, 2009

For Civilization, It Is Mises or Bust: Featured on

My article "For Civilization, it is Mises or Bust (originally posted here) is featured today on the Ludwig von Mises Institute web site (Article | Comments) | Spanish Translation (Thank you, Euribe!)

I hope you will enjoy reading it. Here is an excerpt

Before the rise of liberalism made continuous capital accumulation possible across generations, the common man held a gross underestimation of what his own species was capable of. He took it for granted that economic stagnation across millennia was simply an inevitable fact of life. He had no inkling that human society was capable of enormous strides in the standard of living within a single decade. If the average man had any notion of it at all, he would have shrugged at the fact that his own standard of living was not much different from that of the average man a dozen generations before him, or, for that matter, from an even more ancient forebear 1,000 years prior. And if the ruling caste lived high on the hog while the bulk of the populace remained mired in squalor, well that was just a fact of life, too.

But that has irreversibly changed. The phenomenal increases in the well-being of man over the past centuries have exploded such lies. The common man knows he and his fellows are capable of wondrous achievements.

Lilburne's Mises Blog Post Roundup: 12/08/09-12/16/09

The Seen and Unseen of Obama's Stimulus Plans

Egalitarian Expropriation: Bernie Sanders on Colbert

Economics and Moral Cowardice (about Krugman's petty swipe at Austrians)

Confronting the "Unconfrontable" in the LvMI Forum

The Trinity is Complete (about Bernanke being made Time's Person of the Year

Wednesday, December 16, 2009

Impoverisher of the Year

As readers of this blog know, in an astounding feat of oblivious irony, Time magazine has chosen the man who very likely just broke the world as "Person of the Year". In my last post, I commented on the propaganda aspects of the choice. In this article, I would like to address the woeful economic content of Time's corresponding hagiographic piece on Ben Bernanke and the Federal Reserve, line-by-line.

the Fed controls the money supply. It is an independent government agency that conducts monetary policy, which means it sets short-term interest rates...

Indeed, in other words it sets the gross market rate of interest. It has absolutely no control over originary interest (the actual ratio of prices of present goods over future goods). Therefore, whenever it manipulates the former, it keeps it from trending toward the latter, which can only lead to malinvestment. The world might be a much better place, if Ben Bernanke simply read Human Action, chapter 19.

...which means it has immense influence over inflation, unemployment, the strength of the dollar and the strength of your wallet.

...AND over the structure of production: and a wholly pernicious influence, at that. Let's take the items under the Fed's purview which Time listed in turn.

  • Inflation: Over the long term, ALL the Fed has ever done with inflation is modulate how fast it inflates.
  • Unemployment: The only way the Fed "alleviates" unemployment is by inducing unsustainable structures of production, thereby creating jobs which, while surely appreciated by those who get them, on balance only serve to consume capital, thereby impoverishing society as a whole.
  • Strength of dollar/wallet: The only thing the Fed has done since 1913 to the strength of the dollars in our wallets is to dwindle it.

And ever since global credit markets began imploding, its mild-mannered chairman has dramatically expanded those powers and reinvented the Fed.

Global credit markets needed to implode, because they were inflated all out of proportion in relation to the actual amount of capital on the planet, given the going rate of time preference. By trying to keep it from imploding, Bernanke only prevented the loan markets from adapting themselves to that reality.

Professor Bernanke of Princeton was a leading scholar of the Great Depression. He knew how the passive Fed of the 1930s helped create the calamity -- through its stubborn refusal to expand the money supply and its tragic lack of imagination and experimentation.

This is either unacceptable ignorance or unforgivable deception. Central banks lower interest rates by expanding the money supply and flooding the loan market with new money. And to what degree did the New York Fed (which was then in the monetary saddle) do this after the 1929 stock market crash? As economist Robert Murphy tells us, in The Politically Incorrect Guide to the Great Depression and the New Deal, the New York Fed responded to the crash with unprecedented easy-money measures:

On November 1, 1929, just three days after Wall Street's Black Tuesday, the Fed slashed its discount rate by a full percentage point. Then fifteen days later it cut again, to 4 1/2 percent. Throughout the following year, it cut five more times, so that by December 1930 the New York Fed's discount rate had fallen to 2 percent. This was already a record-low for the Fed, but it cut further still, reaching 1 1/2 percent in May 1931.

I guess central bank measures only qualify as "imaginative" if you push rates down to practically 0% like Helicopter Ben has done. We should all be glad the New York Fed wasn't anymore "imaginative" (irresponsible and foolhardy) than it already was.

Chairman Bernanke of Washington was determined not to be the Fed chairman who presided over Depression 2.0. So when turbulence in U.S. housing markets metastasized into the worst global financial crisis in more than 75 years...

...turbulence made necessary by a housing bubble inflated by Bernanke and his predecessor, Alan Greenspan...

...he conjured up trillions of new dollars and blasted them into the economy

...which are nothing but media of exchange, and will only serve to transfer and destroy wealth, but create none...

...engineered massive public rescues of failing private companies;

...which only created oceans of moral hazard and propped up wealth-destroying ventures at the expense of foregone wealth-creating ventures...

...ratcheted down interest rates to zero; lent to mutual funds, hedge funds, foreign banks, investment banks, manufacturers, insurers and other borrowers who had never dreamed of receiving Fed cash; jump-started stalled credit markets in everything from car loans to corporate paper; revolutionized housing finance with a breathtaking shopping spree for mortgage bonds;

...all of which will only serve to induce unsustainable business projects and consumption levels...

...blew up the Fed's balance sheet to three times its previous size;

...which while also contributing to the previously listed effects, may very well end up leading to Weimar-level hyperinflation.

...and generally transformed the staid arena of central banking into a stage for desperate improvisation.

...because apparently markets reallocate capital better when there is a single central planner "desperately improvising" with crude aggregate numbers.

He didn't just reshape U.S. monetary policy; he led an effort to save the world economy.

"Effort" being the operative, and perhaps generous, word here.

No wonder his eyes look tired.

Poor thing; squandering the world's wealth must be exhausting business.

The last Fed chair, Alan Greenspan, inspired an odd cult of personality. Bernanke hoped to return the Fed to dull obscurity. But his aggressive steps to avert doomsday -- and his unusually close partnerships with Bush and Obama Treasury Secretaries Henry Paulson and Timothy Geithner -- have exposed him and his institution to criticism from all directions.

"Unusually close partnership"? Is this the "independence" Bernanke's so worried about with regard to the Audit the Fed bill?

Bleeding-heart liberals and tea-party reactionaries alike are trying to block his appointment for a second four-year term. Libertarian Congressman Ron Paul is peddling a best seller titled End the Fed. And Congress is considering bills that could strip the Fed of some of its power and independence.

Those dread populists obstructing an honest technocrat! Nicholas Biddle must be sympathetically rolling in his grave.

Saturday, December 5, 2009

New Human Action Comics Issue Covering Diminishing Marginal Utility

Here's a new issue.  Sorry for the long delay.  This one cover the law of marginal utility, and is a follow up to the issue introducing marginal utility.  I had to race through making this one tonight due to time constraints, so there may be mistakes I'll need to correct later.

Mann-Made Global Warming

Tony from Toronto, in a New York Time discussion forum says:

Well at least we now know what causes man-made global warming:- Phil Jones, Michael Mann and their all-male cast of dodgy scientists. They have generated global warming all on their own. So long as we keep giving 'em more data Harry_Read_Me's computer programs will keep those graphs trending relentlessly upward.

I never thought a New York Times discussion forum on climate change would ever be dominated by skeptics. It goes to show that (a) many are being converted by the recent scandal and (b) those who were already skeptical now feel no need to be shy about it anymore. These are happy days indeed.

Wednesday, December 2, 2009

For Civilization, it is Mises or Bust

For those who may be new to Austrian Economics, to better understand the ideas presented below, please first take a look at this web comic on capital theory from my series Human Action Comics

Probably what most sets the Austrian School apart from mainstream economics is the Austrian School's careful analysis of the structure of production. When an Austrian economist considers the structure of production, he doesn't just dwell on crude aggregates, such as the total number or total value of capital goods in an economy. Rather, h considers how long (or how "roundabout") a given structure of production is. He asks, "How many steps are there in the production process between the extraction of raw resources and the actual output of consumers' goods?" He also considers how any given society with a given structure production can improve its productivity.

