Delivered February 6, 1999
The head of state makes a speech to a packed house of legislators, and is cheered to the rafters for his flurry of visionary policy ideas. He calls for the restoration of cities and towns, and the revival of the nation's industrial base through new spending programs. He makes more housing a national priority. He promises more education spending, new resources for the armed forces, a secure system of old-age pensions, and more equitable health-care delivery. He takes the credit for a purported economic boom, and further promises to surpass all previous records in national productivity.
No, this isn't Clinton's state-of-the-union address. It was Stalin's 1946 speech, which concluded as follows: "The Soviet people are ready for it! Under the leadership of the Soviet government, with Stalin at its head, the Soviet people will transform the law on the new Five Year Plan into life."
If anyone still took Clinton seriously, this could be a chilling comparison. After all, there was a time when the state-of-the-union speech set the agenda for the nation. Now it is seen as little more than theater. Even the news media treated it like a movie premier, evaluating the script, the acting, and the emotional impact, but never confusing it with real life.
In Washington now, they only pretend to make grand new policy. In fact, as Moynihan pointed out last year, they're just trying to get through the day.
If we look at the present state of the war between government and the economy, it is clear that the economy is winning. Technological developments far outpace the ability of government to control them. The public is participating as never before in capital markets. Private arbitration is steadily replacing government courts. The sheer power of market forces overwhelms government power on an almost daily basis.
Books on freedom and against the corruptions of government are more available than ever before, even if today's professors are loathe to see their students get their hands on them.
Through the Internet, the Mises Institute reaches a world-wide audience on a minute-by-minute basis. Journal articles that were once inaccessible are available at no charge to students and faculty around the clock. We hear from everywhere, from the University of California to the University of Beijing. The Austrian School has sympathizers in nearly every economics department in the country, and in such departments as history and philosophy as well.
Meanwhile, the moral legitimacy of government, its officials, and its policies has been on the wane for some time. Show me a student who aspires to enter the civil service these days, and I'll show you a failure.
Politicians as a group, and not just one party, are deeply distrusted and even detested. At all levels of government, the competent are leaving for the private sector. The military cannot retain pilots, the IRS cannot retain accountants, and the labor department cannot retain economists.
Politicians are dropping like flies, and the two parties are having trouble recruiting anyone respectable to put his name on the ballot. The Clinton administration cannot even retain cabinet members.
As for voting, few bother to do it any more. But far from being a sad commentary on the present state of the civic culture, non-voting is actually a form of secession from a fraudulent system that offers the illusion of democratic participation but not its reality.
Nobody in Washington really believes in Keynesian fiscal planning anymore. Sure, they pay lip service to the idea, because it provides a rationale for their jobs. But the last hint that government spending should be used to boost macroeconomic aggregate demand came in 1993, just after Clinton was elected.
In the meantime, the growth in government spending has slowed dramatically since the 1980s, a decade in which a 163% increase in government spending was accompanied by daily talk of budget cuts.
A new hi-tech corporate power elite is being raised up, disconnected from government. They make their fortunes by virtue of their terrific innovations and their extreme attentiveness to the needs of the consumer, and through a competitive struggle with others who are constantly attempting to do the same.
The members of this new corporate elite are far less connected to the idea and regulatory apparatus of the nation state than any of their predecessors. They have witnessed firsthand the remarkable power of the market economy to transform society and individual lives, and have seen nothing but failure from government programs and consortiums.
Now, we must remember that we are in the midst of an economic boom. I would feel a lot more like celebrating the soaring stock market, and the rock-bottom unemployment rate, if the Fed hadn't been boosting the money supply, a fact which is already showing up in the declining value of the dollar on international exchange.
In time, the boom will turn to bust, and market traders will receive a new lesson in what that old-fashioned word "recession" means. But the question we have to ask ourselves is this: in the next recession, will the forces of government be able to impose the kind of fiscal and regulatory planning that they once enacted as a matter of course?
I don't think so. To impose a dramatic step-up in government power requires a public consensus in favor of government "solutions" that simply no longer exists.
What we are witnessing is the continuation of a process that began to be revealed in the late 1980s, when socialist regimes crumbled despite every prediction that they would be permanent. The same forces are working themselves out in different and unpredictable ways right here at home. The ideological foundations of all-round statism are beginning to collapse. It has never been more likely that we will see a reflowering of classical freedom in our time.
