"It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a 'dismal science.' But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance."
Ludwig von Mises: "It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights." - The Theory of Money and Credit
The normative principle I am suggesting for the law is simply this:
No action should be considered illicit or illegal unless it invades, or aggresses against, the person or just property of another.
Only invasive actions should be declared illegal, and combated with the full power of the law.
The phrase "Merchants of Death" takes center stage in the movie Iron Man, which is a spectacular exposé of a subject that dominates the American economic landscape but about which Americans have very little knowledge. The phrase and the movie deal with the odd juxtaposition of capitalism and war as found in the weapons industry. Here we have innovations and efficiency of the type we associate with the private commercial sector but serving ends that are the very opposite of capitalism. The industry serves war, not peace, depends on coercion, not human volition, and profits from destruction, not creation.…
The existence of such an industry scandalized Americans in the interwar period, and there was one treatise that led the way in helping to foment the outrage. In fact, it was a bestselling book in 1934 with the title Merchants of Death. This book is not a typical left-wing style attacks on commerce as the essence of war. In fact, it argues the opposite:
"The arms industry did not create the war system.
On the contrary, the war system created the arms industry."
"I have concluded that history in my own public school education was little more than a chronological sequence of political campaign slogans, punctuated by the odd war."
When the great truths of Political Economy shall become generally known—when men shall be convinced that each person will sell with greater facility the more others gain; that they can only gain by means of labour, capital, or land; that the greater the number of producers the greater the number of consumers; that unproductive consumers are mere representatives of others, and can only consume by means of what others produce; that all nations are interested in the prosperity of each other, and in facilitating the means of communication; that capital or land, and even labour, can only be productive while it is respected as property, and that the poor but industrious man is interested in the defence of the property of the rich, and in maintaining good order, because their subversion may deprive him of the means of subsistence:—when these truths shall be generally known, it will be almost impossible to stir up nations or bodies of men against each other. This science therefore is eminently social, and by teaching that no men can injure others without injuring themselves, and that the advantages gained by others are productive of advantages to themselves, will probably effect what a less interested doctrine has not yet accomplished.
There are certain lightbulb moments in political economy: the first time you understand price fixing as it relates to shortages and gluts; the first time you understand minimum wage in terms of price fixing; the first time you understand opportunity costs the way Bastiat meant when he wrote of the seen and the unseen; the first time you grasp what is meant by externalization of costs, the tragedy of the commons, moral hazard…
Jörg Guido Hülsmann's "The Political Economy of Moral Hazard" is the type of essay that turns on the lightbulb. It's not that I hadn't grasped the concept of moral hazard before. I had. But somehow JGH puts it all together in a way that seems so simple and obvious and yet it helps pieces slide into place that had perhaps been at odd angles before. It is one of those clarifying essays that won't let you see the world the same way again:
Moral hazard is the incentive of person A to use more resources than he otherwise would have used, because he knows, or believes he knows, that person B will provide some or all of these resources. Many economists have concluded that moral hazard entails market failures.
Jörg Guido Hülsmann shows, however, that moral hazard arises anywhere there is a separation of ownership and control — and further, that moral hazard entails expropriation when ownership and control of a resource are separated without the consent of the owner. This is, in fact, the essence of government interventionism: institutionalized uninvited co-ownership. FULL ARTICLE
There are many pernicious myths of modern history — about the Industrial Revolution versus the working poor, about Jefferson versus Hamilton, about Lincoln versus slavery, about robber barons, railroads, trusts, imperialism, central banking, labor unions, and on and on — but in our current situation, the most dangerous of all these myths is probably the old canard that Hoover's laissez-faire policies got us into the Great Depression and that FDR's New Deal got us out. The first piece to take apart is the claim that Hoover's policies were laissez-faire. Yes we should blame him for the severity and length of the early Depression, but to portray him as a president who was unwilling to intervene in the economy is to get his legacy exactly backwards. See chapter 7 of Murray Rothbard's America's Great Depression:
Postscript: Paul Marks, in a comment at the Mises Blog, calls this chapter "A good section of a good book," but does see a couple of weak spots. Here's one:
I am not sure that the oft repeated claim that Hoover supported laissez-faire is an "ironic twist of fate" - after all this claim was first made by people who knew perfectly well that Hoover was an ardent interventionist.