Capital Accumulation and Social Progress

Any change in the structure of production obviously must either involve (A.) an increase of, (B.) a decrease of, or (C) a maintenance of its length. Improvements in productivity which involve less or equally roundabout production processes will tend to be adopted very quickly because they tend to require fewer resources. Therefore, all that is required for their adoption is their discovery. For example, it won't take long for a hunting society to realize that the hard, sharp obsidian in the area is better for skinning animals than the fragile, blunt pumice stones they may have tried to use first.

But once a society has plucked all the low-hanging fruit of "no-brainer" productivity improvements, what then can its members do to improve productivity? Obviously the only thing left to do would be to adopt improvements in productivity which involve more roundabout methods of production.
For example, a hunting society might try the more roundabout (but more productive) method of making and using bows and arrows for hunting to replace the less roundabout (but less productive) method of making and using crude spears. This is an investment in more productive capital goods. However, since making bows and arrows take more time, and perhaps more resources, the hunters and their investment must be sustained by an adequate stock of food and other materials, since, even though the bows and arrows will yield a greater bounty, they will only do so after a longer period of time. Thus, savings are an indispensable prerequisite for increases in productivity which involve lengthening the structure of production.

Or, as Ludwig von Mises explained in Human Action, chapter 18, section 3:
As soon as those present wants are sated the satisfaction of which is considered more urgent than any provision for the morrow, people begin to save a part of the available supply of consumers' goods for later use. This postponement of consumption makes it possible to direct action toward temporally remoter ends. It is now feasible to aim at goals which could not be thought of before on account of the length of the period of production required. It is furthermore feasible to choose methods of production in which the output of products is greater per unit of input than in other methods requiring a shorter period of production. The sine qua non of any lengthening of the process of production adopted is saving, i.e., an excess of current production over current consumption. Saving is the first step on the way toward improvement of material well-being and toward every further progress on this way.
This "further progress" is possible due to the fact that more bountiful production methods mean more goods, which in turn mean a greater capacity for savings. The new saved goods can be used, not only to maintain the new, longer structure of production (by replacing bows and arrows as they are spent), but can also be used to support an even longer and more bountiful structure of production (say, in the case of the hunters, building and using extensive traps). The savings made by possible by the second productivity-enhancing lengthening of the chain of production can then in turn be used to for a third such lengthening, and so on. In a free market, this virtuous cycle of capital accumulation can go on in perpetuity, thus engendering an upward spiral in the well-being of mankind.
But as Mises wrote later in the same section, no matter how high up the spiral we may be, we always owe the propitious opportunities at hand to the capital accumulation of those who came before us.
Every single performance in this ceaseless pursuit of wealth production is based upon the saving and the preparatory work of earlier generations. We are the lucky heirs of our fathers and forefathers whose saving has accumulated the capital goods with the aid of which we are working today. We favorite children of the age of electricity still derive advantage from the original saving of the primitive fishermen who, in producing the first nets and canoes, devoted a part of their working time to provision for a remoter future. If the sons of these legendary fishermen had worn out these intermediary products--nets and canoes--without replacing them by new ones, they would have consumed capital and the process of saving and capital accumulation would have had to start afresh. We are better off than earlier generations because we are equipped with the capital goods they have accumulated for us.
It is just such an upward spiral as mentioned above that the western world experienced during the Industrial Revolution. And as Mises further elucidated in chapter 18, section 4, the rapid rise in western living standards during that time was a function of capital accumulation.
To have capital goods at one's disposal is tantamount to being nearer to a goal aimed at. An increment in capital goods available makes it possible to attain temporally remoter ends without being forced to restrict consumption. A loss in capital goods, on the other hand, makes it necessary either to abstain from striving after certain goals which one could aim at before or to restrict consumption. To have capital goods means, other things being equal, a temporal gain. As against those who lack capital goods, the capitalist, under the given state of technological knowledge, is in a position to reach a definite goal sooner without restricting consumption and without increasing the input of labor and nature-given material factors of production. His head start is in time. A rival endowed with a smaller supply of capital goods can catch up only by restricting his consumption.
The start which the peoples of the West have gained over the other peoples consists in the fact that they have long since created the political and institutional conditions required for a smooth and by and large uninterrupted progress of the process of larger-scale saving, capital accumulation, and investment.
Of course what ultimately matters for the well-being of society is the actual degree to which our wants are satisfied, and therefore the actual usefulness of goods. Of course we can only know the actual usefulness of goods in hindsight. Acting man, therefore, must rely on his anticipation of the actual usefulness of goods. Of course, man is not prescient, so he will often err in his anticipations. The more he errs, the more he will adopt structures of production that are either (A.) not as long (and productive) as he could have afforded, or (B.) longer than he can sustain and see through to completion. As an example of (B.), a hunter who incorrectly measured the length of rope in his possession might embark on building a kind of trap which required more rope than he actually had. He would, of course, be unable to finish the trap, and any of the rope that was cut into lengths that were unusable for anything else will have been wasted.

Central Banks and Social Retrogression

The Austrian Business Cycle Theory, first formulated by Mises in 1912, teaches us that in a developed economy, artificial expansions of the supply of money and credit (which now are the exclusive prerogatives of central banks) temporarily lower the rate of interest which leads to mass error. It causes people to think, like the hunter with poor rope-measuring skills, that they are wealthier than they truly are, which leads them to over-consume, and invest in production processes which are too ambitious given the capital goods available.

Let's say a hunting society using crude spears is at Level 1 of capital accumulation. Bows and arrows are used at Level 2, and traps at Level 3. Using such a scale, an industrial society would have to be characterized as several orders of magnitude above these levels. So let's use a different scale for such societies. Let's say in the early phases of its first industrial revolution, a given society was at Level A, and, through capital accumulation, it subsequently advanced to Level B, then C, and so on.
Now let's say that the society at some point is cursed with a central bank. At the time of the central bank's first expansion of money and credit, the society is at Level Q. Again, artificial expansions of the supply of money and credit make the members of society think they are at a more advanced level than they really are. It makes them think they have sufficient capital goods to see through longer, more productive production processes, when they really don't. And so let's say the monetary expansion is sufficient to make the members of the society think they are at Level R, instead of Level Q. They make Level-R-appropriate investments which are simply unsustainable; they are going through an economic bubble. The reality of the situation will eventually reveal itself to the members of society. That is the moment of the "bursting of the bubble".

Now you might think it would then simply be a matter of reallocating the capital to Level-Q-appropriate production processes. But that presupposes capital as an amorphous blob, like a mass of clay, which can be divided up and merged together to any purpose. But just as the shaft of a curved bow makes a wretched spear, and much of the materials of a animal trap are useless for the production of bows, most of the investments made during a bubble are simply lost. As Jim Fedako has beautifully put it:
The standard view is that capital is clay, ready for the potter to reshape it in a moment's time. In contrast, the Austrian view takes the current structure of capital as a given, something that the entrepreneur must take into consideration when formulating his plans. If an entrepreneur wants to change the current structure of capital, he will wield dynamite and dozer, not water and wheel.
And so, having squandered resources, our hypothetical society which was acting as if it was at Level R, is more likely to find itself taking two or more steps back, not one, and may, at best, need to adopt Level-P-appropriate methods of production.

That is of course, unless the central bank expands money and credit even further, making them think Level Q is still viable. Then it will just continue to squander resources, and continue to drop level after level until the central bank finally leaves bad-enough alone.

And of course it is not just how long the central bank fosters malinvestment that matters, but how intensely it does so. The greater the degree to which the central bank expands money and credit, the worse will be the resulting malinvestments. It should be obvious that an unsound production process adopted by a businessman who thinks he's three times as wealthy as he really is will squander more resources than one adopted by a producer who thinks he's only two times as wealthy as he really is.

Our Present Crisis of Interventionism

What does this mean for us in our present situation? The longevity and the intensity of the monetary and credit expansion embarked upon by the Federal Reserve since the beginning of Alan Greenspan's term at its helm has been unprecedented. Compared even with the levels of monetary and credit expansion during the 20s and 30s, what Greenspan did after the dot-com bubble burst, and what Bernanke is doing following the bursting of the housing bubble has been stratospheric. In the space of months, Bernanke doubled the Fed's balance sheet. Through engendering massive capital consumption, these measures have destroyed prodigious amounts of wealth, and continue to do so today.

