MCViewPoint

Opinion from a Libertarian ViewPoint

Posts Tagged ‘Ludwig von Mises’

Why Mises Rejected Common Notions of “Progress” | Mises Wire

Posted by M. C. on October 31, 2021

He says: “The term progress is nonsensical when applied to cosmic events or to a comprehensive world view. We have no information about the plans of the prime mover.” I must say that Mises has given rather short shrift to claims of cosmic design, but to him his point was obvious, and one can see why he makes it. His fundamental aim in all his economic and social writing is to defend the system of social cooperation through the free market from all attacks against it.

https://mises.org/wire/why-mises-rejected-common-notions-progress

David Gordon

Ludwig von Mises has some characteristically acute and important comments on the idea of progress in history, and in what follows, I’d like to address some of these. In the way he develops his views, one of the key themes of his notion of ethics plays an important role.

In contrast to those, like Herbert Spencer, who think that human history is progressive because it forms part of larger process of biological evolution, also viewed as progressive, Mises says that in biological evolution, what develops later is not “better,” or for that matter worse, than what has gone before. If natural selection results in one species’ supplanting another, that does not make the second species superior, even if it has traits that we prefer to those of the first. Mises puts the point in this way:

It was one of the shortcomings of nineteenth-century philosophies to have misinterpreted the meaning of cosmic change and to have smuggled into the theory of biological transformation the idea of progress. Looking backward from any given state of things to the states of the past one can fairly use the terms development and evolution in a neutral sense. Then evolution signifies the process which led from past conditions to the present. But one must guard against the fatal error of confusing change with improvement and evolution with evolution toward higher forms of life. Neither is it permissible to substitute a pseudoscientific anthropocentrism for the anthropocentrism of religion and the older metaphysical doctrines.

In what he says about evolution, Mises is in accord with the understanding of most modern biologists.

When Mises speaks of “pseudoscientific anthropocentrism,” what he means is that we human beings project our own importance to ourselves onto the process of evolution, so that we take ourselves to be the goal of history. But, he says, this is not part of science, which is purely descriptive.

As the argument stands so far, it contains a gap. From the fact that science is limited to describing and explaining change and cannot, within its own terms, properly speak of “improvements,” it does not follow that evolution has no goal. That would be true only if the standpoint of scientific description were the only way to assess what has occurred in the historical development of life or if no other way of assessment allowed room for a goal. In speaking of “goal” here, I have in mind a goal of the whole process, rather than the goals of individual persons. It is not part of descriptive science that such goals are precluded but only that they are not included within it.

Mises has anticipated this objection. He says: “The term progress is nonsensical when applied to cosmic events or to a comprehensive world view. We have no information about the plans of the prime mover.” I must say that Mises has given rather short shrift to claims of cosmic design, but to him his point was obvious, and one can see why he makes it. His fundamental aim in all his economic and social writing is to defend the system of social cooperation through the free market from all attacks against it. If people were to say that they have access to God’s plans for history, this might lead them to support interference with the free market, and it is Mises’s opinion that almost all those who did claim such direct access propose interfering with the market. For that reason, he opposes them. It doesn’t follow from this that Mises rejects religion, but to the extent he views it positively, it is religion that confines itself to individual salvation and avoids social doctrines that oppose the free market.

Mises takes aim also at another doctrine of progress. During the Enlightenment of the seventeenth and eighteenth centuries, many intellectuals thought that the growth of science and reason made progress inevitable. Mises rejects this view also, as it overestimates the influence of reason on human conduct. He says,

Eighteenth-century social philosophy was convinced that mankind has now finally entered the age of reason. While in the past theological and metaphysical errors were dominant, henceforth reason will be supreme. People will free themselves more and more from the chains of tradition and superstition and will dedicate all their efforts to the continuous improvement of social institutions. Every new generation will contribute its part to this glorious task. With the progress of time society will more and more become the society of free men, aiming at the greatest happiness of the greatest number. Temporary setbacks are, of course, not impossible. But finally the good cause will triumph because it is the cause of reason…. All these hopes were founded on the firm conviction, proper to the age, that the masses are both morally good and reasonable. The upper strata, the privileged aristocrats living on the fat of the land, were thought depraved. The common people, especially the peasants and the workers, were glorified in a romantic mood as noble and unerring in their judgment. Thus the philosophers were confident that democracy, government by the people, would bring about social perfection.

This prejudice was the fateful error of the humanitarians, the philosophers, and the liberals. Men are not infallible; they err very often. It is not true that the masses are always right and know the means for attaining the ends aimed at. ‘Belief in the common man’ is no better founded than was belief in the supernatural gifts of kings, priests, and noblemen.

You might think from all this that Mises has no use at all for the concept of progress, but that is not correct, and it is here that his view of ethics enters the scene. He thinks that ultimate ends cannot be rationally assessed. Nevertheless, almost everyone wants peace and material prosperity and these aims, we can show by strictly scientific, value-free argument, only the free market can achieve. To the extent that the free market is accepted, we can properly speak of progress; but we cannot say that the desirability of the market will lead to its general acceptance. That only time will tell.

In the foregoing, I have as usual confined myself to an account of Mises’s thought and have not sought to assess it critically. Author:

Contact David Gordon

David Gordon is Senior Fellow at the Mises Institute and editor of the Mises Review.

