In modern America, the terms “fascism” and “fascist” has come to take on a vague meaning to describe anyone whom one considers abhorrent or disagreeable, and any technical understanding of the terms appears now to almost exclusively be held by scholars in the fields of history, political philosophy, and economics. Not only has these terms long lost their meaning among the public, but given the frequent comparisons with Hitler directed against politicians or other figures, it appears that the memory of the horrors of Fascism in the 20th century has been numbed down so much that it to many merely amounts to the minimum surface-level of Fascism = Bad.
To be fair, there wasn’t a widespread understanding of the term in Allied nations even during WWII. In 1944, John Flynn published the book “As We Go Marching“, in which he noted that even at that time there was a very limited understanding of what Fascism actually means, and ventured to clarify the history and the theory to the best of his ability. This investigation was not conducted to try to stimulate sympathy for the Axis powers, nor to provide superfluous criticism to the already despised enemies of Nazi Germany and Fascist Italy, but rather to document the foundations of Fascism, i.e. how and why it managed to prosper in the culture and politics of these nations, and to warn against similar developments taking place in the United States.
The book is divided in three parts: Fascist Italy, Nazi Germany, and the United States. Flynn frequently emphasizes here that neither Mussolini nor Hitler could’ve arisen to power like they did in a vacuum, nor would it be guaranteed that Italy and Germany wouldn’t respectively have become dictatorships had they not come to power (how’s that for the “killing baby Hitler” thought experiment?). In the mid-19th century, hardly anyone could’ve foreseen that Italy and Germany would become dictatorships in just over half a century – relatively tolerant and laissez faire societies, both of which were long composed of independent city states. But one brick at a time, the foundations were set, and the symptoms of this cancer manifested itself and spread far and wide.
In Italy, the political precedents were largely set by the Prime Ministers prior to Mussolini, such as Agostino Depretis and Federico Crispi. As Flynn portrays it, Depretis started massive deficit spending for public works and welfare programs, while Crispi established justifications for militarism and imperialism. Regarding the philosophical aspects, Mussolini was very much inspired by Niccolò Machiavelli in the sense of using any means necessary to attain and hold on to power, and many associates and party members of his were captivated by Vilfredo Pareto’s so-called “elite theory”, which, according to Encyclopedia Britannica claims that
(1) a community’s affairs are best handled by a small subset of its members and (2) in modern societies such an arrangement is in fact inevitable.
To Mussolini, however, philosophical justifications was considered unnecessary. He held no shame in being shown contradictory or hypocritical. Flynn cites him to have asserted that “Every system is a mistake and every theory is a prison.”
Similarly in Germany (then the Weimar Republic), massive deficit spending on welfare spending was initiated by Otto von Bismarck, as was advocated by Johann Gottlieb Fichte (along with militarism and imperialism), who also became the founder of nationalism. Longer back in time, the philosophical basis of Nazi Germany has often been associated with the teachings of the German philosopher G.W.F. Hegel, who, among other things, praised the State as being “the Divine Idea as it exists on earth”:
All the worth which the human being possesses – all spiritual reality, he possesses only through the State. […] For Truth is the Unity of the universal and subjective Will; and The Universal is to be found in the State, in its laws, its universal and rational arrangements.
Furthermore, similarly to Vilfredo Pareto’s “Elite Theory”, the reflections of Friedrich Nietzsche on morality as bastardized by his Nazi sister fueled the oligarchical mindset of Nazi party members. Having been devastated by hyper-inflation and being severely pressured militarily by the Treaty of Versailles further provided the Nazis with an external enemy they could use as a scapegoat to cover for their own misdemeanors and simultaneously rallying support for their doctrine as being a way out of Germany’s predicament.
Having briefly explained some of the foundations for Fascism that Flynn delineates, what does he conclude the term to mean? He lists up eight points which he calls the “essential ingredients of fascism”:
[Fascism] is a form of social organization
In which the government acknowledges no restraint upon its powers—totalitarianism.
In which this unrestrained government is managed by a dictator —the leadership principle.
In which the government is organized to operate the capitalist system and enable it to function-under an immense bureaucracy.
In which the economic society is organized on the syndicalist model, that is by producing groups formed into craft and professional categories under supervision of the state.
In which the government and the syndicalist organizations operate the capitalist society on the planned, autarchial principle.
In which the government holds itself responsible to provide the nation with adequate purchasing power by public spending and borrowing.
In which militarism is used as a conscious mechanism of government spending, and
In which imperialism is included as a policy inevitably flowing from militarism as well as other elements of fascism.
“Wherever you find a nation using all of these devices,” Flynn contends, “you will know that this is a fascist nation.”
Some further elaboration of the list is due for those who’ve not yet read the book. The two first points is based on Flynn’s distinction between totalitarianism and dictatorship. Though the two are often conflated, he explains that he perceives “The totalitarian government [to be] one which possesses in itself the total sovereignty of the nation,” and “We have a dictator when the unlimited powers of a totalitarian government are deposited with the executive or an executive council.” Points 3-5 further elaborates how the Fascist government interacts with the market, which relate to the often-cited economic definition of fascism as an “economic system in which the government controls the private entities that own the factors of production.” You may recall Pareto’s Elite Theory, as mentioned earlier, and now it’s clear that we can understand Fascist government as a bunch of oligarchs trying to centrally plan the economic system by controlling the means of production without explicitly owning them.
The seventh and eight points relates to another distinction in terms Flynn makes in the book, namely one between militarism and imperialism. “By militarism,” he explains,
I mean that institution in which the nation maintains large national armies and navies in time of peace, usually raised on the principle of conscription. It cannot be too much emphasized that you do not have militarism until you have the principle of universal military service or some form of conscription in time of peace as a permanent institution of national policy.
Imperialism is an institution under which one nation asserts the right to seize the land or at least to control the government or resources of another people. It is an assertion of stark, bold aggression.
Having gone through some of the foundations of Fascism in Italy and Germany, as well as Flynn’s definition thereof, how does he tie this to the political developments in the United States by 1944? Of the points that match with the list above, he listed the following to already have been introduced by the time he wrote the book:
The institution of planned consumption or the spending-borrowing government.
The planned economy.
Militarism as an economic institution, and
Imperialism as the handmaiden of our militarism.
Most of the points seemed to have been experimented with by then, and even more so by today, but the lack of the two first makes “a world of difference”, according to Flynn. So thought John Maynard Keynes, the main economist (along with Alvin Hansen) who popularized the ideas of deficit spending and “economic stimulus”, admitting that the system he advocated
can be much easier adapted to the conditions of a totalitarian state than the theory of production and distribution of a given production put forth under conditions of free competition and a large degree of laissez-faire.
“It is impossible,” Flynn elaborates,
to operate a public-debt-supported autarchy save by means of a totalitarian government. The system of planning calls for interferences and intrusions into the private affairs of business organizations and of private citizens. It implies of necessity the multiplication of rules and regulations upon an oppressive scale. It involves endless improvisation of these regulations and the administration of them by vast bureaucratic organizations. All this must be on a scale that will inflict so many irritations and annoyances and oppressions that men will not submit to them save in the presence of overwhelming and ruthless force. No democratic society will submit to them.
The Constitution was designed to prevent against the United States government ever becoming totalitarian, and Flynn calls it “the antithesis of the totalitarian government” due to “the people” possessing that “total sovereignty” and that only a few activities had been delegated to the federal government. They have, however, taken on increasingly more tasks outside the scope delegated by the Constitution, and not infrequently are they directly violating the Bill of Rights, already by 1944 but exponentially more by today. There are over a hundred thousand pages of laws in the Federal Register (state and county laws are added on top of that), and in combination with a corrupt, unaccountable police force, pretty much anyone could become arrested or attacked based on the whim of the officers lest they know their rights and how to handle such encounters.
Franklin Roosevelt’s National Recovery Administration (NRA) was struck down as unconstitutional, and he threatened ousting the responsible judges for it. Hitler and Mussolini had praised Roosevelt’s programs as Fascist, but he had a lot more barriers for implementing them than they did. He did last three terms, and not only lengthened the Depression with his programs up until he could start war planning, but also caused lasting damage with Social Security having amassed great deficit spending ever since. It’s not difficult to imagine the pessimism Flynn may have had in seeing the exponential rate of government growth under FDR and fearing that it may continue as such under suceeding presidents. Government control of business was later compounded by Lyndon B. Johnson establishing Medicare and Medicaid – giving the government a strong grip over the healthcare sector – as well as lending programs for higher education that we now see the legacy of in the form of what is now called the “student loan crisis”. A further list of expansions of power by American presidents can be found in my article Why the State Revels in Crises.
In the end, Flynn concludes that
despite many differences in the character, customs, laws, traditions, resources of the peoples of Italy, Germany, and America, we have been drifting along identical courses and under the influence of the same essential forces.