Regarding the true wealth of society, nobody can say exactly how many "alphabet-levels" we've fallen, or will fall. But it is will very likely be enough to result in a calamitous long-term plummet in the living standards of the average person. This will very likely bring us to the climax of what Mises called the "Crisis of Interventionism".

Before the rise of liberalism made continuous capital accumulation possible across generations, the common man held a gross underestimation of what his own species was capable of. He simply took it for granted that economic stagnation across millennia was simply an inevitable fact of life. He had no inkling that human society was capable of enormous strides in the standard of living within a single decade. If the average man had any notion of it at all, he would have shrugged at the fact that his own standard of living was not much different from that of the average man a dozen generations before him, or, for that matter, from an even more ancient forebear 1,000 years prior. And if the ruling caste lived high on the hog while the bulk of the populace remained mired in squalor, well that was just a fact of life, too.

But that has irreversibly changed. The phenomenal increases in the well-being of man of the past centuries have exploded such lies. The common man knows he and his fellows are capable of wondrous achievements.

And so, years from now, after the ceaseless and prodigious capital consumption engendered by the Federal Reserve and other government measures has reduced society to squalor again, the common man will not accept it. The ruling caste may insist to him that The New Squalor is simply a product of circumstances brought on by the recklessness of certain private individuals, and that the maintenance of its own power and position are necessary to keep things from getting even worse (as the Fed is doing even now as it is confronted with but a mild curtailment of its powers). But the common man will not believe them. He will not accept a return to the old order. He has already tasted the fruits of capital accumulation. He knows civilization is capable of more than this, and that somewhere there must be a wrench in the gears of society: a problem too fundamental to be explained by just the reckless investing or heedless consumption of certain private individuals at a certain point in time. He will desperately look for this wrench, even if it means abandoning some of his most firmly-held beliefs about government and society. He already knows from history that the students of Marx can't help him find it. And he will come to realize after a string of failed economic rescue attempts that the students of Keynes and other mainstream economists don't know where it is either.

But, if he survives long enough, and if society does not descend into barbarism first, the common man might find the answer to his conundrum in the writings of Ludwig von Mises and his students. And he will learn from Mises that the wrench in the gears of civilization is nothing else but the interventionist state. He might then even find the will and the nerve to yank out the wrench for good.

Or he might not, and all will be lost.

As the state brings the world deeper into the Crisis of Interventionism, civilization itself is nearing a fork in the road. It will be Mises or bust.

Friday, November 27, 2009

Posthumous Refutations

Please read about my new (hopefully daily, if I can maintain that pace) project on the Mises Blog.

Saturday, November 21, 2009

Climate Scandal and Healthcare Debate

Two recent posts by me on the Mises blog:

Edutheria by Lilburne

Ludwig von Mises wrote:

"Society lives and acts only in individuals; it is nothing more than a certain attitude on their part. Everyone carries a part of society on his shoulders; no one is relieved of his share of responsibility by others. And no one can find a safe way out for himself if society is sweeping towards destruction. Therefore everyone, in his own interests, must thrust himself vigorously into the intellectual battle. None can stand aside with unconcern; the interests of everyone hang on the result. Whether he chooses or not, every man is drawn into the great historical struggle, the decisive battle into which our epoch has plunged us."

The decisive battle Mises spoke of continues today, and it has come to a head. The unprecedented actions taken by the United States government in the last 8 years (especially the unprecedented degree of monetary expansion of the last 2 years) have brought human society to the brink. Now more than ever, society needs as many shoulders as possible.

When Mises wrote the above words, the "intellectual battle" he meant was a battle of economic ideas. Unfortunately today, the battlefield must be enlarged beyond that.

In Mises' day, it might have been enough to rescue society for a critical mass of individuals to only comprehend praxeology, thereby enabling them to explode the myths of the socialist and interventionist. But now the intellectual armament of a man who would be free must be larger.

  • He must also know enough of algebra and calculus to know the limitations of their applicability and thereby explode the myths of the mainstream economist.
  • He must know enough of true natural science and its underpinnings to explode the myths of the environmentalist.
  • And he must know enough of true history to explode the myths of the public school teacher.

With Mises' injunction in mind, I intend to create a general curriculum with which any intelligent adult or adolescent can arm himself to that degree.

This curriculum for freedom, or education for eleutheria (Greek for freedom) will be called Edutheria.

This curriculum is not only motivated by Mises' entreaty, but it will be informed by his epistemology. Mises wrote extensively upon the appropriate ordering of conception before understanding in cognition, and thereby, of theory before history in scholarship. I believe this priority is just as appropriate for the humble student trying to find truth for himself as it is for the pioneering scientist trying to discover truth for the sake of all mankind. And so Edutheria will start with pure theory, namely logic, praxeology and mathematics, and work from there to the humanities and to natural science.

The four successive portions of this curriculum will be as follows:

  1. Theory: First logic, then praxeology (including economics) and mathematics
  2. Chronology: An economic and logistical exploration of historical facts
  3. History of Thought: Applying theory to discover ideological insights and fallacies; culminating in a summary of contemporary natural science and a working ideology for...
  4. A General Interpretation of History, Society, and Man

This curriculum will be useable both for completely independent study and for study under the guidance of a tutor. It will be appropriate for brilliant middle schoolers, bright high schoolers, and intelligent adults.

Ideas, facts, and narratives will be introduced with comics and skits, and then further elucidated with original monographs and worksheets as well as further reading assignments. Lessons can be applied via writing and report assignments to be provided.

I fully expect this to be my life's work.

Thus far, I have made the following progress:

My work in the near future will be dedicated mostly to the praxeology portion, especially Human Action Comics.

Wednesday, November 11, 2009

Human Action Comics #4: Opportunity Cost and the Entrepreneur

Human Action Comics #4 and #5 are now #5 and #6 respectively. I've created a new #4 on opportunity cost and the entrepreneur (two subjects which I believe are best treated before capital theory and exchange theory). You can view the new issue in Facebook (no account required) or watch it as a Picassa slideshow below. Click play and then pause to advance at your own pace. Click on the middle of the screen to view in a bigger window (or even full-screen).

Monday, November 9, 2009

Updated: Human Action Comics #1... Now Infused with Scarcity!

I've expanded and improved issue #1. I believe it now covers the basics more thoroughly, extensively, and funnily. I hope you will take a look. You can either view in Facebook or watch as a Picassa slideshow below. Click play and then pause to advance at your own pace. Click on the middle of the screen to view in a bigger window (or even full-screen).

Sunday, November 8, 2009

Crisp Argument For Libertarianism

Libertarianism is the only morally justifiable political philosophy for anyone with a conscience normal enough to feel that murder, theft, and enslavement are wrong, and a mind consistent enough to apply that maxim to every man equally.

Lilburne on the LvMI Blog

I'm now writing for the Ludwig von Mises Institute Blog! I'll be regularly posting digests of interesting topics and discussions going on in the Ludwig von Mises Institute Forum. Here is my first such digest: Lifelong Learning in the LvMI Forum.

Saturday, November 7, 2009

Updated: Epistemology and Worldview Throughout History

I've updated the inter-post links in my series of posts called Epistemology and Worldview Throughout History. If you're interested in mythology and/or ancient philosophy, I hope you will give it a read.

Thursday, November 5, 2009

Narrated Version of Human Action Comics #3 Up On YouTube

Narrated by yours truly. Thanks to Daniel from the Mises Forums for editing it!

Wednesday, November 4, 2009

Crisp Argument Against Central Banking

Over the long term, ALL the central banks do is dramatically increase the money supply. And an increase in the money supply provides NO general social benefit.

Think about it. How could increasing the amount of money in circulation do any good?

By making society directly wealthier? That's ridiculous, because money has no direct use-value, and it does not produce anything with direct use-value. It is a nothing but a medium of exchange. ANY amount of money is just as good as ANY OTHER amount of money to serve its role as a medium of exchange.

How about by allocating resources more efficaciously? Also ridiculous, only less self-evidently so. Increasing the money supply creates distortions in the price structure, because the money doesn't instantly manifest in everybody's pockets at the same time. Prices are the FUNDAMENTAL DATA of economic calculation and efficacious resource allocation. So how can a DISTORTION in the price structure lead to anything else but MISALLOCATION of resources?