So "bare faced lie" would be more accurate than "ironic twist of fate".
Of course, now several generations have passed, people (such as media types) who make the "Hoover was a free market person" assumption are NOT telling lies - they are simply comming out with the nonsense they were taught at school and college.
"There are decent public schools and terrible ones," writes Lew Rockwell, "so there is no use generalizing. Nor is there a need to trot out data on test scores. Let me just deal with economics. All studies have shown that average cost per pupil for public schools is twice that of private schools. If we could abolish public schools and compulsory schooling laws, and replace it all with market-provided education, we would have better schools at half the price, and be freer too. We would also be a more just society, with only the customers of education bearing the costs." FULL ARTICLE
Not only is my article featured at Mises.org today, but it's one of the first daily articles to be made into an audio article:
Senator Joe McCarthy, covering the microphones as he listens to his aid Roy Cohen in 1954
While his claim of ideological steadfastness on his "basic political views" may have been correct, Rothbard did change his mind on questions of strategy and alliance, most significantly on the question of "McCarthyism" and the broader anti-Communist movement of the American Right, which he eventually rejected in favor of a more nuanced (and largely misunderstood) anti-anti-Communism.
In a never-before-published essay, Murray Rothbard points to a book on American history as an archetype of how not to write history. "The first test of a historical work then, and one that the author fails, is a richness of factual material. But the historian is more than a chronicler; he must also have a command of the significance of events. The historian must have a 'vision' of the meaning, of the significance, of the material he is presenting."
[This article by Murray N. Rothbard follows "The Road to Civil War," and is excerpted from the same unpublished report to the Volker Fund, 1961.]
The Civil War was one of the most momentous events in American history, not only for its inherent drama and destruction, but because of the fateful consequences for America that flowed from it.
We have said above that the War of 1812 had devastating consequences for the libertarian movement; indeed, it might be said that it took twenty years of devotion and hard work for the Jacksonian movement to undo the étatist consequences of that utter failure of a war. It is the measure of the statist consequences of the Civil War that America never recovered from it: never again was the libertarian movement to have a party of its own, or as close a chance at success. Hamiltonian neo-Federalism beyond the wildest dreams of even a J.Q. Adams had either been foisted permanently on America, or had been inaugurated, to be later fulfilled.
Let us trace the leading consequences of the War Against the South: there is, first, the enormous toll of death, injury, and destruction. There is the complete setting aside of the civilized "rules of war" that Western civilization had laboriously been erecting for centuries: instead, a total war against the civilian population was launched against the South. The symbol of this barbaric and savage oppression was, of course, Sherman's march through Georgia and the rest of the South, the burning of Atlanta, etc. (For the military significance of this reversion to barbarism, see F.J.P. Veale, Advance to Barbarism). Another consequence, of course, was the ending of effective states' rights, and of the perfectly logical and reasonable right of secession—or, for that matter, nullification. From now on, the Union was a strictly compulsory entity.
[This article by Murray N. Rothbard is excerpted from a 30,000-word report to the Volker Fund, written in September 1961, giving a very detailed description of everything wrong with A History of the American Republic by George B. DeHuszar. The full memo will be included in the forthcoming collection Renaissance Man, edited by David Gordon.]
The road to Civil War must be divided into two parts:
the causes of the controversy over slavery leading to secession, and
the immediate causes of the war itself.
The reason for such split is that secession need not have led to Civil War, despite the assumption to the contrary by most historians.
The basic root of the controversy over slavery to secession, in my opinion, was the aggressive, expansionist aims of the Southern "slavocracy." Very few Northerners proposed to abolish slavery in the Southern states by aggressive war; the objection — and certainly a proper one — was to the attempt of the Southern slavocracy to extend the slave system to the Western territories. The apologia that the Southerners feared that eventually they might be outnumbered and that federal abolition might ensue is no excuse; it is the age-old alibi for "preventive war." Not only did the expansionist aim of the slavocracy to protect slavery by federal fiat in the territories as "property" aim to foist the immoral system of slavery on Western territories; it even violated the principles of states' rights to which the South was supposedly devoted — and which would logically have led to a "popular sovereignty" doctrine.