Be seeing you

Posted in Uncategorized | Tagged: , , , , | Leave a Comment »

Why Everyone Should Read These Two Essays by Ludwig von Mises

Posted by M. C. on September 29, 2021

In “Liberty and Property” Mises explains how and why private property is essential to protecting our freedoms and minimizing our exposure to counterproductive social engineering schemes. The main contribution of the industrial revolution, Mises explains, was the great decentralization of wealth which gave rise to “consumer sovereignty.”

In “Middle-of-the-Road Policy Leads to Socialism” Mises pinpoints the essential problem with all forms of interventionism. Whether it is called communism, socialism, planning, state capitalism, or industrial policy, interventionism always signifies the same thing: “No longer should the consumers … determine what should be produced, in what quantity and of what quality. Henceforth a central authority alone should direct all production activities.”

https://mises.org/wire/why-everyone-should-read-these-two-essays-ludwig-von-mises

Thomas J. DiLorenzo

Originally printed in Two Essays by Ludwig von Mises.

Posted in Uncategorized | Tagged: , , | Leave a Comment »

Watch “The Stage Is Set for A Crack Up Boom — Are You Prepared?” on YouTube

Posted by M. C. on August 28, 2021

The late and great Austrian economist Ludwig von Mises was the individual who logically conquered the impracticability and unworkability of Socialism, Communism & Fascism. But just because an idea can’t work, doesn’t mean that those with a lust for power won’t attempt to pull it off anyway. These bad ideas end in a catastrophe that Mises called a “Crack-up Boom.” Are you ready for it?

The crisis began when you sacrificed your liberty.

https://youtu.be/fXgP4jozYMw

Be seeing you

Posted in Uncategorized | Tagged: , , , , | Leave a Comment »

The Secret Ronald Reagan Told Me about Gold and Great Nations | Mises Wire

Posted by M. C. on August 21, 2021

Ronald Reagan once told me that no nation has abandoned gold and remained great. As president, he supported the creation of the Gold Commission. However, he did not stop the establishment from stacking the commission with defenders of the monetary status quo.

https://mises.org/wire/secret-ronald-reagan-told-me-about-gold-and-great-nations

Ron Paul

Today [August 15] marks 50 years since President Richard Nixon closed the “gold window,” ending the ability of foreign governments to exchange United States dollars for gold. Nixon’s action severed the last link between the dollar and gold, giving the U.S. a fiat currency.

America’s experiment with fiat has led to an explosion of consumer, business, and—especially—government debt. It has also caused increasing economic inequality, a boom-bubble-bust business cycle, and a continued erosion of the dollar’s value.

Nixon’s closure of the gold window motivated me to run for office. Having read the works of the leading Austrian economists, such as Ludwig von Mises and Murray Rothbard, I understood the dangers of abandoning gold for a fiat currency and wanted a platform to spread these ideas.

When I first entered public life, support for restoring a gold standard, much less abolishing the Fed, was limited to so-called “gold bugs” and the then tiny libertarian movement. Even many economists who normally supported free markets believed the fiat system could be made to work if the Federal Reserve were forced to follow rules.

These rules were supposed to provide the Fed with clear guidance as to when to increase or decrease the money supply. This may sound good in theory, but a “rules-based monetary system” still allows the Federal Reserve to manipulate interest rates, which are the price of money, causing artificial booms and very real busts.

The stagflation of the Carter era did increase interest in monetary policy. The rise of the “supply-siders,” who supported a limited role for gold, helped increase interest in the issue.

Ronald Reagan once told me that no nation has abandoned gold and remained great. As president, he supported the creation of the Gold Commission. However, he did not stop the establishment from stacking the commission with defenders of the monetary status quo.

The commission’s two pro-gold members, Lewis Lehrman and myself, produced a minority report, written with the aid of Murray Rothbard, making the case for a gold standard. The report was published as The Case for GoldIt can be downloaded at Mises.org.

By the mid-1980s, any interest among the political and financial elites in questioning the Fed’s power had disappeared. This was due to acceptance of the myth that Paul Volcker tamed inflation. In the 1990s, a virtual cult of personality arose around the “Maestro” Alan Greenspan, who once told me that the Fed had learned how to “replicate” the results of a gold-backed currency.

While my warnings that the Fed was leading the American economy over the cliff were dismissed in Washington, they found a receptive audience outside the Beltway. The response to my 2008 presidential campaign led to a birth of a new liberty movement that put monetary policy front and center.

The 2008 meltdown, big bank bailouts, and the Fed’s subsequent failure to reignite the economy despite unprecedented money creation fueled the growth of the new movement. My Campaign for Liberty organization mobilized the new liberty movement to make Audit the Fed a major issue in Congress.

Fifty years after Nixon closed the gold window, prices are heading toward 1970s-era increases. Yet the Fed cannot increase interest rates as long as the politicians keep creating billions of new debts.

It is clear that America is heading toward another Federal Reserve–created economic crisis. The good news is the impending crisis gives us an opportunity to spread our message, grow our movement, and finally force Congress to audit and end the Fed.

Originally published by the New York Sun. Author:

Ron PaulDr. Ron Paul is a former member of Congress and Distinguished Counselor to the Mises Institute.