Crisp Arguments

In this ongoing series of posts, I will try to condense the most concise and effective arguments possible for several big issues.

Tuesday, November 3, 2009

Updated: Lilburne's Guide to Menger's Principles

I've copied over from the old site all the posts in my Guide to Principles of Economics by Carl Menger and completed the laborious task of updating all the links in each post. It's not as easy to read as my comics, but I hope you find it informative all the same!

Sunday, November 1, 2009

More Slides Added to Human Action Comics #5

I've added 15 new slides on economic growth to Issue #5 (slides 35-50). They can be found on the Human Action Comics main page.

Thursday, October 29, 2009

Freedom vs. Property Piece (Ebook)

Click here to learn how to read these on your iPhone.

Freedom and Property: Where They Conflict by Frank van Dun

Human Action Comics #5: Direct Exchange

Issue #5 on Direct Exchange is up on Picassa and Facebook. I'll come back to edit this post, once I narrate it and upload it on YouTube.

Monday, October 26, 2009

Chasing a Dream by Lilburne: A Song Dedicated to the Ron Paul rEVOLution

I wasn't active in the Ron Paul campaign, though I wish I was. I wrote this song imagining what it might have been like.

A Moving Piece on Ludwig von Mises (Ebook)

Economics and Moral Courage by Lew Rockwell

Two Great LvMI Speeches in Salamanca (Ebooks)

Click here to learn how to read these on your iPhone.

The World of Salamanca by Llewellyn H. Rockwell Jr. in the Context of Publishing History by Jeffrey A. Tucker

You Will Never Be Alone with an Economist in Your Pocket

10 Anthropica Points for whoever can identify what quotation the title of this post is based on and who said it!

I recently installed the eBook reader Stanza on my iPhone.  It may not be E Ink, but it's much better than reading Rothard and Mises on the iPhone's Safari browser!  Just the fact that Stanza remembers exactly which page you left off at makes all the difference.

There are other ways than the following to transfer epub files into your iPhone.  But I had trouble until I tried the following way...

  • Search "Stanza" in the App Store on your iPhone.
  • Download and then launch Stanza (it's free)
  • Tap on "Online Catalog"
  • Tap Plus Sign
  • Tap "Add Web Page"
  • Type "Mises" under "Name" and the following url under "URL": (You'll just have to type it out once.  It'll be worth it!)
  • Tap "Save"
  • Then, back in "Online Catalog", tap "Mises" and the Mises ePub page will appear.  Click on whichever ebook you want (currently Human Action; Man, Economy, and State; America's Great Depression; and The Case Against the Fed are available), and wait for it to download.

EVERYONE interested in Austrian Economics who has an iPhone should have Human Action and MES on it.  Even if it's slow going, or if you don't understand all of it... just make those two treatises your long-term companions, and whenever you find yourself waiting in line or waiting for your girlfriend to finish shopping, just fire up whichever treatise you feel most like reading, and make some progress!

Thursday, October 22, 2009

A Rather Politically Convenient "Rethinking" on Cancer Screening

The Journal of the American Medical Association, the labor-restricting guild that is largely responsible for the high cost of health care published an editorial, the thrust of which, in the words of its lead author Laura Esserman (who by the way donated a cool thousand to Obama's presidential campaign), is that, "The benefit [of cancer screening] is not nearly as much as we hoped and comes at the cost of overdiagnosis and overtreatment..." And the American Cancer Society, although they've since backpedaled a bit, has voiced support for this position.

The mainstream media is all over this "rethinking" on screening. The New York Times headline runs, "Benefits and Risks of Cancer Screening Are Not Always Clear, Experts Say" Sharon Begley in Newsweek: cites the editorial while opining about, "Why there's more reason than ever to be skeptical about cancer screening."

Esserman has been quoted and interviewed extensively in the past couple of days. In her interviews on the News Hour and on San Francisco's KQED she protests profusely that the "rethinking" she is pushing for is not about restriction of care, but is about "tailoring care" and "making care better."  In the KQED interview, in a soppy, "caring" tone, she professes her concern for patients worrying over cancers which they do indeed have, but which aren't necessarily dangerous.

I highly suspect that all this is basically a ham-fisted attempt at consent-engineering purposed toward softening the blow for future government-mandated restrictions on screening. Unless we fight back, we may well be on our way toward centrally-rationed health care. And that's not scare-mongering, but simply a sensible analysis of political trends.

Sunday, October 18, 2009

Human Action Comics by Lilburne

Issue #TopicPicassaFacebookYouTube
1The BasicsView in PicassaTemporarily Unavailable in FacebookView in YouTube (older, incomplete version)
2Subjective Theory of ValueView in PicassaView in FacebookView in YouTube
3Marginal Theory of ValueView in PicassaView in FacebookView in YouTube
"3.2"Diminishing Marginal UtilityView in PicassaUnavailable in FacebookUnavailable in YouTube
4Opportunity Cost and the EntrepreneurView in PicassaView in FacebookCurrently Unavailable in YouTube
5Capital TheoryView in PicassaTemporarily Unavailable in Facebook Currently Unavailable in YouTube
6Simple ExchangeView in PicassaView in Facebook Currently Unavailable in YouTube

Ever since I first started studying the Austrian tradition, I have never accepted the characterization of economics as the "dismal science".

Economic truths are only "dismal"--in the sense of "depressing"--to busy-body statists who long for a free hand in coercively remaking society according to their own liking.  To those who love freedom, however, economics is a scientific affirmation of what we already know in our hearts: that freedom works.

And economic truths are only "dismal"--in the sense of "dreary"--to those unfortunate enough to have learned mainstream neoclassical economics from textbooks.  To students of the Austrian tradition, who learned economics from, for example, reading the penetrating prose of Ludwig von Mises or listening to the hugely enjoyable lecture archive of Murray Rothbard, economics is the thrilling study of ACTION.

In the spirit of economics thus conceived, I have started a new project to communicate the basic principles of Austrian economics in the most action-oriented medium around: comics.  I would like to introduce you to that project.  I usually wouldn't write a "review" of my own work.  But the great Lew Rockwell suggested I do so.  And when Mr. Rockwell says "write", I say "how much?"

In my new series, Human Action Comics, I try to explain the principles of Austrian Economics in a manner as simple, as clear, and as enjoyable as possible.  I'm no visual artist, so don't expect dazzling graphics.  But I am a teacher by profession and a writer by passion.  So, in Human Action Comics, I try to bring my communicative and creative strengths to bear through:

  • Clear explanations and examples (with extensive use of "Crusoe Economics")
  • Dynamic character interaction (by giving life and personality to great figures from the history of economic thought)
  • Generous dollops of humor (witness the power of Menger's beard in Issue #3)
  • Even a bit of drama (Issue #2 ends with a cliff-hanger!)
My hope is that these comics will make the "cost of entry" of being introduced to Austrian Economics so low that even those skeptical friends and family that all libertarians have will take a gander.

Here's some feedback I've received in the past week:
"Excellent... thanks for making it so enjoyable to understand."
" might have actually given me the tools to show my fiancee that economics is actually fun!"
"I find your Human Action Comics very funny and enlightening. I think that if someone has a drive to learn about economic theory, your stuff is spot on."
"You just keep outdoing yourself! Thanks again, these help me introduce friends to Austrian economics and open up discussions. Loving them."
All six current issues (and all future ones) can be found in the table at the top of this post.  I hope you will enjoy them.

Saturday, October 17, 2009

Human Action Comics #5: Capital Theory

Click here to view in Facebook (no account required) or watch below (After clicking play, click pause, and then advance through the slides at your own pace).

Wednesday, October 14, 2009

The New Home of Summa Anthropica

For those already familiar with Summa Anthropica, I'm switching over to Blogger due to technical difficulties at the previous host.  It will take a while, but I will move each post over, one at a time.

I may still crosspost at the old site.

Tuesday, October 13, 2009

Human Action Comics #3: Marginal Theory of Value

View the slides in Facebook (no account required), watch a narrated version on YouTube or watch below (After clicking play, click pause, and then advance through the slides at your own pace).