Warning that being against Fascist Italy and Nazi Germany – as well as those supporting those regimes – does not necessarily exclude you from fitting the description of a Fascist, he asserts,
Fascism will come at the hands of perfectly authentic Americans, as violently against Hitler and Mussolini as the next one, but who are convinced that the present economic system is washed up and that the present political system in America has outlived its usefulness and who wish to commit this country to the rule of the bureaucratic state; interfering in the affairs of the states and cities; taking part in the management of industry and finance and agriculture; assuming the role of great national banker and investor, borrowing billions every year and spending them on all sorts of projects through which such a government can paralyze opposition and command public support; marshaling great armies and navies at crushing costs to support the industry of war and preparation for war which will become our greatest industry; and adding to all this the most romantic adventures in global planning, regeneration, and domination all to be done under the authority of a powerfully centralized government in which the executive will hold in effect all the powers with Congress reduced to the role of a debating society.
“There is your fascist,” he continues, “And the sooner America realizes this dreadful fact the sooner it will arm itself to make an end of American fascism masquerading under the guise of the champion of democracy.”
Now that the main points and message of the book have been explained, I’d like to mention that it also provides some context to the controversy of whether Fascism is to be meaningfully categorized as a type of Socialism. Nazism, i.e. National Socialism, has it in its name, so its followers viewed that as a type competing with the Marxian versions. When asked why he called himself a Socialist, Hitler answered that,
Socialism is the science of dealing with the common weal. Communism is not Socialism. Marxism is not Socialism. The Marxians have stolen the term and confused its meaning. I shall take Socialism away from the Socialists.
Furthermore, Mussolini was long a fierce Syndicalist, but was thrown out of the Socialist Party before setting up his own party. With regard to the platforms of the Fascists and the Nazis, they had no practical significance when the parties got into the government, so arguments on the matter based on those points aren’t very convincing. In terms of economic definitions, a Socialist government means one in which capital goods are “publicly owned” (in practice owned by the government), while a Fascist one controls what the private owners of them are allowed to do with them. Whether we, as Ludwig von Mises, classify Socialism in terms of a “German” (Fascism) and a “Russian” variety, or as distinct concepts, we should seek to understand these ideologies and systems so we can recognize foundations and symptoms of them in our own societies, and figure out what our role in our historical context may be, as “you can’t be neutral on a moving train.”
To Americans, consider this book your warning against unintentionally being part of establishing Fascism in America; and to everyone else, note the developments in your respective countries in regard to the eight points of Flynn’s definition of Fascism. As we go marching, whither will we end up? If the answer is serfdom and tyranny, we cannot say that we weren’t warned.
P.S.: I’ve tried to get a lot of great content from the book into this review, but I hope you will still consider reading it if you’re interested in this topic and want more elaboration.
Given Alan Greenspan’s notorious reputation among libertarians as a Randian free-marketeer who became corrupted during his time in the Federal Reserve and ended up being largely responsible for the easy money policy that contributed to the Great Recession, I was curious as to how he would characterize particular events in the economic history of the United States, especially the financial crises. I’ll first present some praise and scrutiny to the discussions on the Great Depression and Great Recession, respectively, and then briefly summarize my thoughts on the other aspects of the book.
The Great Depression
I was positively surprised of how he and his co-author addressed the roots of the Great Depression, citing the trade barriers caused by Hoover signing the Smoot-Hawley tariff and retaliatory tariffs consequently being levied by other powers; admitting that malfeasance by the Fed was a relevant factor; and explaining that Hoover’s and Roosevelt’s interventions in the market largely only worsened the crisis. His negative descriptions of Roosevelt’s massive programs of National Industrial Recovery Act [NIRA] and the New Deal are worth quoting: “The NRA [National Recovery Administration],” Greenspan writes, “was responsible for implementing a vast process of government-sponsored cartelization: regulating production in entire industries and raising prices and wages according to government fiat,” and also explains that Roosevelt’s “stimulus package” of public sector jobs out-crowded private sector jobs after in the short-term seeming to help recover the economy during 1935-6 (serving as an empirical/historical example against the Keynesian advocacy for having the government trying to “stimulate” the economy).
The Great Recession
Though his take on the Great Depression may be commended, Greenspan was far more defensive when discussing the Great Recession. On the one side, he rightly mentioned Freddie Mac and Fannie Mae, as well as other government measures aggressively encouraging home ownership, as being important factors. However, while he mentions low interest rates as a factor, he blames this on a “savings excess” in emerging economies after the Asian economic crisis of 1997 that pressed global interest rates down and thus fueling a global bubble by boosting asset prices.
Even if this is true despite the savings rate in the US falling from 7.4% in 1998 to 2.5% in 2005 (see picture below, data from FRED) , one must recall that the interest rate nowadays isn’t naturally “pushed up” or “pressed down” by economic forces alone; central banks set a “discount rate”, meaning the interest rate they charge for loans to commercial banks and other financial institutions, and additionally “target” the market interest rate through purchasing securities like government bonds (though more recently, in quantitative easing, they’ve additionally started buying other assets like mortgage-backed securities).
The Austrian Business Cycle Theory (ABCT) explains that if the artificial interest rate set by the central bank is lower than the natural rate determined by the equilibrium between the supply and demand of loan-able funds, that the loan-market will be inaccurately reflected in the visible interest rate and create incentives to fuel an unsustainable bubble. Blaming a “savings excess” as a factor to the crisis thus suffers from the same fallacy as blaming “overproduction”, the symptom is treated as the root cause, while the real question is why the gap between supply and demand take a long time to close (i.e. if there are any barriers thereto).
Greenspan further outright denies that “easy money” policy by the Federal Reserve had anything to do with the crisis. This seems to be a logical extension of his previous claim of a savings excess, as he argues that this “global savings glut” limited “the Federal Reserve’s ability to influence interest rates through the federal funds rate (which is the only interest rate that the Fed controls)”. Furthermore, while he concedes that “the ‘easy money’ critics are right to argue that a low federal funds rate (at only 1 percent between mid-2003 and mid-2004) lowered interest rates for ARMs [Adjustable-Rate Mortgages],” he claims that this rate peaked two years before the crisis and accordingly, according to Greenspan, “Market demand obviously did not need ARM financing to elevate home prices during the last two years of the expanding bubble.”
A statistic further draws into question these claims of a “savings excess/glut” is that the effective federal funds rate rose from 4.07% in December 1998 to 6.62% in November 2000 (thereafter plummeting to 1.52% by December 2001), which may make us wonder why this “saving excess” took so long to affect this metric. In fact, we might wonder whether this is really just a scapegoat to cover for Greenspan & Co’s efforts to pull the economy out of the bust of the dot-com bubble at this time by cutting rates and in the process setting in motion what has come to be known as the housing bubble.
General Thoughts on the Book
Despite these heated disagreements on the nature of business cycles, I thought the book overall was enlightening and well-written. Greenspan and his co-author rightly emphasized the significance of creative destruction for economic development, and for the most part smoothly described how market trends, innovation, and government regulations interacted in the process. They illustrate well how damaging government taxes and regulations can be to the economy, particularly small businesses, and don’t adhere to Keynesian dogma in their economic theory, though, as illustrated, some obfuscation and common myths may have been used to deflect criticism from Greenspan’s involvement in causing the Great Recession.
With this in mind, I recommend those who want to learn more about economic history to check out this book. If you disregard (or read with scrutiny) the parts of the business cycle, much of the book has a lot of page-turning material drawing you into the beautiful process of people improving each others lives through the economic interactions throughout American history. If you only want to understand business cycles better, however, the following books are, in my opinion, more adequate:
Metrics are created to establish quantifiable ways to determine certain trends, be they positive, negative, or neutral. As far as the metrics appropriately signal what they’re intended to represent, they may be quite useful to a certain extent, but unless one is conscious of their limitations, they can be “cheated” and accordingly become misleading indicators. Unless we are conscious of how they may be manipulated in this manner, we run the risk of acquiring a false understanding of both the theory and history involved.
Economic metrics are generally interpreted as more or less accurate ways to determine how the economy is going relative to previous times, and how the economy is going is by extent presumed to be in line with the well-being of the people. Gross Domestic Product (GDP), for instance, is the main metric analyzed to this end ; if it goes up, the economy is supposedly doing better, and if it goes down, it’s doing worse. This metric is said to be based on the five components
C (Consumer spending) + G (Government spending) + I (investment) + EX (exports) – IM (imports).
From this, it might be said that imports are bad for the economy and that an increase in any of the others is good for the economy, which has in recent years led to a quite unfortunate resurgence of Protectionism (i.e. establishing trade barriers like tariffs). Further mathematical manipulation of this equation also leads to what is called the “multiplier”, which, for instance, claims that an increase in government spending can create a sort of scattering effect adding more to the economy than what was taken from it through taxes. By this logic, it doesn’t matter what the government spends money on; just that in some way or another the economy will be “stimulated” by it. The deception here can, however, be broken through if we understand the limitations of the metric at hand.
Why would it, for instance, be considered a positive that people increase their consumption? If it was due to a decrease in poverty that led to less people dying of thirst and hunger it may indeed be a positive, but why should a Black Friday surge in consumption of things the buyers may end up not even getting much practical use of be treated the same way? How about a trend of increasing leisure and focus on minimalism in a given population? This would be represented negatively on various economic metrics, but should they really be condemned for making personal choices that make them happier just because of some collective metric claiming that the population “overall” is worse off for it? How about if government spending increases due to the government initiating a war? Are we to see that as a good thing only because an economic metric or two increases? Many more examples could be mentioned, but this will probably suffice for the point at hand.
