…the Austrian theory of the trade cycle reveals that only the inflationary bank credit expansion that enters the market through new business loans (or through purchase of business bonds) generates the over-investment in higher-order capital goods that leads to the boom-bust cycle.
Murray N. Rothbard Economic Controversies, p. 737
0:00 – Rothbard Quote
0:51 – What is economics?
2:14 – What makes the Austrian School of economics unique?
3:14 – What is an accurate way of measuring wealth in a given society?
4:37 – Why are some countries poor and others wealthy?
7:16 – How can we increase access to products and services to those in lower income brackets while increasing quality – healthcare and housing?
13:20 – Why do Austrians oppose regulation?
15:46 – Do Austrians assume perfect knowledge?
18:04 – What about monopolies & cartels?
23:45 – Subjective value
24:54 – Labor Theory of Value
26:45 – Centrally planning – difference between corporations and governments
29:19 – Competitive currencies – Spontaneous order
31:44 – Spontaneous order in law
33:18 – Do disastrous situations justify the existence of a state?
35:17 – A Priori reasoning vs. Empirical evidence
38:30 – Real world examples
40:50 – Wealth vs. Dignity
42:54 – Why wages rise
46:04 – The “free” mindset
49:55 – Competition – the Austrian approach as a process
Why does the government hate Austrian economics? How is economics really philosophy?
This school of economic thought explains the boom bust cycle of our economy using simple deductive logic. Using Praxeology, a branch of philosophy created by Ludwig von Mises. It studies the economy by analyzing human action. How does it work? Tune in!
In his debate with Dave Smith Nick Sarwark said people aren’t worried about foreign policy because it doesn’t affect their lives. Tommy decided it was time that this idea was taken on, and debunked for good.
Pete welcomes the president of the Mises Institute, Jeff Deist. Jeff returns to the show to talk about free speech issues, a challenge to Pete on his social media posts and, of course, the enemy that is the Federal Reserve.
Reading “How I Left the Left” is a solid reminder that there’s not much intellectual heft remaining on that side of the fence. If an ideology sets out to isolate the locus of evil in people’s very identity, it is pretty well spent. This, in addition to the failure of the socialist model everywhere it has tried, explains why the Left has suffered so much at the polls and now faces a serious backlash in campus and public life.
With the failure of action comes reaction, and now the Western world is dealing with something far less familiar to most people: the rise of the alt-right as the alternative. It is attractive to some young people due to its taboo-breaking, rebel ethos that so easily inflames teachers and protectors of civic conventions.
The movement is more than that, however. It has a real philosophical and political history, one that stands in violent opposition to the idea of individual liberty. It has been largely suppressed since World War II and, because of that, most people assumed fascism (and its offshoots) was gone from the earth.
As a result, this generation has not been philosophically prepared to recognize the tradition, the signs, the implications, and the political application of the ideology so many are stumbling to embrace.
Here is a prehistory of what we call the alt-right today, which is probably better described as a 21st-century incarnation of what in the 19th century would have been called right-Hegelianism. I’m skipping over many political movements (in Spain, France, and Italy), and clownish leaders like George Lincoln Rockwell, Oswald Mosley, and Fr. Coughlin, to get right to the core ideas that form something like a school of thought which developed over a century.
Here we have a lineage of non-Marxist, non-leftist brand of rightist but still totalitarian thinking, developed in fanatical opposition to bourgeois freedom.
1820: Georg Friedrich Hegel published Elements of the Philosophy of Right, which spelled out the political implications of his “dialectical idealism,” an outlook that departed dramatically from the liberal tradition by completely abstracting from human experience to posit warring life forces operating beyond anyone’s control to shape history. It turns out that the politics of this view amounted to “the state is the march of God through the world.” He looked forward to some age in the future that would realize the apotheosis of State control. The Hegelian view, according to a 1952 lecture by Ludwig von Mises, broke into Left and Right branches, depending on the attitude toward nationalism and religion (the right supported the Prussian state and church, whereas the left did not), and thereby “destroyed German thinking and German philosophy for more than a century, at least.”
1841: Thomas Carlyle published On Heroes, Hero-Worship, and The Heroic in History, which popularized the “great man” theory of history. History is not about marginal improvements in living standards by using better tools, but rather about huge episodic shifts brought about through power. A champion of slavery and opponent of liberalism, Carlyle took aim at the rise of commercial society, praising Cromwell, Napoleon, and Rousseau, and rhapsodizing about the glories of power. “The Commander over Men; he to whose will our wills are to be subordinated, and loyally surrender themselves, and find their welfare in doing so, may be reckoned the most important of Great Men.” Carlyle’s target was Adam Smith and the Scottish Enlightenment generally. Hitler’s biographers agree that the words of Carlyle were the last he requested to be read to him before he died.