Monday, October 12, 2009

Human Action Comics #2: Subjective Theory of Value

Click here to view in Facebook (no account required), watch on YouTube with narration, or view below as a Picassa slideshow. (After clicking play, click pause, and then advance through the slides at your own pace).

Sunday, October 11, 2009

Human Action Comics #1: The Basics

View in Facebook (no account required), watch on YouTube with narration, or view as a Picasa slideshow below (After clicking play, click pause, and then advance through the slides at your own pace).

Friday, September 25, 2009

Society Versus State in Seven Epochs

I perceive political history as Murray Rothbard and Albert Jay Nock perceived it: as a struggle between free society and the state.1  I do not pretend to be an impartial observer of that struggle.  As an amateur historian I aim to be what Lord Acton called a "hanging judge", freely condemning acts of evil, as well as extolling acts of virtue.  In my analysis of history, I aim to "hang" the criminals who fill the ranks of the state, commiserate with their victims, congratulate the free men who manage to escape their grasp, and extol the moral men who strive against them.

Mainstream historians, in spite of pretensions of impartiality, often, in practice, have a similarly judgmental view of history.  However, they reserve their hangman's noose for relatively free men, and extol princes.  An excellent example of this is in Egyptology.  Ancient Egyptian history is divided up by western scholars into "Kingdoms" and "Intermediate Periods".2  The Old, Middle, and New Kingdoms are eras during which all of Egypt was united under the yoke of a single pharaoh.  The First and Second Intermediate Periods are eras when state power, while not extinguished, was diminished and localized.  The implication of this naming scheme is that Pharaonic rule is the "normal" condition of the land, and that periods of political decentralization are merely awkward transitions.  Most Egyptologists characterize the Intermediate Periods as unhappy, chaotic times, hardly worthy of mentioning.  And they extol the "Kingdoms" for their unity of purpose and the splendor of their royalty.  Never mind the crushing of the individual required for such unity.  And never mind how much rapacity was required to squeeze enough wealth from the people to fund the opulence of the Pharaonic court.

Ramses II of Egypt

In my division of history into political epochs, I will take the exact opposite tack as does the Egyptologist.  I will characterize eras of advancing freedom as the "normal" periods.  Instead of "Kingdoms", my "normal" periods will be called "Freedoms" (and I will use the Egyptologist's "Old, Middle, and New" scheme).  I will term eras dominated by swelling states as numbered "Intermediate Periods", in order to rightly mark them as aberrant and perverse.

I list my epochs below.  Next to each epoch, I also provide two "markers" to bookend each age.  Each marker is a geographic location which represents a high point characteristic of its age: one at each age's beginning and one at each age's end.

The Old Freedom: From the First Society to the Halaf Culture

It has been argued that man has only risen from the depths of squalor upon becoming “civilized”, that is, upon coalescing into a civitas, or state. Thus mainstream history textbooks hail the origination of government as a crucial step in the “march of progress.”  However, great prosperity is the fruit of society, not the state.  And society antedates the state. 

Civilization first arose in Mesopotamia, the “land between the rivers”.3  However, many societal advancements associated with “civilization” antedated the state in that region.4  Paleolithic families commerced with people as far away as Anatolia and Palestine many millenia before the rise of the Sumerian city-states.  Village life arose in Mesolithic times.  And the Neolithic agricultural revolution and introduction of pottery got underway quite nicely under stone age anarchy.

Three successive (though overlapping) proto-historical cultures arose in northern Mesopotamia: the Hassuna, Samarra, and Halaf cultures.  All three made great strides in art, trade, and the technologies of agriculture, building, implements, pottery, and even irrigation.5  And not one of them showed any signs of having a central government.  The Hassuna culture developed stamp seals, an important development in the protection of private property and in trade, as well as a precursor to the written language.  The Samarra culture invented irrigation with which they produced amazingly abundant harvests, as evidenced by the remains of capacious granaries.  The Halaf culture even had cobbled streets and specialized centers which mass produced a distinctive pottery (which has been called by the French antiquarian Georges Roux, “the most beautiful ever used in Mesopotamia”1) for peaceful exchange abroad. Pre-state Mesopotamian society was accomplishing wondrous things for itself.

An Iranian Granary

The First Intermediate Period: From Eridu to Hastings

Then something happened.   Several Halafian towns were for some reason depopulated.6  And their exquisite pottery was replaced by a cruder style: a sure archaeological sign of cultural displacement.   A very different people, the Ubaid culture, had come from the south and supplanted the Halafians.  The Ubaid culture had shrines, altars, offering tables, and enormous temples: sure signs of a priestly elite.  And their temples consistently grew in size and grandeur as the ages went by: a sure sign of consolidating priestly power.   It is highly likely that the people of this culture are the famous Sumerians themselves in their proto-historical form.   If so, then the cult which originated in the Ubaid temples is the very tradition which evolved into the monstrous temple-states of Sumer, Akkad, Babylon, and Assyria.  The north Mesopotamian tradition of freedom that lasted for a millennium and a half was replaced by the systemic deceit and coercion of the state.

 Where did this “Ubaid” culture start and how? It seems likely that that culture, and the state itself first arose in Eridu (my full argument for this is in my post Cradle of the State.  Eridu is the oldest Sumerian city known to archaeologists. And it is the first place in which evidence of the “Ubaid” culture is found. In fact, the early phase of the Ubaid period is known as “Eridu”.

The archaelogical site of Eridu reveals that a series of successively larger temples was built on the same spot, starting with a simple, tiny one-room building, and ending with a vast sprawling proto-ziqqurat.7 This is the first instance in the archaeological record in which any kind of heavy centralization of power is evidenced by a few buildings being dramatically larger than the rest. And one can see that centralization of power growing as each successive temple is built with ever greater opulence, while the surrounding buildings stay humble.

At some point, a separate palace is constructed one kilometer north of the temple site. This palace site, the earliest known in the world, also undergoes a series of upgrades through the ages. However, most of the palace levels were not archaeologically recoverable. Level 2 is the most complete. It bears resemblances to palaces in the city-state and later holy site of Kish. It is distinguished from temples in the absence of altars and the presence of gates, chambers, courtyards, guard’s rooms, and living quarters.

Perhaps this palace, and palaces in general, developed as a residence for top priests, who evolved into kings. Alternately, perhaps the priests gave some local uneducated ruffian command of the army, so they would not themselves need to get in harms way. This “general” acquired a power-base of allegiance of his own among the soldiers, and evolved into a king, then demanding his own lavish quarters.
    Eridu’s place on the King’s List also indicates that it was something of an empire. The King’s List is known to have only included kings whose cities reigned over (or were at least hegemonic over) the entire region of “Sumer-and-Akkad”. This jibes perfectly with the fact that the Ubaid culture which first arose in Eridu was later found throughout the region. And given how, throughout history, the most centralized nation-states have also been the most war-thirsty, it seems very likely that the priest-kings of Eridu would not be satisfied with completely subjugating only the local population. And also seems very likely that an all-powerful central cult-state, with the ability to dragoon its young men into war, would be able to put under the yoke village after peace-loving village as it marched up the Euphrates.

    The Standard of Ur

    Early on in the history of the state, there was an incomplete division between the state's muscle (centered around the king in his palace and the armies he led) and its brain (centered around the priest-technocrats in their temples).  As we see in the first palaces having been spin-offs of the first temples in ancient Eridu, this may have happened in the very first state.  This specialization led to a limited degree of rivalry, but for the most part Throne and Altar worked hand-in-glove to enslave and fleece the populace.
    To understand the import of this development in human history, one must understand the nature of this phenomenon called the state.

    There has always been thuggery: assault, plunder, and enslavement.  But mankind has natural safeguards to defend against thuggery: including the ability to recognize justice, and the ability to join together with other decent people to implement justice.

    There has always been deceit: slander, fraud, and indoctrination.  But mankind has natural safeguards to defend against deceit as well: reason, skepticism, and the senses.

    However,  with the advent of the state, mankind's defenses was overwhelmed by a devastatingly effective partnership between thuggery (the Throne) and deceit (the Altar).  The state has always been a maleficent symbiosis of violent criminals (the Throne) and propagandizing/brainwashing intellectuals (the Altar).8  The Altar fosters the Throne through twisted sophistries which establish a false legitimacy and engineered consent to disarm our natural safeguards against thuggery. The Throne fosters the Altar through compulsory indoctrination  and through using its ill-gotten gains to directly corrupt intellectuals, all of which disarms our natural safeguards against deceit.