In addition to these clear problems to the representation of underlying trends in social and economic metrics, even if they had accurately represented statistical trends in the past, it could still cease to be so if they were to be used as targets for policy, according to “Goodhart’s law“, named after Charles Goodhart, the former chief economic adviser to the bank of England. His brief explanation of the “law” is that “Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes.” Robert Lucas has further explained that
Given that the structure of an econometric model consists of optimal decision rules of economic agents, and that optimal decision rules vary systematically with changes in the structure of series relevant to the decision maker, it follows that any change in policy will systematically alter the structure of econometric models.”
After all, it is the collective outcome of people’s individual actions that are represented in these metrics, and is it really worth it that we be coerced into doing something that supposedly increase them but actually makes us worse off? Living free and making personal decisions based on what we believe is the best for ourselves and others shouldn’t be tossed aside to satisfy some arbitrary numbers. The government may find it a convenient way to gather support for its policies, but we free minds can see through this propaganda, however subtle. Consider what is best for people as individuals, not as collectives based on some abstract model of speculative economic relationships.
“No action can be considered virtuous unless it is undertaken freely, by a person’s voluntary consent;” that is the libertarian creed – our creed. We find Austrian economics to be the tradition most appropriately analyzing economic phenomena by its individualistic and causal-realist methodology, standing as a preferable alternative to the collectivist and abstract mathematical approach to economics devised mainly by Leon Walras and John M. Keynes. We follow the Austrian tradition because it actually analyzes and describes people’s actions and its consequences, not just metrics spuriously representing them. The limits to growth is the extent to which a metric can be manipulated without eventual side effects; there’s no limit to individuals’ pursuit of bettering the conditions of themselves, their families, and their friends.
It’s commonly believed among libertarians that “war is the health of the state” based on Randolph Bourne’s 1918 essay by the same name, but that isn’t really the full story. Indeed, war strengthens the State; empowers it; allows it to expand far beyond what it could otherwise. But war isn’t the only way to do that. It’s merely a means to an end, and can thus be replaced if it ceases to be an option. Any power-hungry bastard with a sliver of intelligence has a plan B, and the State inherently attracts those types. There are many solid reasons why war is the best choice for them to achieve their goals: it fuels fear and insecurity in the minds of the public; creates a dynamic of “us vs. them” thinking in the form of “patriotic” fascist dogma conflating the State and society; and ultimately breeds dependency by the people to their rulers. “Oh please, dear Kings; save us from the evil barbarians! Whatever shall we do without you?!” Begging for the perpetuation of their own slavery. It’s all well and good ’till they stab you in the back – and they will, whether swiftly or so slow you won’t recognize it before it’s too late. It’s just a matter of time. Loyalty to them just makes you blind to the process.
Dependency is behind all of this, and is also a fundamental element in human life itself: We’re all bound by something, whether it’s a person, an object, a habit, or an idea, and I think most of us can feel, deep down, whether that dependency holds us back or pushes us forward. For the measure of judging the value of such dependencies is whether they bring out the best or worst in us; whether our actions that emanate from that basis (the sum of those dependencies: the soul) brings us a little closer to hell or heaven. The Soviet dissenter Aleksandr Solzhenitsyn asserted after his time in the Gulag concentration camps that “the line between good and evil crosses every human heart,” and that’s the fundamental burden inherent in life itself: we constantly face decisions which could drag the future in one direction or another, in ways impossible to foresee. Playing on the side of evil always ends with becoming haunted by it, rotting your soul, until it eventually takes away everything you have; while trying to move beyond the spectrum of good and evil, similarly, will make even the most intelligent men (like Friedrich Nietzsche) end up insane in the pursuit of answers.
Most of us want to do what is right, but often we don’t see that due to lack of knowledge or experience, even if the answer is right in front of us. That’s why we’re scared, anxious, and insecure. Sometimes we just need to reflect on our current dependencies and whether we truly want those in our lives. What may always seek our dependency is the State: They cannot rule without us feeling dependent on them; they’re nothing more than a gang of robbers writ large, and without the public depending on them to bear their responsibilities, that common perception may finally make us free.
You may not consider it when you do your taxes on a yearly basis, but as the decades accumulate, the amount taken from you eventually becomes quite sizable, and even a “stable” inflation rate of 2% caused by the central bank can be enough to wreak havoc in many families and relationships in the long run. And what does the money taken get used for? Wars and famines unleashed abroad to create dependency domestically and signal dominance to other governments, and the establishment of a police state to enforce that dependency? A school system propped up to make people indoctrinated debt slaves? Government nutrition “advice” making people obese and unhealthy and handing us harmful drugs and vaccines while jacking the health care prices up so much it becomes near impossible to get out of it? Welfare programs perpetuating poverty by disincentivizing work? Where will it ever end? Mind control? Oh, wait. Already happened. It’s a mad, mad world we’re living in, designed to make us dependent upon the rulers.
It shouldn’t surprise us that it’s difficult to drag people out of the matrix; we just need to do what we can to reverse the trend, or break out of it somehow. What may help us in that process is to connect with the dependencies that bring out the best in us, and parting ways with those that only bring us down, because the greatest battles we face are internal rather than external.
Every four years we’re told the same story. You have to choose who to have as chief of your ruling class, and since you get an option, that somehow justifies them extorting us and steering our lives, while kidnapping and murdering those who dare reject their demands. So it will be in 2020: Will Trump be reelected or will someone else get to become our ruler in chief? The question for us is rather “Will it make a difference?” And of course it won’t. The Welfare-Warfare state will keep perpetuating itself no matter who is fronting as the official “President”.
However, it’s rather humorous to witness the self-proclaimed “Democrats” suddenly becoming so distasteful of democracy once someone got elected whom they didn’t approve of. Aren’t they the one’s supposed to be favoring that system? To be fair, Clinton won the majority vote, but at least Trump was smart enough to play the game by the rules it was set out as and not how he wished it would’ve been. Still, you don’t see them complaining when they’re the one’s winning. But once they lose… “Abolish the electoral college.” Why? Because it’s an unfair system? Spare me.
And what if they actually got through with their impeachment process? Would they rather prefer Mike Pence? When the CIA took out JFK in ’63, at least they had a patsy as his running mate to replace him. Do the Dems really want someone who is anti-abortion and anti-LGBTQ (or however many letters it is at this point) to be their gang leader? Of course they don’t, but why are they then never mentioning that when they make their case for impeaching Trump?
However much the establishment may be railing against Trump, it’s not as if impeachment will suddenly lead to Clinton becoming the chief gang leader as a result, unless done through a literal coup d’êtat. The Clintons and the rest of the gang has gotten quite some experience with such coups in the Middle East and South America, so it wouldn’t exactly be difficult to pull off were the “intelligence community” supportive of such. Without a doubt, however, the likely outcome of such would be a second civil war being commenced in the US of A, with partisans killing each other for the ruling class they’d prefer to see in power; oblivious to the possibility of living under true freedom.
Shakespeare was onto something when he said that “all the world’s a stage, and all the men and women are merely actors.” One understands this especially when one recognizes the chief gang members for the clowns they are. Waking people up from the trance of “government” (latin: gubernare – govern/control; mente – mind) is of primary importance if we Anarchists want to live in a truly free world in our lifetime. And that Trump is making the “Presidency” appear less legitimate in the eyes of the public we can certainly use to our advantage.
The gang in chief has always taken great pleasure in manipulating language to their advantage. They call themselves a “government” rather than a “gang”, “politicians” rather than “gang members”, and their activities “taxation”, “arrest” and “capital punishment” rather than “robbery”, “kidnapping” and “murder”, respectively. So it is also with the term “country”, used to imply that the gang for some reason has the “right” to plunder and control those living within some arbitrary lines called “borders”, and that those of us who are inside this border should consequently look at each other as a “team” that is in competition with other “countries” led by different gangs.
Never do they fail to exploit this dogma, and have historically caused a great deal of suffering by railing support for their totalitarianism and mass murder as a result. Everyone knows the classic examples, but it keeps being used, albeit to different degrees. Now, after a long failed attempt by the “Democrats” to remove their gang leader by calling him a “Russian puppet” [meaning, of course, of the gang in chief within the arbitrary area called “Russia”], the war-hawks on both sides appear now to have begun using the rhetoric to deflect any criticism or mention of their war crimes. Tulsi Gabbard has been the main target of this psy-op recently, but given that Ron Paul met similar accusations during his time in the gang indicates it’s not a new tendency but merely one which has recently been escalated.
Given Gabbard’s earlier record of “military service” (i.e. engaging in violence abroad on behalf of the gang), this also shows clearly that the gang members couldn’t care less about “veterans” for anything else than puppets to control in accordance with their master plans. Once they begin questioning the legitimacy of war and the government, tough luck; now you’re on your own. If you don’t pledge allegiance to them, then you’re a traitor to your “country”, to be subjected to stigma through nonsensical allegations. “If you’re not on our team, you’re on their team.” That’s the game they’re playing, and which they’ve always been playing: the duopoly is controlling the gang, and you’re only “allowed” to support one of them (though to the outsider they seem highly indistinguishable).