Be seeing you

Posted in Uncategorized | Tagged: , , , , , | Leave a Comment »

A Brief History of Secession Referenda in Europe | Mises Wire

Posted by M. C. on June 16, 2021

But in all cases, plebiscites were employed to determine a question of secession, whether or not the end goal was ultimately full independence. In this, they have worked relatively well. In many cases, these plebiscites have helped to peacefully settle disputes and to send a message to central regimes about the prudence of granting independence to separatist regions that vote overwhelmingly for independence. 

Given all this it would be odd to regard a vote on independence in Scotland—or anywhere else—as some sort of outlandish or radical political strategy. 

https://mises.org/wire/brief-history-secession-referenda-europe

Ryan McMaken

Scotland still hasn’t given up on holding another independence referendum within the next several years. Although London opposes the measure, it is notable that the debate over Scottish secession is not over whether or not a secession vote is moral or legal. Rather, the question is over whether or not such a vote is prudent at this time.

This is quite a departure from American politics, in which any suggestion of independence for any region of the US—a country that is not even as old as the three hundred–year union between England and Scotland—is considered obviously illegal and beyond the pale of serious political discussion.

Moreover, in spite of the US’s (rather unwarranted) reputation for expansive local autonomy, we can find many cases in which European regimes were far more willing to compromise on local assertions of autonomy and independence than is the case in the United States.

Although fully or partially successful secession movements are not frequent occurrences in Europe, we can nonetheless look to a number of cases in which regions successfully carried forward independence movements at least to the point that a referendum was held. In some of these cases, independence won voter approval and was enacted.

Let’s look at some of these cases to learn more.

Local Autonomy and Plebiscites as a Component of Classical Liberalism

In his 1919 book, Nation, State, and Economy, Ludwig von Mises concludes that local independence is an assumed characteristic within a liberal (i.e., a “classically liberal” of “libertarian”) polity. He writes:

When a part of the people of the state wants to drop out of the union, liberalism does not hinder it from doing so. Colonies that want to become independent need only do so…. no people and no part of a people shall be held against its will in a political association that it does not want.

Moreover, in his 1927 book, Liberalism: In the Classical Tradition, Mises encourages the use of plebiscites in carrying this out. Mises writes:

[W]henever the inhabitants of a particular territory, whether it be a single village, a whole district, or a series of adjacent districts, make it known, by a freely conducted plebiscite, that they no longer wish to remain united to the state to which they belong at the time, but wish either to form an independent state or to attach themselves to some other state, their wishes are to be respected and complied with.

To some readers, this might seem a very radical position that Mises is taking. But, writing in the late teens and 1920s, Mises was working from what was becoming an established—albeit infrequently used—strategy for maintaining or increasing local autonomy within European states.

European Independence Plebiscites: A Quick History

Perhaps the earliest uses of plebiscites to win local support for secession movements occurred in the late eighteenth century during the French Revolution. In an effort to enlarge the French state, plebiscites were used in the Papal States enclaves of Avignon and Comtat Venaissin in 1791, in Savoy in 1792, and in the Belgian Communes, Nice, and the Rhine Valley in 1793.1

In none of these cases was full independence contemplated, and these plebiscites only gave the voters a choice between the status quo and joining the French Republic. Nonetheless, pro-French sentiment was high in many of these areas and voters did indeed in many cases chose to secede from their status quo polities (i.e., the Papal States, Belgium, Sardinia) and join the French state.

By the nineteenth century, plebiscites were being increasingly used as part of the political process of changing which regime controlled certain districts and regions:

[Plebiscites] were held in the transfer of control of Rome from the Papal State to Italy in 1870, in Denmark’s sale of St Thomas and St John to the United States in 1868, and in Sweden’s cession of St. Bartholomew to France in 1877.2

The Ionian Islands were transferred to Greece by Great Britain after the move was approved by voters in an 1863 plebiscite.

Plebiscites were also used—beginning with the aftermath of the Treaty of Prague in 1866—in attempts to settle the so-called Schleswig question over the borderlands between Denmark and the German Confederation.

Secession in the Twentieth Century

By the beginning of the twentieth century, the idea of holding local elections to settle border disputes or the inclusion of a region within a certain polity was anything but novel.

In a 1905 plebiscite, nearly 100 percent of Norwegian voters approved dissolving Norway’s union with Sweden. Norway became a fully independent state three months later.

In a 1918 plebiscite, Iceland’s voters approved independence for the country in a personal union with Denmark under the Danish king. (The king would remain the head of state; Iceland became a republic after another plebiscite in 1944.)

In 1919, the Austrian region of Vorarlberg held a plebiscite to determine if the region should secede from Austria and join Switzerland as a new canton. Eighty-one percent of Vorarlberg voters approved the measure, but the movement failed due to opposition from the Swiss and Austrian governments, among others.

A plebiscite was held in Carinthia in October 1920 to resolve an ongoing border dispute between Yugoslavia and the new Austrian republic. Fifty-nine percent voted to attach Carinthia to Austria. In spite of opposition from Yugoslavian forces, the region ultimately became Austrian.