    The Throne needs the Altar.  The ruled always outnumber the rulers, so a reign predicated on bald criminality (like a protection racket) would quickly be overthrown. To maintain its power, a regime must transmute murder into justice, tribute into taxation, and slavery into citizenship in the minds of its subjects. To do that, it needs intellectuals.

    The Altar needs the Throne. Elaborate scams based on lies and manipulations (like cults) are difficult to maintain. Eventually some people begin to see through the lies and speak out. To keep its hold on its flock, an elite must be able to silence or coerce dissenters. To do that, it needs thugs.

    The state put man in chains, but also under a spell. The former could not hold man without the latter.
    It is highly worth mentioning that in the pre-state cultures of Mesopotamia, while there were signs of religion on a household level, there were no temples, and no signs of an official cult.9

    The close-knit symbiosis between Throne and Altar known as "Caesaro-Papism" characterized all states throughout ancient history10, from the Egyptian Pharaohs who reigned as living incarnations of the god Horus, to the Athenian Democracy which executed Socrates for impiety, to the Roman imperial cult of Sol Invictus, to the literal Caesaro-Papism of the Byzantine Empire.

    Why did the advent of the state follow so closely on the heels of the Agricultural Revolution?  Before then, there was not enough food to support both productive slaves and unproductive masters.  But the unprecedented advent of vast surpluses of food had the unfortunate side-effect of making human slavery more viable and more tempting to would-be slavers.

    The First Intermediate Period is characterized by relatively free peoples (often characterized by both the conquerors and later historians as "barbarians" or "backwards peoples") being overrun by militant centralized states: northern Mesopotamian villages overrun by Sumerian armies; Beoetian villages overrun by Theban phalanxes, Gallic villages overrun by Roman legions, Saxon villages overrun by Carolingian knights.  The last great event of this kind in this period was the Norman Conquest of England, decided at the Battle of Hastings in 1066.

    Norman Knights Charging an English Shield Wall (from the Bayeux Tapestry)

    The Middle Freedom: From Canossa to Runnymede

    The first great sundering of the historic partnership of Altar and Throne occurred 11 years after the Battle of Hastings when Holy Roman Emperor Henry IV trekked barefoot to the Castle of Canossa in Italy in a hair-shirt to beg Pope Gregory VII to lift his excommunication.11  In humbling the emperor, the Pope heralded the Papal Monarchy of the High Middle Ages.

    The Walk to Canossa

    But this Papal Monarchy did not go on to become an empire.  The Church was powerful and independent enough to counter and limit the power of European monarchs, but not enough to become a full empire itself.  The fragmentation of power that the church imposed upon Catholic Europe emboldened nobles and clerics against kings, lesser nobles against greater nobles, and peasants and burghers against lords.  This unprecedented breakdown of Caesaro-Papism set Catholic Europe on a course widely divergent from the rest of the world.12  Caesaro-Papism and the despotism it made possible persisted in medieval and early modern times throughout the east, even including Orthodox Russia and Byzantium.  It is the history of political fragmentation shared by all of Catholic and post-Catholic Europe and its colonies that most distinctly sets "the west" apart from the rest of the world.
    The relative freedom made possible by political decentralization led to the industrial and commercial revolution of the high middle ages13 which is egregiously ignored by contemporary popular history.  During the middle ages, water and wind mills peppered Europe like never before.  The increased energy thus harnessed and its automaticity had an explosive effect on productivity.  Cereals grains were processed with unprecedented efficiency.  The greater heat of medieval furnace technology initiated the true iron age, during which quality iron was available for widespread use for the first time.  There were huge improvements in agricultural technique, including in field rotation.  The medieval harness unleashed the motive power of the horse in agriculture, which dramatically increased productivity.  Scientific husbandry at monastery sheep farms led to an explosion in wool productivity.  All this happened, and much much more.

    The Magna Carta, signed in 1215 in Runnymede was a check on royal power that was most characteristic of this relatively free and highly prosperous age.14

    John of England signs Magna Carta

    The Second Intermediate Period: From Anagni to Versailles

    Unfortunately, 70 years after Runnymede, European saw the coronation of a monarch who would prove to be the herald of an age of absolute monarchy.  Philip IV of France (known as "the Fair" for his good looks) committed a wide number of atrocities (bringing on the Hundred Years War, expropriating and expelling the French Jews, expropriating and murdering the Knights Templar, imposing crippling taxes on the vitally important fairs of Champagne).15  But the most significant of these was his arrest of Pope Boniface VIII in 1303.16

    As the culmination of an intense power struggle between the King and the Pope (particularly over the king's desire to tax the clergy), Boniface excommunicated Philip.  Philip responded by sending two thousand mercenaries to the Papal palace at Anagni.  The mercenaries plundered the palace, and captured the Pope, nearly murdering him.  Although rescued by locals, the Pope developed a fever shortly after this incident, and died.  Within a few years, the Papacy was relocated to Avignon, a French-dominated territory, and was relegated to slavishly generating moral authority for the French crown by rubber stamping its  atrocities.  Just as the humiliation of a monarch at the hands of a Pope at Canossa signaled the beginning of an age of relative freedom and prosperity, so did the humiliation of a Pope at the hands of a monarch at Anagni ring that age's death knell.17

    Sciarra Colonna Slapping Boniface VIII

    Philip the Fair was followed by many European monarchs who continued to bully, fleece, and manipulate the Church, thereby vastly increasing their power over the rest of society.  Caesaro-Papism was back; Throne and Altar were reunited.  In the 14th century, the Avignon Popes continued to serve as puppets of the French Crown.  But even after the Papacy returned to Rome, the Church was a fundamentally different institution.  In country after country, it was either driven out by the Protestant Reformation, which many monarchs embraced and promoted as a movement which gave them more power (also, many of the Reformation's spiritual leaders, including Martin Luther, believed not in religious freedom, but in the crown acting as head of the national church18), or subjugated.  In the 15th century, the Inquisition, a department of the Church, served slavishly as a bloody tool of the Spanish Crown.  In the 16th century, Henry VIII drove the Catholic Church out of France to expropriate its wealth and set up his own state church.  In the 17th century, cardinals served as veritable viziers for the French Crown.  The procession toward absolute monarchy culminated in the "Sun King": Louis XIV of France who completely subjugated the French nobility and clergy and who brought nothing but impoverishment, war, and repression to his people  Monarchs throughout this age used their newly untrammeled power to engorge themselves, via taxes and corveys, on the surpluses made possible by the advances of the High Middle Ages.  After the centuries of phenomenal economic growth called the High Middle Ages, the 14th century was a time of retrogression, and the 15th and 16th centuries were times of relative stagnation.19

    The New Freedom: From Munster to Manchester
    However, the march of absolute monarchy would not go unchecked.  Europe had already tasted the fruits of freedom, the seeds of which were deeply sown, especially in the towns.  In the 17th century, the Dutch burghers revolted against the despotic Spanish Crown.  Decades of struggle paid off when, in 1648 the Treaty of Munster was ratified, establishing the independence of the liberal states of the Low Countries.20

    Citizens of Amsterdam celebrating the Peace of Münster

    This was followed by the English Civil War.  This revolution and the conflicts following it dramatically weakened the English state, which made possible the Industrial Revolution in that country.21  An Age of Revolution followed which was largely a series of attempts in other western nations to copy the success of the English experiment.  Free trade and property rights were shown to be the key to prosperity.  In country after country, revolution or the threat of revolution paved the way for economic liberalization (especially the abolition of serfdom), which paved the way for industrialization, which paved to the way for greater increases in human prosperity than had ever been known.22  The apogee of the liberal tradition in Europe was perhaps the career of Richard Cobden.23  Cobden was a leader of the Anti-Corn Law League, which was formed in Manchester, and which succeeded in repealing the last great vestige of the protectionism of the previous epoch.  As an MP later in life, Cobden also negotiated a sweeping free trade treaty with France.  The heroic activism of Richard Cobden made food and countless other goods more affordable for countless of his fellow humans.  More than any ruler with "the Great" attached to his name, Cobden was truly a benefactor of mankind.