Not a word is to be tolerated of how the murder of innocents abroad may lead to their friends and families some day wanting to seek revenge; how regime change wars made prosperous “countries” devolve back into slavery, poverty, and misery; or how the Islamic terrorist groups they’ve now been fighting for almost two decades most likely could not have arisen were it not for their earlier interventionism (al-Qaeda, ISIS, etc.). And if you dare mention it you’re a “Russian puppet”. The absurdity of all of this is making Machiavelli turn over in his grave, and yet many seem to just accept it blindly without question; another clear symptom of the horrific consequences of spending a decade or two in the indoctrination camps we call “public schools”.
To the Anarchist, it’s not a question of which “government” he pledges allegiance to, for he considers no such thing to be a meaningful concept except for the propaganda of the central authority, nor “countries” or “borders”. As Lysander Spooner wrote in 1870,
A man’s natural rights are his own, against the whole world; and any infringement of them is equally a crime, whether committed by one man, or by millions; whether committed by one man, calling himself a robber, (or by any other name indicating his true character), or by millions, calling themselves a government.
Only as long as they maintain the public’s perception in line with the divide-and-conquer dogma of country versus country, native versus foreigner, rich versus poor, etc., can they hold onto their powers. If enough of us realized that the main conflict of importance here is rather between those engaging in peaceful cooperation and those who engage in brute force or the threat thereof to get their way, a truly voluntary society may finally be within reach.
Given the State’s far-reaching involvement in various aspects of our lives today, it’s clear that the absence thereof would at least to some degree have led to an alteration of the social and economic arrangements presently characterizing our societies. Anarchists all agree that a stateless society would, generally speaking, turn out better than a Statist one, but they differ on the desirability of certain modes of interpersonal interactions and the likelihood of how they would manifest themselves. The 19th-century Anarcho-Syndicalist Dyer D. Lum (1890) argued, for instance, that “Rent, Wages, Interest, Profits, Taxation, are not natural but artificial, having no claim in equity, founded on privilege and only maintained by the denial of equal freedom,” which right-wing free-market Anarchists would disagree with except for the case of taxation. I’ve previously reflected a bit on the ethical justifications for voluntary hierarchies (Kløvning, 2019a), which left-wing Anarchists  like Lum tend to oppose as a matter of principle, so I will here focus more on how economic affairs would be more or less likely to be altered as derived through the praxeological method (The Praxeological Academy, 2019), with basis in the four first economic phenomena Lum decried above.
Wages and profits are necessarily interrelated, and although these are considered undesirable (based on the labor theory of value) and dispensable for a stateless society (as a principled stance against all hierarchies) by left-wing Anarchists, there are strong reasons to believe it would’ve emerged spontaneously without the State, although I’ll argue that it may have had certain key differences. In a stateless society, as in a Statist one, entrepreneurs will need to hire people to actualize their ideas and scale their businesses, and non-entrepreneurs need money to survive and thus are willing to offer their work in exchange thereof. Any serious attempt to enforce against such employment being instituted will, therefore, tend to lead to the establishment of a central authority, which is an important reason I’ve previously argued that Socialism, as the term is commonly understood, cannot in the long term be reconciled with Anarchy in practice (Kløvning, 2019b).
Still, I agree with left-market Anarchists that the employee-employer relationship would likely have certain differences in a stateless society from our current status quo. The schooling we’ve gone through is necessarily interlinked with how we view employment, and the State school system most of us have spent over a decade of our lives going to is, namely, designed to prop us up to become suitable for an employee-status in the marketplace, and taught us that that’s pretty much the only alternative we’ve got. As John Taylor Gatto (2003) has documented,
Spartan ideas of management came to American consciousness through classical studies in early schooling, through churches, and also through interest in the German military state of Prussia, which consciously modeled itself after Sparta. As the nineteenth century entered its final decades American university training came to follow the Prussian/Spartan model. Service to business and the political state became the most important reason for college and university existence after 1910. No longer was college primarily about developing mind and character in the young. Instead, it was about molding those things as instruments for use by others.
How things were prior to this development may provide us with an indicator of how it could be in a stateless society where this mental entrapment would be absent. Joseph Stromberg (2009) has, for instance, contended that
A typical nineteenth-century American “self-help” book aimed at young men did not say, “Get a job working for wages within an increasingly in tricate division of labor so as to enjoy a greater variety of consumer goods.” Instead, it said, “Get yourself a competency” – a vision fraught with republican implications suitably modernized. Working for wages, if one did it at all, was a temporary stage – to be endured while learning a skill or trade and abandoned later in favor of real or potential independence.
It may be said that private schooling in a stateless society would be no guarantee of becoming acquainted with some of the many alternatives to accepting a life-long wage job (such as entrepreneurship or living a minimalist lifestyle of the grid), and though I think competition and a lack of State interference in education would make such alternatives more likely to be taught, I grant its theoretical possibility. We are naturally ignorant of the alternatives we haven’t been told about and haven’t thought through ourselves, and parents have the most influential role in raising their children in the best way they can and informing them of the different opportunities life has to offer to the extent they’re familiar with them. School may be more suitable for some than others, and the same thing may be said about employment: For many, it’s necessary for a while, while others do just fine without it.
With the possibility to grow your own food without being bothered by the FDA or EPA (or whatever agencies regulate food and agriculture in your country) all the time, starving wouldn’t necessarily be the only alternative to employment, and one could also just use employment as a temporary stage to save up money to start a business for oneself. As there would be no central bank in a stateless society, there would be little inflation (if any – based on the historical record, deflation might be expected to be the trend), as well as no taxes, so it would be significantly easier to save up the money required to start one. On top of that, the absence of State licenses, permits, regulations, and taxes for new business owners makes the barriers of entry drop significantly in a stateless society compared to a Statist one. With such unnecessary costs gone, there seems to be much reason to believe that far more people would dare venture to become entrepreneurs in the absence of the State .
In short, employment would likely not be so much of an inevitability for all enter into in a stateless society, but rather only a temporary stage for those who want to start something up for themselves or just save up a lot of money to raise one’s living standards depending on the situation. These things can both be done in a Statist society as well, but only with a great degree of difficulty in comparison to in a stateless one. Of course, this by itself may not satisfy many left-wing Anarchists who see total egalitarianism as their ultimate goal, but with the standard that individuals should have a wide arrange of opportunities available for them to follow as simply as possible, I consider a stateless society as I’ve described it here to be vastly superior to a Statist one by a vast proportion.
An increasing degree of competition as a result of the surge of new entrepreneurs entering the market will naturally lead to large businesses having their market share constantly threatened, and with the lack of State privileges, subsidies, and bailouts, they will have no easy time holding onto it. There’s thus reason to believe that there to some degree would be less inequality in a stateless society , but I think there still would be some degree remaining albeit with a different standard than a Statist one.
A stateless society has the ideal free market, where you can only gain a profit and a larger market share by providing something of value that people want. One company or another must have the highest quality or lowest price on some goods or services provided at a given time and thus be able to legitimately acquire a larger market share. However, they will still constantly be at the risk of going out of business if they don’t maintain that status, to be replaced by some competitor(s) eager to supersede them by taking advantage of their weaknesses.
To use Lum’s terminology, there is more plasticity in the economy of a stateless society in comparison to the fixity in a Statist one. Companies already do frequently change in rank of market share, large businesses go bankrupt, new ones become dominant, etc. in relatively free-market Statist societies, but this would be occurring to a much greater degree with the absence of the State.
It can be deduced from what has hitherto been said that the bosses (employers) in a stateless society would have to treat their workers better and focusing more on motivating them to work than merely dictating to them what to do. Though the extent would depend on the organizational structure of the business, competition would incline the employer to be more like a leader than a boss, in the sense the terms are used in the figure below, as studies indicate that motivation plays a significant role in increasing worker productivity (Khan, 1993; Hackman, 1980; Shahzadi et al., 2014).
If only for the sake of keeping up with the competition, employers will be incentivized to motivate their workers for increased productivity lest some competitor snatches their place for failing to realize the importance thereof. Such competition serves as a self-regulating mechanism for the marketplace, making State regulations of workplace conditions unnecessary and even undesirable in the long term for replacing it.
Cooperatives, Communes, and Flat Organizations
Due to their distaste for hierarchies, left-wing Anarchists tend to prefer egalitarian structures, emphasizing the importance of cooperatives and communes, and that organizations would, in general, tend to be a lot flatter in a stateless society. Some of them concede, however, that such egalitarianism would require an alteration in the mindset and human nature to actualize, though certain historicists consider this development inevitable. William Godwin ( 1994, p. 75), for instance, has claimed that “the intellect has an infinite tendency to raise itself […] Reason must develop itself further. What it perceives as correct, it will sooner or later venture to actualize. This is an unavoidable law of human nature.”
We must first emphasize that the state of equality that we advocate is not a result of coincidence. It is not an equality that is forced from above by the authorities or after overeager pressures by a few enlightened philosophers. This must be an equality that is created for the serious and well-reflected conviction of society as a whole. We will without further ado assume that such a conviction can exist among a certain number of people living along, and if it is possible in a small community, we see no reason to doubt that it’s also possible in an ever bigger society (p. 43) [my translation].