1841: On the continent, meanwhile, Friedrich List published The National System of Political Economy, celebrating protectionism, infrastructure spending, and government control and support of industry. Again, it was a direct attack on laissez faire and a celebration of the national unit as the only truly productive force in economic life. Steven Davies comments: “The most serious result of List’s ideas was a change in people’s thinking and perception. Instead of seeing trade as a cooperative process of mutual benefit, politicians and businessmen came to regard it as a struggle with winners and losers.” Today’s economic nationalists have nothing new to add to the edifice already constructive by List.
1871: Charles Darwin left the realm of science briefly to enter sociological analysis with his book The Descent of Man. It is a fascinating work but tended to treat human society as a zoological rather than sociological and economic enterprise. It included an explosive paragraph (qualified and widely misread) that regretted how “we institute poor-laws; and our medical men exert their utmost skill to save the life of every one to the last moment… Thus the weak members of civilized societies propagate their kind. No one who has attended to the breeding of domestic animals will doubt that this must be highly injurious to the race of man.” At the very least, he suggested, we should stop the weak from marrying. This is the “one check” we have to keep society from being taken over by inferiors. Tragically, this passing comment fired up the eugenicists who immediately began to plot demographic planning schemes to avoid a terrifying biological slide to universal human degeneracy.
1896: The American Economic Association published Race Traits and Tendencies of the American Negro by Frederick Hoffman. This monograph, one of many of the type, described blacks as intractable criminals who are both lazy and promiscuous, the influence of whom in national biology can only lead to a decline of the race. Their mere presence was considered an existential threat to “uncompromising virtues of the Aryan race.” Such views were embraced by Richard T. Ely, the founder of the American Economic Association, and came to dominate the academic journals of this period, providing academic cover for Jim Crow laws, state segregation, business regulation, and far worse.
1904: The founder of the American eugenics society, Charles Davenport, established the Station for Experimental Evolution and worked to propagate eugenics from his perch as Professor of Zoology at Harvard University. He was hugely influential on an entire generation of scientists, political figures, economists, and public bureaucrats, and it was due largely to this influence that eugenics became such a central concern of American policies from this period until World War II, influencing the passage of wage legislation, immigration, marriage law, working hours legislation, and, of course, mandatory sterilizations.
At this point in history, all five pillars of fascist theory (historicist, nationalist, racist, protectionist, statist) were in place. It had a theory of history. It had a picture of hell, which is liberalism and uncontrolled commercial society. It had a picture of heaven, which was national societies run by great men inhabiting all-powerful States focused on heavy industry. It had a scientific rationale.
Above all, it had an agenda: to control society from the top down with the aim of managing every aspect of the demographic path of human society, which meant controlling human beings from cradle to grave to produce the most superior product, as well as industrial planning to replace the wiles of the market process. The idea of freedom itself, to this emergent school of thought, was a disaster for everyone everywhere.
All that was really necessary was popularization of its most incendiary ideas.
1916: Madison Grant, scholar of enormous prestige and elite connections, publishedThe Passing of the Great Race. It was never a bestseller but it exercised enormous influence among the ruling elites, and made a famous appearance in F. Scott Fitzgerald’s The Great Gatsby. Grant, an early environmentalist, recommended mass sterilization of people as a “practical, merciful, and inevitable solution of the whole problem” that should be “applied to an ever-widening circle of social discards, beginning always with the criminal, the diseased, and the insane, and extending gradually to types which may be called weaklings rather than defectives, and perhaps ultimately to worthless race types.” Hitler loved the book and sent Grant a note praising the book as his personal bible.
1919: Following World War I, German historian Oswald Spengler published The Decline of the West, which met with huge popular acclaim for capturing the sense of the moment: the cash economy and liberalism were dead and could only be replaced by the rise of monolithic cultural forms that rally around blood and race as the source of meaning. Blood beats money all over the world, he argued. The interminable and foggy text broods with right-Hegelian speculations about the status of man and predicts the complete downfall of all lovely things unless the civilization of the West dispenses with its attachment to commercial norms and individualism and instead rallies to the cause of group identity. The book kicked off a decade of similar works and movements that declared freedom and democracy to be dead ideas: the only relevant battle was between the communist and fascist forms of state planning.