After World War I, several plebiscites were held as a means of implementing the Treaty of Versailles. These plebiscites, unlike locally driven plebiscites in, say, Vorarlberg and Iceland, were conducted under significant pressure from outside great powers—namely, the victorious Entente powers. Where plebiscites were actually held in German territory—such as in East Prussia—the results favored the Germans, but the Entente powers also simply transferred some areas of Germany to Poland and Czechoslovakia. (The Third Reich would later employ plebiscites in Austria and the Sudetenland as retribution for these territorial transfers.)

In 1946, a plebiscite was held to determine if the Faroe Islands should secede from Denmark. It narrowly failed.

In 1955, voters in the Saar, a French protectorate, voted to join Germany.

In 1964, Maltese voters approved independence from the United Kingdom in a plebiscite.

In 1990, Slovenia declared independence from Yugoslavia via plebiscite. The new Slovenian republic ultimately won independence after the nearly bloodless Ten-Day War. 

In the wake of the collapse of the Soviet Union, plebiscites were held in several Soviet republics including Ukraine and the Baltic states. 

(Outside Europe, of course, many more secession plebiscites were held throughout the twentieth century as part of the process of decolonization in Africa and Asia.)

Plebiscites in Perspective

As we can see from these examples, Mises’s position in favor of plebiscites to implement self-determination plans through secession were not especially radical in the context of the late 1920s. After all, by the early twentieth century, they had come to be used a tool for settling border disputes and as a means of allowing for local vetoes on international agreements involving attempts at changing which state controlled certain regions. In many cases, plebiscites did not offer the option of total independence, but provided an option to attach the region in question to a different sovereign state. But in some cases, plebiscites were used to establish the creation of new sovereign states such as Slovenia, Estonia, Iceland, and Norway. In many cases, the results of plebiscites were not carried out or were short lived even when implemented. For example, the Ionian Islands changed hands more than once after the 1863 vote.

But in all cases, plebiscites were employed to determine a question of secession, whether or not the end goal was ultimately full independence. In this, they have worked relatively well. In many cases, these plebiscites have helped to peacefully settle disputes and to send a message to central regimes about the prudence of granting independence to separatist regions that vote overwhelmingly for independence. 

Given all this it would be odd to regard a vote on independence in Scotland—or anywhere else—as some sort of outlandish or radical political strategy. 

  • 1. For an extensive description of nineteenth-century plebiscites, see Sarah Wambaugh, A Monograph on Plebiscites: With a Collection of Official Documents (New York: Carnegie Endowment for International Peace, 1920).
  • 2. Michael Hechter and Elizabeth Borland, “National Self-Determination: The Emergence of an International Norm,” in Social Norms, ed. Michael Hechter and Karl-Dieter Opp (New York: Russell Sage Foundation, 2001), p. 193.

Author:

Contact Ryan McMaken

Ryan McMaken (@ryanmcmaken) is a senior editor at the Mises Institute. Send him your article submissions for the Mises Wire and Power&Market, but read article guidelines first. Ryan has degrees in economics and political science from the University of Colorado and was a housing economist for the State of Colorado. He is the author of Commie Cowboys: The Bourgeoisie and the Nation-State in the Western Genre.

Be seeing you

Posted in Uncategorized | Tagged: , , , | Leave a Comment »

The Ron Paul Institute for Peace and Prosperity : Police Problems? Embrace Liberty!

Posted by M. C. on April 27, 2021

The drug war is a major reason police have increasingly looked and acted like an occupying army. Police militarization threatens everyone’s liberty. Black people have been subjected to drug war arrests and imprisonment at relatively high rates.

Those interested in protecting and enhancing black people’s (and all people’s) lives should embrace liberty. Libertarians reject the use of force to achieve political, economic, or social goals, Therefore, in a libertarian society, police would only enforce laws prohibiting the initiation of force against persons or property.

Free markets, individual liberty, limited government, sound money, and peace are key to achieving prosperity and social cohesion. Those sincerely concerned about improving all human lives should turn away from the teaching of Karl Marx and John Maynard Keynes, who advocated expansive government power, and, instead, embrace the ideas of pro-liberty writers such as Ludwig von Mises and Murray Rothbard.

http://ronpaulinstitute.org/archives/featured-articles/2021/april/26/police-problems-embrace-liberty/?mc_cid=74f313367e

Written by Ron Paul

undefined

Many Americans saw former policeman Derek Chauvin’s conviction on all counts last week as affirming the principle that no one is above the law. Many others were concerned that the jury was scared that anything less than a full conviction would result in riots, and even violence against themselves and their families.

Was the jury’s verdict influenced by politicians and media figures who were calling for the jury to deliver the “right” verdict? Attempts to intimidate juries are just as offensive to the rule of law as suggestions that George Floyd’s criminal record somehow meant his rights were not important.

The video of then-policeman Chauvin restraining Floyd led people across the political and ideological spectrums to consider police reform. Sadly, there have also been riots across the country orchestrated by left-wing activists and organizations seeking to exploit concern about police misconduct to advance their agendas.

It is ironic to see self-described Marxists, progressives, and other leftists protesting violence by government agents. After all, their ideology rests on the use of force to compel people to obey politicians and bureaucrats.

It is also ironic to see those who claim to want to protect and improve “black lives” support big government.

Black people, along with other Americans, have had their family structure weakened by welfare policies encouraging single parenthood. This results in children being raised without fathers as a regular presence in their lives, increasing the likelihood the children will grow up to become adults with emotional and other problems.