Egalitarian structures of production would, of course, be possible to establish in a stateless society, and right-wing Anarchists have nothing against that as long as it’s done voluntarily, but where they disagree is the empirical question of which organizational structure would be most efficient for providing the goods and services they’re set up for.
Flatter (meaning less hierarchical) organizations is preferable where a lot of creativity and innovation is required, but where work tasks are more standardized (such as in producing cars), hierarchies seem unavoidable to get any production done and to stay in business, no matter the egalitarian convictions the employers may have. Hence, flat organizations, and even more so with cooperatives and communes, may be suitable for certain modes of production, but to acquire certain other goods and services, they would need to trade with or purchase from more hierarchical businesses.
Rent as an economic phenomenon arises from the incentive to let others use one’s land or property in exchange for money. The tenant is dependent on the renter to keep a place to stay and will be evicted therefrom if the rent runs sufficiently overdue. Left-wingers, both of the Statist and Anarchist variety, tend to infer from this that the renter is exploiting the tenant. Indeed, it may sound insufferable to hear about folks becoming homeless for failing to pay rent on time, but one must recall that they’re not entitled to the property of the renter, and one cannot expect them to provide free housing to anyone who needs it.
The tenant might, however, expect to find his/her circumstances more preferable in a stateless society. Without property taxes, the costs of the renter would be far lower, making it possible for him to decrease the rent. Without zoning laws and rent controls, it would be far easier for new house investors to enter the market, increasing supply leading to a decrease in rents. Without the income tax, sale tax, and inflation, the tenant would also be free from State parasites extorting him, making it a lot easier to keep up on rent and being able to escape perpetual poverty. Possibly he may also be able to save up enough to own an apartment or house at one point, at least with far less difficulty than it is in a Statist society.
Interest payments are a result of time preference, i.e. the extent to which one prefers to have something now more than in the future. I prefer having my money available at the moment more than only being able to access it sometime in the future, so for me to be incentivized to lend you some of it, a certain interest rate may be set in accordance with my time preference as a percentage over given periods (i.e. every week, month, or year).
The official lending market is operated by banks rather than private individuals, however, and the interest rate set in a stateless society would be dependent on the supply and demand of loanable funds. In a Statist society, however, the general interest rate is set by a central bank independently from the market rate. If the interest rate is set lower than the market rate (as the central bank is incentivized to do), an artificial boom (bubble) is propped up as entrepreneurs and investors take up more loans than is really available in the market, manipulating the structure of production and dooming the economy for an eventual downturn (though the government and the central bank tries to maintain the bubble through inflation and keeping interest rates low). Higher employment rate and more economic growth in the present comes at the cost of lower employment rate and less economic growth in the future under such a manipulated market, which may benefit those who understand (and control) the system at the expense of those who don’t.
Another bastardization of interest is fractional reserve banking (FRB). FRB is the tendency of banks to keep less money in reserve than the customer has deposited, and earns interest by lending out the difference. This also increases the money supply as the difference may now simultaneously be used by the lender and the depositor, as is illustrated in the figure below (with a 10% reserve rate):
Fractional Reserve Banking may be said to be inherently fraudulent insofar as the customer of the bank considers himself to be keeping his money protected in the bank rather than lending it away.
FRB cannot, of course, be banned in a stateless society, but one might at least expect banks to be far less reliant on that in such a system. At least in the United States, deposits have been insured through the Federal Deposit Insurance Corporation (FDIC) since 1933, which has incentivized banks to increase their degree of FRB as they run zero risks of being held liable in case they couldn’t return the money to the depositors who demanded it back. As the banks would have a risk by operating with FRB in a stateless society, they would be far more careful with doing so, though banks technically still could be an intermediary as long as they were open about the money being lent by the bank rather than kept as a deposit. To that extent, FRB wouldn’t be inherently fraudulent, but would rather serve an important role in the modern economy.
The Desirability of Statelessness
Whether one considers a stateless society at least theoretically to be superior to a Statist one is dependent on which status and position one currently holds. Without a doubt, those business owners who today are dependent on State-provided subsidies, privileges, and bailouts would abhor seeing those suddenly withering away, but the plasticity of statelessness would mean a far greater amount of people having the opportunity to escape poverty and the dependencies of employment, rent, and debt, and making it easier to enter the market for those willing to put in some effort by utilizing their abilities to create value for the public.
No system can satisfy everyone, but its legitimacy relies on the strength of the underlying principles it’s built upon. Will it be based on mutually beneficial voluntary interactions or forcibly extracting resources? Will it be based on leaving people alone to be lazy or productive as they please, or the lazy being parasites on the productive? Will it be based on rewarding those who create the most value for the customers, or those who are the best politically connected? Will it be based on allowing or hindering people to pursue new opportunities? Will it be based on freedom or slavery? That’s the real choice between a Stateless and a Statist society.
A stateless society would be significantly different from a Statist one. With a lack of all kinds of regulations and taxes, one may expect the former to have plasticity and be open to change to a far greater extent than the latter, to the benefit of society at large. More competition would mean more difficulty for entrepreneurs, and they would not be able to rely on State subsidies, privileges, and bailouts to stay in business. As the ultimate free market would reign, they could only profit by creating value for customers through high-quality and low-cost goods and services to a greater degree than their competition.
Employment would likely not be so much of an inevitability for everyone to follow in a stateless society, and would rather only be a temporary stage to save up money for later investment or consumption. Increased competition would incline employers to improve work conditions and be more motivating and inclusive for the workers at hand, though the degree to which it would be beneficial to flatten the organizational structure would depend on the goals and tasks at hand. Both real estate investors and tenants would have a greater time in a stateless society, as regulation and taxes wouldn’t be a bother for either of them, making it easier for the former to enter the market (lower barriers of entry leading to more supply) and making it easier for the latter to pay the rents for living there.
Interest would also be present in a stateless society, although with rates set by the markets (supply and demand) rather than a central authority, and the much-derided cyclical system of booms and busts would be far less volatile (not to mention that the State couldn’t bail out the failing banks with taxpayer money). Fractional Reserve Banking would, similarly, only be possible on a lower and more transparent level, where the banks to a far greater degree would be responsive to feedback by their customers and the public at large to stay in business.
Statelessness isn’t desirable for those with interests in maintaining the State, especially politicians, bureaucrats, and politically well-connected tycoons. But is it those we should be primarily concerned about in our reflections of the desirability of abolishing the State, extorting and controlling us for their benefit and to maintain the system, or is it justice, fairness, and freedom we should pursue? The ability for everyone to pursue happiness in whatever voluntary way they desire, by escaping poverty, increasing their living standards, creating value for others, acquiring property, etc.
Whether left-wing, right-wing, liberal, or conservative, you may from your individual perspective now see how a stateless society could supersede a Statist one. You have the choice here and now to decide for yourself which system to fight for. Will it be liberty or slavery? The future is in your hands.
The process of growth and self-improvement for the individual is to a large extent dependent on following the tracks of others who have come further in life. Early childhood is highly reliant on such imitation, to learn how to walk, speak, read, etc., and likewise must one in many cases seek out help from professionals if one is to acquire mastery at some subject or skill later in life, which is why many top performers have invested a lot in mentors to coach them (Greene, 2012). Similarly, tradition may be said also to have a crucial role on a societal basis, such as in older generations teaching their children good manners, literacy, general life lessons, and so on, as well as maintaining what modes of governing have historically seemed to work better than others.
Although much of this is indubitable, it also has a flip side. Tradition is practical not because of any intrinsic quality, but the process through which knowledge, habits, and skills are transferred across generations. Thus, it is the content that’s being perpetuated through tradition (as a process) that is to be the subject of analysis when judging any one of the many traditions that are “competing” for dominance. Slavery, for instance, was long defended much due to the role of tradition and that it seemingly had existed since the dawn of mankind, even with philosophers like Aristotle deeming it completely natural that some are doomed from birth to be slaves and others, masters. This tradition was perpetuated for thousands of years, and it was no easy process to overturn it.
Although it’s among the more extreme examples, it clearly shows the unreasonableness of blindly accepting any tradition just because that’s how things have been done before. Most progress, innovations, and breakthroughs are borne because there are people who dare to be different; contrarians who are more concerned with trying new things, techniques, ideas, etc. than always to imitate what everyone else is doing. It’s a tautology to say that our individuality can only be found in the qualities that differentiate us from others, yet the implications of this simple statement are plentiful. Such characteristics may be considered positive or negative regardless of whether one has received them through tradition or personal trial-and-error experiences. One ought, therefore, to judge those characteristics, ideas, skills, and habits independently from the historical length and popularity thereof.
One gets the best out of tradition by seeing what works and what doesn’t work. Over the last couple thousand years, plenty of different ideas have been tried, and much of it has been documented and is thus available for us to learn from. Want to start a business? There are many hundred different books to choose from to learn more about how to do it, and with the (relatively) recent emergence of the internet, this kind of information has become superabundant, and it’s right at our fingertips. We can see what has and hasn’t worked well for people, avoid mistakes others have made, and receive lessons from those who have succeeded in doing that one wants to achieve. One needs also, of course, to think critically in this process, as there are many who may exaggerate the extent of their success, or the significance of certain factors or processes to get there.