    Richard Cobden

    It was during this epoch, that America was "conceived in liberty".  While certainly flawed, the American republic held a deep strain of liberalism, which was for the most part ascendant throughout its first hundred years of existence.  This strain can be seen running through such American groups as the libertarian religious non-conformists of the colonial period (led by Roger Williams, Anne Hutchinson and Samuel Gorton)24, the Anti-Federalists (led by Patrick Henry)25, the Republicans of the late 18th century (led by Thomas Jefferson)26, the "Old Republicans" of the early 19th century (led by John Randolph)27, and the Democrats of the middle 19th century (led by Andrew Jackson and Martin van Buren28.  However, this strain was indelibly corrupted by the abhorrent practice of slavery.

    The Third Intermediate Period: From Berlin to Manhatten

    Unfortunately liberalism was not the only current in the revolutionary movement.  The success of liberalism in the 17th, 18th, and 19th centuries was largely due to the fact that its ends happened to temporarily coincide with the ends of another movement: the bourgeoning democratic movement.  From the late 17th century onward, power in European society moved inexorably, but gradually, from the few to the many.  At first this was a highly liberal trend, because it involved destroying the state-fostered privileges of the few and unshackling the many.  This occurred primarily when power was expanded to the middle classes, whose main interest was the protection of property rights.  But as power expanded further to the proletariat, the populist trend continued beyond liberalism, and moved into shackling the few and establishing state-sponsored privileges for the many.

    The subjugation of liberalism to democracy could be seen in France in the Jacobin Terror of the First Republic29, the "National Workshops" of the Second Republic30 and in the Paris Commune31.  The logical culmination of this trend was reached in the Bolshevik Revolution of 1917 in Russia32.  The "dictatorship of the proletariat" in communist Russia led to calamitous famine and widespread murder.33
    The man who most skillfully harnessed the rising tide of people power was Otto von Bismarck, Chancellor of Prussia and, later, of the German Empire.34  Initially considered by reformers to be a chief enemy of the people, he became a populist darling when his despotic policies of taxation, conscription, and state schooling led to startling military victories against Austria and France.  Bismarck also introduced enormous "social insurance" schemes.  Thus did Bismarck draw the German people into trading their freedom for booty and the dole, and in so doing, invented the modern warfare/welfare state.  Bismarck welded together Prussia and the confederate German states into a single, militant, nationalistic, paternalistic, populist super-state which would, in the 20th century, twice try to overrun all of Europe.  The German state was a portent of how the rest of Europe would eventually "modernize."  Bismarck's "success" greatly impressed the Englishman Lloyd George, who would later bring Prussian welfare statism to England.35

    This age also saw a resurgence of Caesaro-Papism.  Even in this age of democracy and science, Throne and Altar were alive and well.  Only it was certain collectives of people (the majority, the proletariat, the Arian race, etc.) which was enthroned at the expense of others.  And instead of subverting faith, intellectuals subverted "scientific" doctrines in order to weave apologia for their state patrons.  For example, the "high priest" of economics in imperial Prussia was Gustav von Schmoller at the University of Berlin, which was boasted to be "the intellectual bodyguard of the House of Hohenzollern".  Schmoller's Historical School of economics rejected the laws of classical economics because obeying them put too many trammels on the state.36

    Bismarck (center, in white) looks on as Wilhelm I is proclaimed German Emperor

    In America during the same generation, Abraham Lincoln, in the War Between the States obliterated political decentralization and began the American shift from laissez-faire to corporatism.37  This marked the shift in ascendency from liberalism to the statist strain in American political thought represented by the colonial Puritans (led by such men as Cotton Mather)38, the Federalists of the late 18th century (led by Alexander Hamilton)39, the "spoils system" Republicans of the early 19th century (led by John Quincy Adams)40, the Whigs of the middle 19th century (led by Henry Clay)41, and the Republicans of the late 19th century (led by Lincoln himself)42.  The laissez-faire industrial, monetary, and trade policies of the America's first century began to give way to corporatism, aka state capitalism (subsidies for business, government intervention in money, and high tariffs and taxes).43  American corporatism further flowered in the regulation and "trust-busting" (really trust-fostering) of the Progressive Era.44  The most pernicious state-fostered trust of them all, a cartel of big banks given state power known as the Federal Reserve System, was established in 1913.45  In the 1920s, the Fed blew up the greatest peace-time economic bubble in history.  The Federal government's response to the bursting of this bubble led to the Great Depression, the deepest and longest-lasting in American history.46  This crisis provided an excuse for the outright confiscation of the American citezenry's gold supply and the nigh-complete cartelization of American industry by Franklin D. Roosevelt.47  Under FDR, with the New Deal, America also jumped on the Bismarckian welfare state bandwagon which by then had already rolled across all of Europe.48

    Overweening corporatism also impelled America into imperialism, beginning with the Spanish American War.  This war began a century of corporatist-imperialist American wars (the two World Wars and all the American interventions in the Cold War) which flouted the Washingtonian principle of non-intervention and led hundreds of thousands of young men to their deaths, and many more to debase themselves in murdering others.  American imperial policies abroad led inexorably to a crisis of freedom at home, culminating in the policies following 9/11.  This crisis of freedom has been compounded by a Second Great Depression generated by massive fiscal and monetary "bailouts" following the bursting of a massive economic bubble blown up by the Fed.  This crisis of freedom is where we find ourselves today.

    George W. Bush on the rubble of the World Trade Center

    Future Freedom: From Ron Paul to Distant Futurity?

    Will there be a Future Freedom?  Might even Ron Paul herald a 7th epoch which will rise as the failures of statism become too intolerable to bear any longer?  If he can bring down the Fed with his heroic actions in Congress and on the public stage, it would be a damn good start.  It might sound doubtful, but as many 19th century tyrants could attest, revolution can sweep across a continent like a prairie fire.  So the 21st century heirs of John Lilburne, Lysander Spooner, Frederic Bastiat, Richard Cobden, Ludwig von Mises, and Murray Rothbard should never stop striving.

    Ron Paul


    • History Begins at Sumer by Samuel Noah Kramer
    • Ancient Iraq by Georges Roux
    • Penguin Atlas of Ancient History by Colin McEvedy
    • Penguin Atlas of Medieval History by Colin McEvedy
    • Penguin Atlas of Modern History by Colin McEvedy
    • Penguin Atlas of Recent History by Colin McEvedy
    • Penguin Historical Atlas of Ancient Egypt by Bill Manley
    • A History of the Middle Ages by Crane Brinton, John Christopher, and Robert Wolff
    • Charlemagne: From the Hammer to the Cross by Richard Winston
    • How the Catholic Church Built Western Civilization by Thomas Woods
    • The Medieval Machine by Jean Gimpel
    • Medieval Feudalism by Carl Stephenson
    • The Crusades by Richard A. Newhall
    • A Distant Mirror: The Calamitous 14th Century by Barbara Tuchman
    • The Italian Renaissance by J.H. Plumb
    • The Reformation by George L. Mosse
    • Rise, Fall, and Renaissance of Classical Liberalism by Ralph Raico
    • The Age of Louis XIV by Laurence Bradford Packard
    • Europe Under the Old Regime by Albert Sorel
    • A History of Britain by Simon Schama
    • Conceived in Liberty by Murray N. Rothbard
    • The Enlightened Despots by Geoffrey Bruun
    • The French Revolution by Leo Gershoy
    • How Capitalism Saved America by Thomas DiLorenzo
    • Modern and Contemporary European History by J. Salwyn Schapiro
    • Europe Since 1815 by Mitchell Garrett and James Godfrey
    • John Adams by David McCullough
    • Thomas Jefferson and His Time by Dumas Malone
    • Andrew Jackson: His Life and Times by H.W. Brand
    • Rethinking Churchill by Ralph Raico
    • World War I As Fulfillment by Murray N. Rothbard
    • The Case Against the Fed by Murray N. Rothbard
    • The Politically Incorrect Guide to the Great Depression and the New Deal by Robert P. Murphy
    • The Ethics of Liberty by Murray N. Rothbard


    1Rothbard, Conceived..., Volume 1
    4 Roux
    7 Reconstruction of Eridu, This is an excellent HTML model of the archaeological site. I highly recommend taking this stratigraphic “tour” of Eridu. For more information see this excerpt from the Cambridge Ancient History (on Google Books).
    8Rothbard, Ethics...
    10Rothbard, Conceived..., Volume 1
    11Brinton et al
    12Rothbard, Conceived..., Volume 1
    14Brinton et al
    16Brinton et al
    17One should not read religious bias in this historical interpretation. Suffice it to say that this author is not himself Catholic.
    19Rothbard, Conceived... Volume 1
    20Raico, The Rise...
    21Rothbard, Conceived... Volume 1
    24Rothbard, Conceived...
    25Rothbard, Conceived...
    31Garret & Godfrey
    33Garret & Godfrey
    34Garret & Godfrey
    35Raico, Rethinking...
    36Rothbard, Ethics...
    38Rothbard, Conceived...
    44Rothbard, World War I...
    45Rothbard, The Case...