Those at the bottom of the economic ladder are restrained in improving their situation because of minimum wage laws, occupational licensing regulations, and other government interference in the marketplace. They are also victims of the Federal Reserve’s inflation tax.

Many progressives who claim to believe that “black lives matter” do not care that there is a relatively high abortion rate of black babies. These so-called pro-choice progressives are the heirs of the racists who founded the movement to legalize and normalize abortion.

The drug war is a major reason police have increasingly looked and acted like an occupying army. Police militarization threatens everyone’s liberty. Black people have been subjected to drug war arrests and imprisonment at relatively high rates.

Those interested in protecting and enhancing black people’s (and all people’s) lives should embrace liberty. Libertarians reject the use of force to achieve political, economic, or social goals, Therefore, in a libertarian society, police would only enforce laws prohibiting the initiation of force against persons or property.

A libertarian society would leave the provision of aid to the needy to local communities, private charities, and religious organizations. Unlike the federal welfare state, private charities can provide effective and compassionate aid without damaging family structure or making dependency a way of life. In a libertarian society, individuals could pursue economic opportunity free of the burdens of government regulations and taxes, as well as free of the Federal Reserve’s fiat currency.

Free markets, individual liberty, limited government, sound money, and peace are key to achieving prosperity and social cohesion. Those sincerely concerned about improving all human lives should turn away from the teaching of Karl Marx and John Maynard Keynes, who advocated expansive government power, and, instead, embrace the ideas of pro-liberty writers such as Ludwig von Mises and Murray Rothbard.

Posted in Uncategorized | Tagged: , , , , , | Leave a Comment »

To Understand Economics, First Understand Private Property | Mises Wire

Posted by M. C. on March 10, 2021

https://mises.org/wire/understand-economics-first-understand-private-property

Chris Calton

In Man, Economy, and State, Murray Rothbard expounds the principles of economics by reconstructing an economy from the ground up. Following the practice of classical economists, he opens the book by imagining Robinson Crusoe alone on an island. After identifying the operative laws that apply even to isolated individuals, Rothbard’s second chapter considers Crusoe on an island with one other person, introducing the concept of direct exchange, or the barter economy. In the third and fourth chapters, Rothbard considers the origins of money and prices in an economy of indirect exchange.

For a treatise on price theory, Rothbard recognizes the need to explain the origins of money prices, as Carl Menger and Ludwig von Mises did before him. In The Theory of Money and Credit, Mises built on Menger’s original explanation for the origin of money by formulating the regression theorem. When considering price changes back through time, Mises theorized, we must naturally come to points of origin and departure. Paper dollars today have no commodity foundation, but we can easily identify the point at which they were disconnected from specie. Going further back, we may not be able to identify empirically the moment at which specie, or any other commodity, was first used as a medium of indirect exchange, but we can logically deduce that such a moment must have occurred as primitive economies grew increasingly complex.

Mises’s theorem offered a number of important insights for price theorists. Perhaps the chief insight is that even though modern money may have no commodity base, the origins of any money could only have been a commodity with some original value in use. No new media of exchange can undermine this history. Even cryptocurrencies, such as bitcoin, can be traced back to a point at which they were first exchanged for dollars. Dollar prices then trace back to a point of disconnect from a commodity foundation, and those prices trace further to a point of original indirect exchange. Another insight derived from the regression theorem is that money prices depend on exchange. This may seem like an obvious truism, but in the early twentieth-century debates over socialism, the necessity of market exchange highlighted the crucial distinction between technical calculation (What do we need to build a given item?) and economic calculation (What should we build given the resources available?).

In chapter 2 of Man, Economy, and State, before Rothbard summarizes Mises’s insights about the origins of money prices, he considers the origins of property rights. With a citation of John Locke, Rothbard asserts the principle of self-ownership and argues that the original appropriation of property comes from mixing labor with yet-unowned resources, such as clearing land for cultivation. Only after establishing a basis for property rights, does Rothbard turn to considerations of exchange and money prices.

Even friendly scholars, happy to acknowledge the value of Rothbard’s treatise, often consider this passage an unwarranted deviation from value-free economic analysis. Rothbard, they claim, is importing libertarian ethical theory into his economic analysis. John Egger, for example, accuses Rothbard of putting on his “political scientist hat,” arguing that “the ethics adopted by . . . Rothbard cannot be derived from Austrian-school principles and are not necessary to Austrian economic analysis.”1

Even sympathetic Austrians rarely pay much attention to Rothbard’s explanation for the origin of property rights except to occasionally dismiss it as a libertarian deviation from scientific analysis, but I believe Rothbard is offering underappreciated economic insights. Mises recognized that money prices depended on exchange, and he saw the need to explain the origins of monetary exchange. Rothbard took Mises’s idea a step further, recognizing that the prerequisite for market exchange is private property and the origin of property norms is therefore just as relevant to economic analysis as the origins of money and monetary exchange. “Before we examine the exchange process,” Rothbard writes in no unclear terms, “it must be considered that, in order for a person to exchange anything, he must first possess it, or own it.”2

Critical readers might object that we cannot take it for granted that property rights originate in the way that Rothbard describes. Governments, of course, can establish property rights, even if in violation of Lockean ethics, that suffice to provide the conditions for market exchange. But such considerations would be inappropriate for Rothbard’s second chapter, as he is considering an unhampered market economy—one in which governments, as yet, play no role. For markets to exist sans government, then, private property norms must emerge spontaneously.