Destructive traditions tend to be maintained through a failure to learn from such previous experience. This may be due to one or more of the following three reasons: (1) falsely interpreting the negative consequences of the tradition to be causally independent thereof, (2) not reflecting over what led to the negative consequences in the first place, and (3) the failure of an older generation to teach the real lessons to the youngsters and thus leave them to the influence of other traditions which may teach the exact opposite. Nowhere can this be more clearly seen than with the effort to implement a Socialist social order. The trend has been especially well-documented by Kristian Niemietz (2019), showing the cycle of support-excuses-denial by supporters of Socialist regimes from the Soviet Union to current-day Venezuela, and the historical examples could also be expanded upon much further back in time before Marx, to “Starving Time” in Jamestown (1609-11) and Lycurgus’ Sparta (9th century B.C.).
The opportunities to learn from the mistakes of the past are endless, and yet there are still those who fail to learn, trapped in idealism and tradition. If we really were attentive to and reflected on what works and what doesn’t work, what’s right and what’s wrong, a mere one or two cases may have sufficed to provide us with some indicators. That’s not where we currently are, however, to our own peril. The support for Socialism is still large, despite its experiments witnessing numerous horrific experiences in the 20th century, and many are still possessed by the philosophy of identity politics, despite its many absurdities (Kløvning, 2019a).
However, the psychological effect of tradition, which I term the tyranny of the status quo, has an example which encompasses a yet larger portion of the population – in fact, the vast majority of people – namely the belief that certain people are morally entitled to rob/extort, kidnap, and murder others, and to a large degree steer and exploit the lives of millions of people. Among non-followers, this belief is called Statism, and it’s maintained through tradition and manipulation of language, i.e. calling the same activities taxation, arrest, and war/capital punishment, respectively, when done by the people operating the tradition-based institution called the “government”. Symbols (flags) and rituals (voting) contribute to making the institution and the tradition that upholds it appear more legitimate, yet no defense thereof really stands up to logical scrutiny (Wedler, 2019; Rose, 2012; Huemer, 2013).
What is then to be done? Challenging every authority and all traditions. To quote Noam Chomsky, “any form of authority, domination, hierarchy, are not self-justifying; they face a burden of proof. And if they can’t meet it […], they should be dismantled in favor of a more free and just social order (The Institute of Arts and Ideas, 2019).” If we really want the best for ourselves and our fellows, we ought not to take traditions for granted, but to challenge the fundamentals and judge their contents in accordance with logical principles. It’s all about taking the next step in the questioning after “what is?”, to “why is it this way?” and “are there any better ways to do this?” Escaping the tyranny of the status quo is no easy task, for there’s a deeply rooted psychological trait in us dedicated to “following the herd”, so to speak, which to some degree (depending on the individual) leaves us vulnerable to emotional manipulation by those unconsciously guarding the gates to outside the Overton window (as is well illustrated in the Matrix trilogy, see Kløvning 2019b).
The first step to freeing oneself is to free one’s mind, and beginning to question everything anew and think critically about the ideas and beliefs one is told by one’s surroundings to adopt and enact. Tradition as a process can be a goldmine if one knows how to use it, i.e. that one judges its contents carefully and critically before adopting or rejecting it, but if this filter isn’t followed, falling into the trap of unconsciously falling in line with the tyranny of the status quo is pretty much an inevitability based on our biochemical wiring. If you manage to avoid that trap, you’ve taken a good first step to truly becoming a sovereign individual, and be an example for others, forming traditions in line with your conscience rather than merely your surroundings.
Mathematics has become an integral part of modern economic theory. At this point, one can hardly read a paper by mainstream scholars in the discipline without encountering complex formulae, functions, and equations which appear incomprehensible to anyone without a deep comprehension of mathematics. With decades of research and university classes based upon the validity of econometrics – the application of mathematics to economic theory – a lot of scholarly effort would’ve been spent for nothing if it was found to have shaky epistemological foundations. The economists of the Austrian tradition have been especially critical of econometrics, and consider a causal-realist approach to be the preferred methodology. It is of primary importance for legitimate contributions in academic work that empirical claims be well-documented and the premises and methodology to have sound epistemological foundations, so the significance of a proper investigation on the issue could hardly be overstated.
In this article, I’ll first delineate some principles of epistemology and the general epistemological value of mathematics, then document the history of econometrics, and afterward explain and elaborate on the Austrian critique. As many a reader may find it difficult to see the relevance of the preliminary discussions to the central question at hand, the model below is provided to clarify why I feel the need to go through them all in order.
Econometrics is based upon certain uses of mathematics, which is again based upon certain epistemological assumptions. To put it in another way, the validity of econometrics is dependent on epistemological assumptions which allow for such applications of mathematics to economics. We’ll later see that much of the disagreement between the Austrian school and the econometricians is firmly grounded in epistemological disputes, so some basic understanding of epistemology is certainly warranted. In the words of Ludwig von Mises (2008: 5),
“Such doctrines [condemning economic theory] go far beyond the limits of economics. They question not only economics and praxeology but all other human knowledge and human reasoning in general. They refer to mathematics and physics as well as to economics. It seems therefore that the task of refuting them does not fall to any single branch of knowledge but to epistemology and philosophy.”
During the millennia governments have existed, the core of their nature appears to hardly ever have been properly investigated or their legitimacy questioned. It’s no rare phenomenon to see objections that the institution holds too much power at a given moment, or that it should not take on additional functions, but that’s usually where the questioning ends. Even the American founders were deemed revolutionary for seeking to establish a government solely limited to the protection of life, liberty and the pursuit of happiness, and they did, in fact, go far enough with this as to open up for the possibility of abolishing it if it ever grew beyond these functions. It’s a tragic occurrence, therefore, to witness that same nation taking on more and more characteristics in line with historical empires like Rome rather than a society based on tort law like Celtic Ireland and the Commonwealth of Iceland.
Few libertarian movements existed before the most recent centuries – mostly religious ones like the Taoists and Quakers – and for every Lysander Spooner, H. L. Mencken and Murray Rothbard, there have been at least a thousand Platos, Hobbes’, and Keynes’. It thus appears that Mencken’s assertion that “It takes quite as long to breed a libertarian as it takes to breed a racehorse ” rings at least metaphorically true. The short list of actual concise and clear-cut analyses of the nature of government have, however, been increasing greatly since the 19th century, including No Treason, Notes on Democracy, Anatomy of the State, The Most Dangerous Superstition, and Democracy: The God That Failed, as well as anthologies like Anarchy and the Lawwith great scattered pieces of writing, while most others are composed of incomprehensible jargon and obfuscation or pure fallacies attempting to legitimatize the State. Given the extensive influence of government into numerous spheres of people’s lives, it’s a curious fact that the institution is so rarely questioned and sought to be understood at a deep level. To see why that is, we may first to analyze the nature of the State and how its incentive structure affects its participants.
So, what is the State ultimately? Is it the people, buildings, and/or processes constituting it? Naturally, these are all parts of how the State operates, but its very nature is more akin to a special type of social organization – even a business – based upon certain prerequisites. The main feature that distinguishes the State from other businesses and social organizations is that it has a monopoly on force. As such, it is almost the sole institution financed through extortion and whose main operations include various manifestations of coercion or the threat thereof, though a few others, like the mafia, utilize similar tactics (hence the free market Anarchist Dave Smith’s apt characterization of the State as “a mafia masquerading as a human rights organization”).
Despite this similarity, the State is still widely thought of as a more legitimate and moral institution than the mafia and has so for millennia. The reason for this can actually be found in the very etymology of the word “government” – describing the organs of the State. It can be divided into two Latin words: gubernareand mentis, meaning “to govern/control” and “mind”, respectively . It is rather fitting that the etymology of this institution would spell out the meaning “to control the mind”, for that is exactly what is needed to get people to consider it as legitimate. The State itself is a fiction – it doesn’t exist in itself; it is entirely reliant on people perceiving it as having a legitimate “authority” to do what it does . Therefore, as Rothbard put it: “The greatest danger to the State is independent intellectual criticism ,” because
If the bulk of the public were really convinced of the illegitimacy of the State, if it were convinced that the State is nothing more nor less than a bandit gang writ large, then the State would soon collapse to take on no more status or breadth of existence than another Mafia gang .
It is thus directly contrary to the interests of the State to have the “citizens” they govern to become independent, critical thinkers who are intelligent and healthy. For that reason alone it appears to be an especially horrific idea to have it take over functions like healthcare and education: they have a significant incentive to make people number and more unhealthy. The caveat is that those “in power” of the institution have to pretend to look out for the interest of the people in order to maintain the perception that they have some legitimate “authority” acquired by the people through democratic elections.