1932: Carl Schmitt published The Concept of the Political, a brutal attack on liberalism as the negation of the political. For Schmitt, the political was the essence of life, and the friend/enemy distinction is its most salient feature. Friends and enemies were to be defined by the State, and enemy-ness can only be fully instantiated in bloodshed, which should be real and present. Mises called him “the Nazi Jurist” for a reason: he was a party member and his ideas contributed mightily to the perception that mass death was not only moral, but essential to the preservation of the meaning of life itself.
1944: Allied troops discovered thousands of death camps strewn throughout Nazi-captured territories in Europe, created beginning in 1933 and continuing through the duration of the war, responsible for the imprisonment and death of upwards of 15 million people. The discovery shocked an entire generation at the most fundamental level, and the scramble was on to discover all sources of evil–political and ideological–that had led to such a gruesome reality. With the Nazi forces defeated and the Nuremberg trials underscoring the point, the advance of fascist dogma in all of its brooding, racist, statist, and historicist timbres, came to a screeching halt. Suppression of the ideas therein began in Europe, the United Kingdom, and the United States, creating the impression that right-Hegelianism was a mere flash in the pan that had been permanently doused by state power.
The same year as the death-camp discovery began, F.A. Hayek published The Road to Serfdom, which emphasized that it was not enough to reject the labels, songs, slogans, and regimes of Nazism and fascism. Also necessary, said Hayek, was the rejection of the ideas of planning themselves, which even in a democracy necessarily led to the end of freedom and the rise of dictatorship. His book was met with critical acclaim among a small group of remaining classical liberals (many of whom were involved in the founding of FEE two years later) but was otherwise denounced and derided as paranoid and reactionary by many others.
For the duration of the ensuing Cold War, it was the fear of communism and not fascism/Nazism that would captivate the public mind. After all, the latter had been defeated on the battlefield, right? The genesis and development of rightest totalitarianism, despite the earnest pleadings of Hannah Arendt, fell away from public consciousness.
Liberalism Not Yet
The Cold War ended 25 years ago and the rise of digital technology has given liberal forms of political economy a gigantic presence in the world. Trade has never been more integrated. Human rights are on the march. Commercial life, and its underlying ideology of harmony and peace, is the prevailing aspiration of billions of people around the world. The failures of government planning are ever more obvious. And yet these trends alone do not seal the deal for the cause of liberty.
With left-Hegelianism now in disgrace, political movements around the world are rooting around in the pre-war history of totalitarian ideas to find alternatives. The suppression of these ideas did not work; in fact, they had the opposite effect of making them more popular to the point where they boiled up from below. The result is what we call the Alt-right in the US and goes by many other names in Europe and the UK. (The transition from the 1990s to the present will be the subject of another essay.)
Let us not be deceived. Whatever the flavor – whichever branch of Hegel we choose to follow – the cost of government control is human liberty, prosperity, and dignity. We choose mega-states, strongmen, national planning, or religious and racial homogeneity at our deep peril.
For the most part, the meme-posting trolls who favor stormfront-style profile pics on their social accounts, and the mass movements calling for strongmen to take control and cast the other from their midst, are clueless about the history and path they are following.
If you are feeling tempted toward the Alt-right, look at your progenitors: do you like what you see?
What is the alternative to right and left Hegelianism? It is found in the liberal tradition, summed up by Frederic Bastiat’s phrase “the harmony of interests.” Peace, prosperity, liberty, and community are possible. It is this tradition, and not one that posits intractable war between groups, that protects and expands human rights and human dignity, and creates the conditions that allow for the universal ennoblement of the human person. (For more on the history of despotic ideas in the 20th century, I suggest Mises’s epic 1947 book Planned Chaos, now available in epub.)
The last word on the correct (freedom-loving) path forward was framed by the great English historian Thomas Babington Macaulay in 1830, a statement that would be loathed by every fascist in history:
“It is not by the intermeddling of an omniscient and omnipotent State, but by the prudence and energy of the people, that England has hitherto been carried forward in civilization; and it is to the same prudence and the same energy that we now look with comfort and good hope. Our rulers will best promote the improvement of the nation by strictly confining themselves to their own legitimate duties, by leaving capital to find its most lucrative course, commodities their fair price, industry and intelligence their natural reward, idleness and folly their natural punishment, by maintaining peace, by defending property, by diminishing the price of law, and by observing strict economy in every department of the state. Let the Government do this: the People will assuredly do the rest.”
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