To this last point, Rothbard never asserts that the Lockean rule of first appropriation is the proper means of establishing property rights (though he certainly believed that and made genuinely ethical arguments along those lines in other works, such as The Ethics of Liberty). In Man, Economy, and State, he simply considers the way property norms could logically emerge in an unhampered market.

Man in a “free, unhampered market … may exchange any type of factor … for any type of factor,” Rothbard writes, but “it is clear that gifts and exchanges as a source of property must eventually be resolved into: self-ownership, appropriation of unused nature-given factors, and production of capital and consumers’ goods, as the ultimate sources of acquiring property in a free economic system” (emphasis in original).3

Rothbard’s argument follows a similar logical structure to Mises’s regression theorem, and in fact even extends the continuum of exchange that Mises outlines. When constructing his theorem, Mises views the end point of his analysis as modern monetary prices, and his point of origin is that moment when a commodity was first used as a medium for indirect exchange. Rothbard has the same end point in mind, but realizing that property rights are (1) necessary for exchange and (2) not a given for any society and therefore warrant explaining, he finds the origins of money prices in the original emergence of private property norms.

Of course, people can provide alternative theories for the origin of private property, but the mere fact that Rothbard recognizes the need to explain property norms is itself a valuable contribution to economics that continues to go unappreciated. The most obvious objection people might offer to counter Rothbard’s theory is no different than the alternative explanation to Mises’s and Menger’s theories for the origins of money: the state must construct property rights and introduce money, thus creating markets.

But as historians and anthropologists learn more about prehistory (the history of man prior to documentary evidence), the statist theories for both property rights and money crumble. Yale political scientist James C. Scott, for example, notes that evidence for the domestication of plants precedes the formation of the earliest states, arguing that states could not exist without a taxable base (grain, most commonly), and the domestication of plants and primitive commerce preceded state formation. Although he doesn’t address property rights directly, Scott notes that the formation of early states “required a host of products that originated in other ecological zones: timber, firewood, leather, obsidian, copper, tin, gold and silver, and honey,” which they obtained through long-distance trade of “pottery, cloth, grain, and artisanal products.”4

Recognizing that economic exchange preceded the state, both Rothbard and Mises raised valid considerations for the origins of money, exchange, and property norms. In offering their theories, they were in fact engaging in a common exercise among classical economists known as “conjectural history.” In the absence of empirical historical evidence, classical thinkers such as Adam Smith and Turgot speculated on the origins of observable, modern institutions based on assumptions about human nature. Although speculative, this method of history was not unscientific. The test of a good theory was that it explained more of what we can observe (both in terms of present society and extant evidence) and omitted less. Historians today who deal with areas of history that have scant documentary evidence, such as Africanists, still engage in conjectural history (even if they may not be aware of its roots in classical political economy).

In this light, Rothbard’s explication for the origins of property norms is not a value-laden prescription for how societies should establish private property rights. Instead, Rothbard is recognizing that early societies must have established some system of private property rights, which individuals recognized reciprocally with respect to each other, and he provides a theory for how this system most likely emerged. It is not an uncontestable idea (no scientific theory is), but scholars dismissing it as a libertarian sidestep from proper economic analysis fail to understand the important economic contribution Rothbard was actually making.

  • 1. John B. Egger, “Comment: Efficiency Is Not a Substitute for Ethics,” in Time, Uncertainty, and Disequilibrium: Exploration of Austrian Themes (Lexington, MA: Lexington Books, 1979), p. 119.
  • 2. Murray N. Rothbard, Man, Economy and State, with Power and Market, 2d scholar’s ed. (Auburn, AL: Ludwig von Mises Institute, 2009), p. 91.
  • 3. Rothbard, pp. 92–93.
  • 4. James C. Scott, Against the Grain: A Deep History of the Earliest States (New Haven, CT: Yale University Press, 2017), pp. 68–92, 125. Although Scott does not address the question of property rights or exchange, he does reference the role of exchange prior to the establishment of the state

Author:

Chris Calton

Chris Calton is a 2018 Mises Institute Research Fellow and an economic historian. He is writer and host of the Historical Controversies podcast.

See also his YouTube channel here.

Be seeing you

Posted in Uncategorized | Tagged: , , , , | Leave a Comment »

Freedom

Posted by M. C. on February 21, 2021

May be an image of 1 person and text that says 'The struggle for freedom is ultimately not resistance to autocrats or oligarchs but resistance to the despotism of public opinion. -Ludwig von Mises FEE'

Be seeing you

Posted in Uncategorized | Tagged: , | Leave a Comment »

Covid-19 and the Socialist Calculation Problem | Mises Wire

Posted by M. C. on January 14, 2021

Nevertheless, government’s response to covid-19 assumes that it knows everyone’s personal risk hierarchy and can tailor an appropriate public response. This is as impossible as knowing values in a socialist commonwealth. In the place of a hierarchy of wants, we have a hierarchy of risk. And just as everyone’s hierarchy of wants is different, everyone’s hierarchy of risk is different. No one can deny this. We see it played out everywhere.

https://mises.org/wire/covid-19-and-socialist-calculation-problem

Patrick Barron

One hundred years ago Ludwig von Mises wrote the definitive exposure of the impossibility of socialism: “Economic Calculation in the Socialist Commonwealth.” In a recent Mises Wire essay—”Socialist Robert Heilbroner’s Confession in 1990: ‘Mises Was Right.’“—Gary North sums up the socialist problem succinctly (his emphasis).