The degree to which the democratic process works as a constraint on negative behavior by the State’s participants I’ve explained in Hoppe on the Problems with Democracy and the Monopoly of Force based on Hans-Hermann Hoppe’s Democracy, where he shows that the substitution of Democracy for Monarchy has had more of an effect of making citizens number and more acceptant of the State as having some legitimate authority. The main fallacy behind this conception is that it assumes democratic elections provides a meaningful way for people to delegate others the right to act on their behalf. People have, however, no inherent right to extort, kidnap, murder, etc., and there is thus no “right” to delegate away to commit these acts, whether to politicians or private actors .
To better understand the significance of the incentive structure in the State we may first investigate how incentive structures operate and affect people’s psychology and behavior (as an aggregate often labeled “human nature”). Human nature is established mainly from three components: biology, environment, and psychology. The genes (biology) we are endowed with from birth are, in a sense, probabilistic functions that determine what characteristics we are more and less likely to develop, and the situations (environment) we find ourselves in throughout our upbringing affect how these probabilities ultimately play out. The psychological part is in essence what constitutes our “free will”, allowing us to change certain characteristics regarding behaviors and attitude (which I’ve delineated in more detail in What The Matrix Can Teach Us About Choice, Free Will and Human Action).
Incentive structures play an important part in the environmental component of human nature. Someone wired biologically to be more aggressive is likelier to escalate situations and such, for instance, but is by no means “doomed” to become that way. If, as he enters school, recognizes that he can gain social status by bullying certain students without much a threat of negative consequences outweighing the incentives, such people will naturally tend to end up doing so as long as they acquire positive results . As an incentive structure, the State is quite similar in the sense that it, too, tends to increase the prevalence of negative behavior in the participants. This was clearly recognized by John D. Acton, who wrote the memorable dictum “Power tends to corrupt and absolute power corrupts absolutely.” He further wrote:
Great men are almost always bad men, even when they exercise influence and not authority; still more when you superadd the tendency of the certainty of corruption by authority.
Politicians are funded through extortion and have more or less influence over how and what to be mandated, restricted, and prohibited, from which coercion is initiated accordingly. They earn more money by increasing the magnitude of the extortion fees, and more power and influence by means of manipulation and having the State continually usurp control of further spheres of human interaction. We can only expect that they’ll act accordingly, and the reason this is often done in secrecy is that people actually do understand the vice of corruption, though most fail to realize that this is the rule rather than the exception with the State.
Regarding the question of whether politicians theoretically can be “morally good”, despite the corruption the incentive structure provides, Robert LeFevre paraphrases Isabel Paterson:
What good does it do to have a saint of every conceivable virtue operating a guillotine? He may have the highest of morals and ethics. He may be imbued with a passion for doing good. But the mechanism he is hired to operate cuts off heads .
The best he can do may be to sabotage the metaphorical guillotines of his colleagues, the closest practical example of which may be Ron Paul: trying to reduce the extortion fees, end pointless wars, and cut bureaucracy and red tape, and so on. Changing the system from the inside is an arduous and challenging task, however, and the most one tends to accomplish from such is only to slow the expansion of such an institution due to the inherent incentive structure – reversing it is near impossible (though this also depends somewhat on the culture of the majority of voters). Hence many are pessimistic about the efficacy of this tactic and believe along with Mencken that “all government is evil, and that trying to improve it is largely a waste of time.”
“However are we to defeat this Leviathan then?” I hear the concerned reader objecting. The suggestions are many and I will not go much into depth about them here , but it all starts by freeing one’s mind from the mythology of State authority and beginning to investigate and question anew everything one had previously accepted as fact. We as a species have been endowed with this remarkable organ – the brain – allowing us to organize and make sense of our surroundings and act accordingly to improve the conditions of ourselves and others. The potential that each and every one of us thereby has is of gigantic magnitude, and we can all achieve great things if we only begin tapping into it. By instilling in ourselves discipline and a sense of responsibility for ourselves and the people we love, we’ve taken a good first step in becoming less reliant on the State. We ought all thus to start utilizing our potential, by always learning, always questioning, and teaching our family, friends, and children that they have an inherent self-ownership which the State violates at a continual basis.
All I know is that first, you’ve got to get mad. You’ve got to say: I’m a human being God damn it! My life has value! […] I want you to get up right now and go to the window, open it, and stick your head out and yell ‘I’m as mad as hell, and I’m not gonna take this anymore!’
When enough people simply realize that they own themselves, and will not tolerate being treated as slaves by politicians and bureaucrats any longer, we’ll have reached a level of perceptual evolution as a society, from which we can finally start to develop legitimate institutions in law , money , and other functions based on voluntary cooperation regulated by market competition and reputation rather than reliant on a coercive monopoly of force, rendering the State obsolete. The emperor has no clothes, and it’s far past the time that we open our eyes and recognize that fact.
Many informative essays and excerpts about theoretical and historical examples of this are included in Stringham, E. (2007) Anarchy and the Law. Other literature on the topic worth reading includes Murphy, R. (2002) Chaos Theoryand Tannehill, M. & Tannehill, L. (1970) The Market for Liberty. Both of the two latter works also discuss the role of private defense/military.
Despite the horrific experience with Socialism across the world throughout the 20th century, the doctrine still maintains plenty of followers and has been growing especially since the Great Recession. “It wasn’t real Socialism,” they proclaim. While the Statist Socialists, most of whom call themselves “Democratic Socialists”, contend that their system could work as long as they had the “right people” in power, the Anarchist variety tend to point to the historical instances as “State Capitalism”, i.e. having nothing to do with their ideal system of societal organization. Only a small minority of acolytes tries to defend and justify the regimes that reigned terror over the Soviet Union, China, Cuba, Venezuela, Cambodia, North Korea, etc., but the self-proclaimed Socialists who denounce these don’t seem to have much curiosity as to why all these experiments tend to end up with the same results.
It’s important to remember that, in contrast to popular belief, theory cannot be separated from the practice; if the theory doesn’t match with how objective reality operates, the theory is wrong or at the very least misleading, and out to be revised accordingly. As such, the historical cases of “Socialist experiments” ought to warrant an investigation into the theoretical reasons of the underlying mechanisms, although they could have been foreseen through deductive reasoning. Ludwig von Mises made a thorough investigation of this in 1922, and Claude Frédéric Bastiat before him in the mid-19th century, both of whom provided a great degree of clarity to why Socialism must fail based on its underlying theoretical foundations before it was laid out for all to see in the 20th century.
To illustrate this, let’s begin by imagining a nation with a complete Anarcho-Communist system having somehow been instituted, without any central authority and where the culture is generally oriented towards charity and mutual aid. If this system maintained itself as such, one could possibly just as well have rather called it “Anarcho-Capitalist”, as voluntary sharing is certainly not out of the question as a definitional matter in the latter system. Where the two systems diverge, however, the problems begin: (1) abolition of employment and (2) redistribution.
What many Socialists mean by the “abolition of private property” does not necessarily mean that no one is allowed to own anything (i.e. consumption goods, which they call “personal property”), but rather that you cannot hire anyone to work for wage labor. Even in a culture where such employment is viewed with scorn, however, this is bound to become a great inconvenience. Complete self-sufficiency is incredibly difficult and comes at a significant cost in comparison to outsourcing certain work for an agreed-upon price. For the same reason trade of goods and services is such a boon to its participants, trade of labor can also make matters significantly more convenient for those involved, incentivizing such an arrangement to be instituted. Thus, although it may be considered against the “rules” of the Anarcho-Communist society in question, there is a powerful incentive encouraging employment to be instituted, both from those seeking to outsource their work (employer) and those willing to trade their labor for wages (employee), and will occur if both parts consider the benefits to exceed the costs of social stigma and the like.
From there the Anarcho-Communist system faces a great dilemma: Either it has to centralize power, making it less “Anarchist”, or become less “Communist” as a result of the employment structure being reinstituted. The Anarcho-Communist acolytes seeking to enforce the rules of their ideology may, it is argued, do so by “mob rule” through organized violence against those making such an agreement, but the multiple theoretical problems here include at the very least secrecy (the parts of the arrangement keeping quiet about it to avoid the social stigma) and scale (how many such arrangements are being instituted simultaneously). Given the unreliability of this strategy, the centralization of power into some sort of quasi-state is almost bound to occur to maintain the system based on the incentive structure involved. This is also what has to be done to solve the problem of how to implement any redistribution scheme, as voluntary donations alone, even in the most charitable society, would be insufficient if the true goal was the elimination of economic inequality.
The central authority thus takes on two main tasks: (1) enforcing against employment being instituted, and (2) organizing the redistribution scheme. The first of these may alone bring out the totalitarian instincts in the rulers at hand, as they would be the ones to decide how it would be enforced and what the punishment for it would be. How would they figure out whether and the extent to which such affairs occurred? How many “police” or “secret agents” would be placed out to do so? What about the cases where there is suspicion but not definite proof that it’s going on? How severe would the punishment have to be to sufficiently discourage people from instituting such an arrangement? These are all important questions the Socialist rulers would have to find an answer to, and it appears that the inclination they’re leaning towards is quite contrary to the characteristics of any relatively free society, at least as Westerners conceive of it.