My own basic perspective on the history of man, wrote Murray Rothbard, is to place central importance on the great conflict that is eternally waged between Liberty and Power, a conflict that was seen with crystal clarity by the American revolutionaries of the 18th century. I see the liberty of the individual not only as a great moral good in itself (or, with Lord Acton, as the highest political good), but also as the necessary condition for the flowering of all the other goods that mankind cherishes: moral virtue, civilization, the arts and sciences, economic prosperity.
Out of liberty, then, stem the glories of civilized life. But liberty has always been threatened by the encroachments of power, power which seeks to suppress, control, cripple, tax, and exploit the fruits of liberty and production. Power, then, the enemy of liberty, is consequently the enemy of all the other goods and fruits of civilization that mankind holds dear. And power is almost always centered in and focused on that central repository of power and violence: the State. FULL ARTICLE
This is especially timely with the deadly Keynesian religion on the rise. High priest Paul Krugman recently resurrected this coprocephalic canard:
The fact is that war is, in general, expansionary for the economy, at least in the short run. World War II, remember, ended the Great Depression. The $10 billion or so we're spending each month in Iraq mainly goes to US-produced goods and services, which means that the war is actually supporting demand. Yes, there would be infinitely better ways to spend the money. But at a time when a shortfall of demand is the problem, the Iraq war nonetheless acts as a sort of WPA, supporting employment directly and indirectly.
Update: How man of us had a history class that would have helped us understand this political cartoon from the 1930s?
Maybe your schooling was a lot better than mine. I remember being taught that Hoover was a do-nothing and that FDR offered the hope of a more activist government. Raimondo writes:
When Roosevelt was swept into office, Flynn welcomed him, sharing the hope that the new president would get the country moving again. Flynn supported the Democratic Party platform of 1932, which called for an end to the extravagant spending of the Republicans, a balanced budget, and the abolition of the many government bureaus and commissions.
But Flynn was soon disillusioned. In fact, the New Deal that Roosevelt sold to the American people in 1932 bore absolutely no resemblance to the one he immediately imposed on an unsuspecting nation. During the first 100 days of his administration, Roosevelt racked up a deficit larger than the one it took Hoover two years to produce. Worse, from Flynn's viewpoint, was the blizzard of new government agencies the president created — agencies that sought to regulate every aspect of economic life — and the billions in borrowed money that financed them.
I think Lew Rockwell's editorial this morning is critically important. Only libertarians have held onto the classical-liberal insight that so-called "class interests" are only in conflict in the context of coercion. Civil society (i.e., voluntary cooperation, e.g., the free market) will harmonize all peaceful interests — race, sex, language, religion, wealth, etc.:
If the political prediction markets are right, we are going to end up with a presidential contest between two people who agree on the pressing need to expand the entire welfare-warfare state.
They can argue about priorities, but they agree on the overall goal.
With the campaign lacking serious issues, something tells me that the great American obsession over race is going to play a major role, which is gravely unfortunate since the discussion is unlikely to be enlightening. But it does raise important questions: what is racism and how can we tell if it exists? FULL ARTICLE
Every Republican I've spoken to is mystified that John McCain has sewn up the Republican nomination. Of course I'm not talking to the run-of-the-mill Republican. There are vast hordes of these people who have never read a book and vote only by the most sordid political instinct known to man. McCain is their candidate. FULL ARTICLE
May 5th, 2008 by 
bkmarcus
Jeffrey Tucker writes:
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The Civil War was one of the most momentous events in American history, not only for its inherent drama and destruction, but because of the fateful consequences for America that flowed from it.
The road to Civil War must be divided into two parts: 
My own basic perspective on the history of man, wrote Murray Rothbard, is to place central importance on the great conflict that is eternally waged between Liberty and Power, a conflict that was seen with crystal clarity by the American revolutionaries of the 18th century. I see the liberty of the individual not only as a great moral good in itself (or, with Lord Acton, as the highest political good), but also as the necessary condition for the flowering of all the other goods that mankind cherishes: moral virtue, civilization, the arts and sciences, economic prosperity.