But Heilbroner failed to present the central argument that Mises had offered. Mises was not talking about the technical difficulty of setting prices. He was making a far more fundamental point. He argued that no central planning bureau could know the economic value of any scarce resource. Why not? Because there is no price system under socialism that is based on the private ownership of the means of production. There is therefore no way for central planners to know which goods and services are most important for the state to produce. There is no hierarchical scale of value that is based on supply and demand—a world in which property-owning individuals place their monetary bids to buy and sell. The problem of socialism is not the technical problem of allocation facing a planning board. It is also not that planners lack sufficient technical data. Rather, the central problem is this: assessing economic value through prices. The planners do not know what anything is worth.

Notice North’s point. Socialism is impossible, not just technically difficult. Knowing what to produce requires a price system. A price system requires private ownership of the means of production. Why? Because the price system rests on individually held hierarchical scales of values. And the hierarchical scale of values require private ownership of the means of production. In other words, if you don’t own something, you cannot know its worth. This doesn’t mean that everyone has the same hierarchical scale of values. But all these individual scales of value do meet in the marketplace to determine marginal prices at given points of time. Your Beanie Baby collection may be worth a thousand dollars in today’s market and possibly zilch tomorrow. Now, your beanie baby collection may be priceless to you and you don’t really care about its value to others. But if you decided to make a business of selling Beanie Babies or even to simply sell your collection, you would be forced to confront the reality of the marketplace.

Covid-19 and the Socialist Calculation Problem

You may well ask what this has to do with covid-19. covid-19 isn’t a marketable good. It isn’t owned by anyone. No one wants it. Quite the opposite in fact. True. Nevertheless, government’s response to covid-19 assumes that it knows everyone’s personal risk hierarchy and can tailor an appropriate public response. This is as impossible as knowing values in a socialist commonwealth. In the place of a hierarchy of wants, we have a hierarchy of risk. And just as everyone’s hierarchy of wants is different, everyone’s hierarchy of risk is different. No one can deny this. We see it played out everywhere. Young people in college assess their personal health risk from covid-19 as very low. The aged and those suffering from other illnesses assess their personal health risk as very high. Furthermore, one’s response is determined by what one gives up. The elderly living on pensions may be giving up very little in a lockdown or quarantine other than their social lives. Certainly they are not giving up their life-sustaining income by staying in semi-isolation. But those still of working age have a very different tradeoff. Business owners who are forced to shut down may lose their entire wealth. Salaried and hourly workers may see a slower drain on their wealth, but the longer the lockdowns continue, the more accumulated wealth they will see drain away.

I have used stereotypical broad categories here for illustrative comparisons only. Of course, those of the same age, health profile, wealth accumulation, etc. may have entirely different personal risk assessments. The old adage applies that no two people are alike. These facts of human existence make universally acceptable public policy responses to covid-19 not just difficult but impossible. The only acceptable public response is one of perfect liberty; i.e., each individual decides his own response to covid-19 as long as he does no harm to others.

What about Externalities?

This brings up a common retort that perfect liberty does harm others. A typical government justification for coerced lockdowns and quarantines was that there was a need to conserve hospital beds for the expected onslaught of covid-19 patients. Sounds reasonable at first, but not upon further examination. This so-called line of reasoning rests upon faulty externality theory; i.e., that everything you do affects others in some degree. By this logic government has a right to regulate everything you do. Forgetting for a moment that government’s access to information is no greater than that of thousands of others, there is the ethical problem of government’s right to determine to whom a private entity may offer services. For example, a private hospital may refuse patients who wish to have elective surgery in order to preserve beds for what the hospital considers more important patients, but government may not insert its power of coercion into this decision. Like the socialist allocation problem, government has no “skin in the game” and, therefore, it has nothing upon which to make a universally applicable policy except the temporary prejudice of those currently elected to office and/or those currently working for government. Perhaps an even more damning criticism of the externality rationale is that there is no attempt and probably no definitive calculation of the many adverse consequences to lockdowns and quarantines, from delayed medical treatment that leads to worsening health (both physical and mental) or even death to permanent loss of one’s ability to feed, house, and clothe one’s family adequately.

The Double Standards of Politicians

So, we are left with these conclusions: since all risk is personal, no one knows the risk tolerance of others. Therefore, one’s response to covid-19 is a personal decision based upon one’s personal risk assessment. In other words, perfect liberty must be respected, because it is the only rational option. Impractical? This is the very policy actually followed by many of the authors of the current restrictions. Governor Newsom of California attended a lavish dinner party after issuing new and more onerous restrictions on public and private gatherings. Illinois Governor Pritzker has been unapologetic about visiting his many out-of-state residences after telling his constituents not to do the same. Other politicians have been similarly embarrassed. Are they taking unnecessary risks, both to themselves and others? There is no definitive answer. By the very fact that they violated their own restrictions, we can conclude that they valued their freedom to do so above their personally perceived risk. Why should not that same right be available to all of us? Author:

Contact Patrick Barron

Patrick Barron is a private consultant to the banking industry. He has taught an introductory course in Austrian economics for several years at the University of Iowa. He has also taught at the Graduate School of Banking at the University of Wisconsin for over twenty-five years, and has delivered many presentations at the European Parliament.