Adding the layer of redistribution on top of this, this tendency appears even clearer. To enforce this, agents of the central authority must as a starting point be allocated to seize capital goods from the citizens, and the decision of whether the methodology of this is “by any means necessary” or not is again up to the whim of the rulers. When the redistribution scheme has been properly implemented and the State owns the capital goods, further problems will arise as a result of moral hazard. Under a system of “from each according to his ability, to each according to his needs,” the reward is independent of the effort, and there is, therefore, no real reason to do any work. Depending on the work ethic of the society at hand, the duration the system will continue to operate at moderate levels may differ, but over time the discouragement eventually kicks properly in and people then put increasingly less of an effort into their labor. The result of this decrease of labor, of course, has to be a decline in productive output, meaning there’s less to redistribute.
Here again, the Socialist rulers have to make the decision: Either centralize power further or the system will collapse on itself. If nobody wants to work and the system is to be maintained, people must be forced to work, and with the State as the only “legal” employer, politicians and bureaucrats are the ones to decide how much to work, what to work on, the punishment for refusing to work, etc. This is why work/concentration camps like gulags in the Soviet Union tend to arise under Socialist regimes; not because the wrong person is in office, but because any such ruler will come in a position where their system will collapse if they decide not to. It’s not that a Socialist government that isn’t totalitarian has figured out the key to success of how to make their system workable, but rather that it hasn’t yet come to the stage where the circumstances incline it to become so. This is because of human nature, pure and simple, meaning the incentives that affect our actions based on the available costs and benefits of the means to achieve particular goals. Whether a devil or an angel, the Socialist ruler will, either way, become totalitarian, varying only by degree.
As a case in point of the tendency from Anarcho-Communism to either free-market Anarchism or totalitarian State Socialism, we may take a brief look at the prominent historical case of Anarchist Spain between 1936 and 1939. This is the major example the Anarcho-Communists seem to continually point to as evidence for their system, but when taking a closer look at the details of the history, we rather find that it supports the thesis I’ve laid out above. In his study on the issue, Bryan Caplan concluded that
The Spanish Anarchists demanded the abolition of all government in the name of human freedom; but once they had the power to do so, they both participated in and established governments which were no less oppressive than any other. […] The experience of the Spanish Anarchists does not reveal any “third way”; to the contrary, their experience eloquently affirms that state-socialism and free-market anarchism are the two theoretical poles between which all actual societies lie.
Social engineering can only be conducted by forcing others to act against their interests, and as the State is the most convenient institution through which this can be done, the totalitarian instincts even of such a variety of self-proclaimed “Anarchists” may be strong enough to make them utilize it to achieve their grand objectives. With this in mind, one can begin to understand Mises’ bold assertion that “Every socialist is a disguised dictator.”
Given the significant power over individuals’ decisions the central authority obtains under Socialism, it isn’t difficult to recognize that other varieties of totalitarians would also be eager to take advantage of their tactics. It’s often argued that the primary difference between Socialism and Fascism as economic systems is that under the former the State owns the majority of capital goods, whereas under the latter they are kept in private hands albeit still controlled by the State. It’s well documented that this was the case in terms of the implementation of price controls and other heavy regulatory frameworks in Nazi Germany and Fascist Italy, but also in ancient times were similar regulations implemented over individuals’ economic decisions. A study on the economic policies of the Roman Empire noted, for instance, that they “often responded to rising grain prices by banning exports, requiring grain merchants and farmers to sell their stocks of grains (thus lowering current prices), and they also imposed maximum price controls.” The authors formulated the effects of this remarkably well: “Coercive government intervention in markets saved lives today and set the stage for even more starvation tomorrow.” This passage is timeless and applies just as well to contemporary governments as with the Roman Empire.
The State cannot abolish the laws of economics. That’s the uphill battle all central planners struggle with, whether they call themselves Socialists, Fascists, Nazis, or any other label. In trying to create the perfect world by eliminating the injustice they perceive in the world – poverty, inequality, and greed – they feel entitled to the right to socially engineer society to conform to their vision, and the power required to actualize this will necessarily corrupt them towards totalitarian tendencies. Even with the purest Anarcho-Communist society as a starting point, it will eventually turn in that direction in accordance with the underlying incentive structure, and the most prominent historical case of Anarchist Spain appears to provide some empirical evidence for the thesis presented of this tendency. Furthermore, totalitarians of other varieties will also be very eager to interfere with the decisions of the citizens they’re in control of, and heavily restrict and mandate all sorts of economic activities. The commonality is collectivist central planning, which always ends up in disaster, not only because of the great inefficiency it leads to but also that the liberty of the individual is completely disregarded for a grander, more abstract whole – the vision of a perfect society – and we should all at this point know where that leads.
A common mischaracterization of the libertarian position is that it is either indifferent to or supportive of all kinds of unethical activities conducted by businesses and individuals in the private sphere. Although this appears to be more of an attempt to stigmatize libertarianism than to carefully assess it, it’s true that its proponents exert far more of their energy to protest State activity than anything going on in the private sphere. I’ve elaborated in detail in previous articles why I think this prioritization is justified, for reasons such as the State creating barriers of entry against competitors in the market; generally accelerating antagonism between the rich and the poor in the private sector; slowing down innovation and economic progress; using plunder and extortion as their primary means for financing; and having completely illegitimate philosophical foundations. Having written many critiques of the State, however, I will here take up the question to which degree libertarians, as well as others, should also view private businesses with skepticism and call them out when they do wrong.
First of all, it’s important to recall that both the private sector and the State are run by human beings and that the primary cause of the differences between these spheres is the incentive structures which encourages or discourages particular activities. Accordingly, people can act unethically whether they’re the owner of a private business or a politician. The mafia, Bernie Maddoff, and Enron are notable examples of this, all of which have received a major degree of notoriety. Given that there is already widespread agreement on the improprieties conducted by such individuals and institutions, however, there aren’t many people left to persuade over to such a position, and thus a more useful activity would likely be to expose less well-known wrong-doing, whether done by the State or other private businesses (or a cooperation thereof). In the case of private businesses, in contrast to the State, customers who become aware of unethical activities can respond by “voting with their dollars” by stopping to shop their goods and services and rather going over to the competitors.
Though it may sound like many libertarians explain this as an automatic process, it clearly requires that the customers become more familiar with the businesses and their products and act accordingly. To provide a less-extreme example of this, imagine a village with ten different grocery stores, four of which someone named Sarah is familiar with. Of those four stores, there may be one which she primarily uses, which may be much due to geographical convenience. Though the store most of the time has all the groceries she pursues, the prices of these products may be higher and the quality lower than that of a competitor, indicating that she could save money and/or get higher quality services if she shopped elsewhere. If Sarah at one point decided to become a more “conscious consumer”, she could do a bit of investigation and discover some of the six other grocery stores she wasn’t previously familiar with, and compare prices and quality between their products.
Naturally, it would take quite a bit of effort to conduct such a thorough investigation, and extra-price costs such as geographical distance would have to be taken into account, but if we extrapolate the example of Sarah to look at the hundreds to thousands of people that may live in the area and have tried various companies, we get more of an idea how the “market” tends to self-correct so effectively. For instance, John has a history of buying X both at companies A and B and informs his friends and family that B has the best price for its quality, and Frank responds to John that he considers another company C to supersede B in this respect. The examples are virtually endless, and in this way, personal observations and reputation based on such spread of information can at an aggregate level significantly affect the actions of the consumers, working as a powerful system to filter out the businesses which do the worst job in satisfying the wishes of the public given that the State doesn’t interfere significantly through bailouts, subsidies, regulations, and other special privileges.
This is the power of decentralized information, which Friedrich von Hayek elaborated remarkably well in The Use of Knowledge in Societyand showed that any attempt to centralize the economy would end up in trouble with acquiring and navigating all this information spread throughout society. Becoming a conscious consumer isn’t something everybody needs to do for the “market” to self-correct, but as long as it’s relatively unhampered, it generally tends to do so as a result of the decentralized information network. By doing so, however, one could personally benefit greatly in the long run through cumulative growth by more cost-effective purchases, as well as one’s associates by making them aware of such opportunities.
One of the most relevant cases of business criticism today is Big Tech. The censorship and political bias often experienced at sites like YouTube, Google, and Facebook today have made conservative populists view with scorn libertarians who don’t want the government to hold such companies “accountable”, although they receive hundreds of millions of dollars in subsidies and have contracts in cooperation with governmental entities such as the Pentagon, the military and NATO. “In fact,” Defense One reports, “defense contractors and high-level U.S. intelligence officials say that social network data has become one of the most important tools they use in the collecting intelligence.” It is true that many libertarians contend that such “private” companies can make decisions in violation of the wishes of the public if they so wish, but a more potent case to make on the issue would be to make more people aware of the collusion by Big Tech with the government, and to transition to more preferable platforms not engaged in such unethical conduct (like Gab, Minds, Steemit, Parler, Bitchute, etc.).
Libertarians may differ in their balance of criticism against the State and private businesses, and although the prioritization of the State in this respect can be well justified, it’s important to recognize the responsibility each and every one of us has in contributing to the market self-regulation process by promoting the good and condemning the bad. It is certainly not obligatory to praise Enron or Maddoff to be a libertarian; quite the contrary, to denounce such companies and figures is to participate in the very process that one tends to argue makes the free-market such a remarkable system.
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