    Friday, September 18, 2009

    On Socialism

    Socialism inevitably leads to destitution and famine in direct proportion to the thoroughness with which it is applied. This has been shown to be true historically, with or without Marxist ideology or 20th century totalitarianism. It has starved 17th century colonists in Virginia and Plymouth just as thoroughly as it did Russian peasants under Lenin. It has also been shown to be true theoretically, from Aristotle's elucidation of the free rider problem to Ludwig von Mises's insight regarding the impossibility of the efficient allocation of resources without prices set by a market for capital goods. Socialism, because it is a revolt against human nature, is a genocidal philosophy.

    But that is just the consequentialist consideration. Socialism is evil on a deeper level as well. Socialism is evil to anyone with a conscience normal enough to feel in his heart that stealing is wrong and a mind consistent enough to apply that moral tenet to everyone equally.

    Sunday, September 13, 2009

    Character as Inverse Time Preference

    It is useful to divide "virtuous behavior" into two categories: 1) actions which are motivated by conscience and 2) actions considered virtuous, but which are not motivated by conscience.  The first category concerns man's morality.  The second concerns man's character.  While moral behavior is impelled by urges which are, in a sense, selfless, "acts of character" are impelled urges that are selfish, only the "self" concerned is a "more future" self.  In other words, character is a matter of time preference.  Everyone has time preference; everyone places a premium on gratification sooner rather than later.  But the level of that "premium on promptitude" varies.  The lower that premium (in other words, the less "now-oriented" the person is), in general, the higher the "character" of the person is usually deemed.
    To illustrate this, let's consider the "13 virtues" of Benjamin Franklin.


    Eat not to dullness; drink not to elevation.

    Let's say a man is at a work party.  He's had three drinks.  He knows a fourth drink will make him drunk.  He knows if he becomes drunk he will say and do things he will regret later.  He weighs two urges in his psyche: 1) an urge to feel the pleasure of being drunk in the near future and 2) the urge to avoid embarrassment in the distant future.  If his premium on promptitude is high enough, he will down the fourth glass.  If it's low enough, the thought of future embarrassment will steer him toward the ginger ale.

    2. SILENCE.
    Speak not but what may benefit others or yourself; avoid trifling conversation.

    Let's say two professional colleagues are having lunch together.  One has a juicy bit of idle gossip on the tip of her tongue.  She weighs the urge to unload her tale with the urge to be more productive with her time with her colleague; she could instead talk about the project they are working on.  The former action would be more pleasant in the short term.  But making headway on their project would advance her career, thereby paving the way for a great deal of pleasure in the long term.  If her premium on promptitude is high enough she will choose to indulge in the gossip.  If it's low enough, she will instead start discussing the project.

    3. ORDER.
    Let all your things have their places; let each part of your business have its time.

    Let's say a man comes home after a long day at work.  He picks up his mail in the lobby of his apartment building, and then walks into his apartment.  He really wants to just crash on the couch and turn on the TV forthwith.  So he has the urge to just drop his mail on his big pile of unopened mail as he's been doing lately.  He knows by doing this every day, he's creating quite a chore for himself in the future when he will have to sort through the big pile.  If he just took a minute to sort through the mail in his hand now, he wouldn't be contributing to the huge chore he'll have to do later.  If his premium on promptitude is high enough, he'll just toss the mail and crash.  If it's low enough, he'll do the tiny chore now to avoid contributing toward having to do a giant chore later.

    Resolve to perform what you ought; perform without fail what you resolve.

    Let's say a woman makes a New Year's Resolution to spend 15 minutes on her treadmill every morning.  Her alarm wakes her one morning.  Only if she gets out bed right then, will she have enough time to do her morning exercise.  But she's still groggy and would love a few more winks.  She weighs in her psyche the urge to sleep more now against the urge to contribute toward her long-term health.  If her premium on promptitude is high enough, she'll hit snooze.  If it's low enough, she'll drag herself out of bed.

    Make no expense but to do good to others or yourself; i.e., waste nothing.

    Let's say a woman shopping in a department store sees a really cute, but ridiculously expensive pair of shows.  Buying them will set her back a whole month in her longer-term goal of buying a new car.  If her premium on promptitude is high enough, she'll swipe her credit card and run home to try them on.  If it's low enough, she'll walk off in her New Balance sneakers eagerly awaiting the day she can drive of the lot in her new car, and pleased by the knowledge that that day will arrive a month sooner than if she had bought the shoes.

    6. INDUSTRY.
    Lose no time; be always employ'd in something useful; cut off all unnecessary actions.

    Let's say a man at work needs to finish his TPS report.  But the task bores him, so he'd rather idle away the hours mindlessly clicking around on the web.  Diving into the TPS report will be burdensome in the short term, but will advance his career in the long term.  If his premium on promptitude is high enough, he'll commence surfing.  If it's low enough, he'll close Firefox, and fire up that awful database software.

    Use no hurtful deceit; think innocently and justly, and, if you speak, speak accordingly.

    Let's say a politician is considering embarking on a smear campaign, based on mischaracterization, against his opponent.  Part of the decision process involves time-indifferent moral considerations.  But another part weighs the short-term goal of winning the election against the longer-term goal of maintaining a reputation of decency.

    8. JUSTICE.
    Wrong none by doing injuries, or omitting the benefits that are your duty.

    Incidents of justice qua justice are time-indifferent, and as such are matters of morality and not character.  Let's say an adolescent is contemplating stealing candy from his baby nephew, and that there is no chance of him getting caught.  There is no long-term downside of stealing the candy aside from the pangs of guilt he might feel.

    Avoid extreams; forbear resenting injuries so much as you think they deserve.

    Let's say a shopkeeper is tempted to shoot a shoplifter in the back for lifting a candy bar from his shelves.  In this case, there is a chance of him facing retribution for what others will consider a gross over-retaliation.  Insofar as that is the case, it is a matter character (inverse time preference).  It might feel good to shoot the punk in the short-term.  He weighs the urge against the long-term fear of rotting away in a prison cell.  Of course there a moral considerations as well.  His urge to shoot is also mitigated by his conscience screaming at him not to commit such a monstrous act.

    Tolerate no uncleanliness in body, cloaths, or habitation.

    Let's say a man is tired of thoroughly cleaning the carpet every time his dog pees on it.  He weighs the "sooner" urge to not have to deal with the mess now against the "later" urge of not having his pad smelling like an outhouse when he has guests over.

    Be not disturbed at trifles, or at accidents common or unavoidable.

    A man gets cut off in his lane on the freeway.  He wants to lean on the horn, and speed past the offending motorist with a middle finger thrust out his window.  This would satisfy him in the short-term.  But if he instead counted to ten and let it slide, it might contribute to a better mood in the long-term.

    12. CHASTITY.
    Rarely use venery but for health or offspring, never to dulness, weakness, or the injury of your own or another's peace or reputation.

    A married man is tempted to sleep with his co-worker.  Again time-indifferent morality plays a role ("it's just wrong"; "my wife doesn't deserve to be cheated on, etc."), but so does the conflict between "sex sooner" and "non-ruined marriage later".

    13. HUMILITY.
    Imitate Jesus and Socrates.

    A woman is tempted to give vent to her pride by bragging about her luxurious vacation.  She weighs that short-term temptation against the long-term aversion against contributing toward a reputation as a boastful bore.

    Character, it would seem, may be considered simply to be inverse time preference.