Be seeing you

Posted in Uncategorized | Tagged: , , , | Leave a Comment »

Rich Millennials Plot the End of Civilization | Mises Wire

Posted by M. C. on December 23, 2020

Mises saw it differently. “The riches of the rich are not the cause of the poverty of anybody; the process that makes some people rich is, on the contrary, the corollary of the process that improves many peoples’ want satisfaction. The entrepreneurs, the capitalists and the technologists prosper as far as they succeed in best supplying the consumers,” he wrote in The Anti-Capitalistic Mentality.

Where do these ideas come from? University faculty, of course. Richard D. Wolff, a Marxist and an emeritus economics professor at the University of Massachusetts Amherst said he has been professionally arguing against capitalism’s selling points since his teaching career began, in 1967, but that his millennial students “are more open to hearing that message than their parents ever were.”

https://mises.org/wire/rich-millennials-plot-end-civilization

The New York Times managed to find some young people whose silver spoons provide a sour taste in their mouths. To hear them talk, their good fortune is making them sick. 

“I want to build a world where someone like me, a young person who controls tens of millions of dollars, is impossible,” Sam Jacobs, 25, told the Times. Jacobs went off to college a normal young man and came back a socialist. Suddenly his family’s “extreme, plutocratic wealth” became too much of a burden for him. 

“He wants to put his inheritance toward ending capitalism,” Zoë Beery wrote for the NYT, “and by that he means using his money to undo systems that accumulate money for those at the top, and that have played a large role in widening economic and racial inequality.”

Wow, that is some self-loathing. If only Ludwig von Mises were able to counsel young Jacobs, whose grandfather founded Qualcomm and who is set to inherit $100 million. In his book Epistemological Problems of Economics, Mises wrote, “Through all the changes in the prevailing system of social stratification, moral philosophers continued to hold fast to the fundamental idea of Cicero’s doctrine that making money is degrading.”

Beery writes that wealth is concentrated in the upper brackets and “Millennials will be the recipients of the largest generational shift of assets in American history.” 

That doesn’t seem like a worrying thought; however, it is for Rachel Gelman, a thirty-year-old in Oakland, California, who described her politics to Beery as “anticapitalist, anti-imperialist and abolitionist.”

“My money is mostly stocks, which means it comes from underpaying and undervaluing working-class people, and that’s impossible to disconnect from the economic legacies of Indigenous genocide and slavery,” the guilty Gelman said. “Once I realized that, I couldn’t imagine doing anything with my wealth besides redistribute it to these communities.”

Mises saw it differently. “The riches of the rich are not the cause of the poverty of anybody; the process that makes some people rich is, on the contrary, the corollary of the process that improves many peoples’ want satisfaction. The entrepreneurs, the capitalists and the technologists prosper as far as they succeed in best supplying the consumers,” he wrote in The Anti-Capitalistic Mentality.

Elizabeth Baldwin is a thirty-four-year-old democratic socialist in Cambridge, Massachusetts, who was adopted from India by a white family when she was a baby. Now, thanks to her adoptive parents, she is wealthy, with a stock portfolio containing shares in Coca-Cola and Exxon-Mobil. 

But, she hates the thought of having her wealth tied up in multinational corporation shares and instead “would rather put my money into a community that has been denied economic resources and disrupts the system.” 

She’s directing her funds toward what she and other wealthy millennials describe as the “solidarity economy.” Fellow traveler and democratic socialist, Emma Thomas, a twenty-nine-year-old, described what she’s now investing in as “an economy that is about exchange and taking care of needs, that is cooperative and sustainable, and that doesn’t demand unfettered growth.”

“At some point, these numbers on a screen are imaginary,” Thomas told the Times. “But what’s not imaginary is whether you have shelter, food and a community. Those are true returns.”

Where do these ideas come from? University faculty, of course. Richard D. Wolff, a Marxist and an emeritus economics professor at the University of Massachusetts Amherst said he has been professionally arguing against capitalism’s selling points since his teaching career began, in 1967, but that his millennial students “are more open to hearing that message than their parents ever were.”

We can only thank goodness the parents of these young people believed in serving customers and saving their wealth. This wealth was not created nefariously. As Murray Rothbard explained, “On the free market, it is a happy fact that the maximization of the wealth of one person or group redounds to the benefit of all.” 

What these millennials are up to is not to be ignored. As Mises wrote in his book Liberalism, “Modern civilization will not perish unless it does so by its own act of self-destruction.” Author:

Doug French

Douglas French is former president of the Mises Institute, author of Early Speculative Bubbles & Increases in the Money Supply, and author of Walk Away: The Rise and Fall of the Home-Ownership Myth. He received his master’s degree in economics from UNLV, studying under both Professor Murray Rothbard and Professor Hans-Hermann Hoppe.

Be seeing you

Posted in Uncategorized | Tagged: , , , | Leave a Comment »