The Dark Days of 1949
What a distance we have traveled from 1949. In the year Mises's Human Action was published, capitalism had no future. The Great Depression was widely attributed to the failure of the free market, despite the valiant efforts of Henry Hazlitt to convince the world otherwise. The New Deal combined with wartime economic planning was said to have saved us from further ruin. The ideology of socialism was all the rage in intellectual circles–as it had been for decades.
The old idea of the liberal society was gone, seemingly forever. It was a relic of a distant age, and certainly not a model for a modern industrial society. The future was clear: the world would move toward government planning in all aspects of life, and away from the anarchy of markets.
The U.S. had fought and won a European war against National Socialism, and an Asian war against a regional empire. The ideological lesson of this experience was not that the free society is superior. But recall that the U.S. had been closely allied with Stalin's Soviet Union, a regime even more deadly and totalitarian than the foes the U.S. had battled.
The experience reinforced New Deal statism. When the U.S. government is given total power, the lesson ran, it can get the job done, so long as the government is granted discretion to choose its friends and enemies along pragmatic lines.
Moreover, the government must be allowed to make decisions over issues of life and death. It must be allowed to conscript, as the U.S. did. It must be allowed to take innocent life with deliberate intent, as the U.S. did in massed bombings of whole cities.
In terms of the ideological superstructure, this was the era of the total state. People the world over had been shaken to their souls at the awesome display of nuclear weapons at Hiroshima and Nagasaki, at the ability of three heads of state to meet and carve up Europe into spheres of influence, at the seeming central role that governments played as a force of history, and at the awful and undeniable reality that individuals appeared to be merely pawns in the new superpower-driven drama of world affairs.
In 1949, the State Department and the Defense Department drafted a document called "National Security Council Finding 68." NSC 68 was a blueprint for global U.S. hegemony. It asserted that only the U.S. government could muster the moral, political, and ideological resources to re-establish and maintain world order, which in turn required a massive munitions and covert-action buildup, and a permanent global military and CIA presence. It would be a new and even more ambitious British empire.
We had come a long way from the original American vision of a country uniquely situated to avoid international political conflicts. In 1949, the major concern of the U.S. power elite was to cement its position by establishing global institutions of unprecedented power, such as a world court, a world central bank, a world economic planner, and a world police force. The only critics deemed respectable were Marxists, who said this planning apparatus was entirely too enthralled with capitalist ideals.
Meanwhile, the real resistance movements in the U.S., including the Southern Agrarians and the America First Committee, had been smashed and discredited, their leaders branded as reactionaries and Axis sympathizers. The election of 1948 seemed to confirm this, as the Dixiecrats were crushed and Truman reelected in an election that represented the highwater mark of voter participation.
What was left of the anti-socialist element in American life was distracted into ignoring U.S. socialism and focusing on the Soviets, a sentiment that was denounced and simultaneously used by the Truman administration to bring about a huge military buildup.
Anyone who doubted the glories of the escalating welfare-warfare-national security state was accused of having an "authoritarian personality," in Theodor Adorno's phrase that still has a prominent place in undergraduate abnormal psychology textbooks.
Freedom-minded intellectuals were dying off, and the few remaining ones had virtually no publishing outlets. Most of the dissident publications that survived the Depression had been killed off during wartime censorship. And shaped by years of war propaganda and fireside chats before that, radio networks and newspapers chose their programming based on nationalistic concerns.
Love of the nation state had even come to displace traditional religion. The flag became an object of worship for the second time in American history (the first being during Wilson's invasion of Europe). Religious sentiments were added to the national pledge and to depreciating coinage, in acts that our forebears might have regarded as blasphemous.
The middle class was roped into a growing welfare state by virtue of expanding Social Security, school loans and grants from government, and the cult of the civil service.
Freedom in Eclipse
In 1949, freedom seemed to have no future. The only serious dispute was over the degree to which choice and autonomy should be limited in government's pursuit of the planned world economy.
The state and the intellectual classes were one. The prophet of this new order was Keynes himself, who achieved an intellectual revolution of unprecedented completeness. As one writer said at the time without irony, "Keynes indeed had the Revelation. His disciples are now dividing into groups, each taking sustenance from the Keynesian larder. The struggle for the Apostolic Succession is on."
Seymour Harris, an economics professor at Harvard whose 1949 book Economic Planning had a huge impact, sums up what was considered the empirical reality of Soviet socialism. "Twenty years ago," he wrote, "Russia presented her first five-year plan. Her phenomenally rapid rate of industrialization and economic growth in the years 1928-1940 attracted the attention of all the majors nations of the world."
As tens of millions were shot or starved to death in the charnel house of socialism, Harris wrote that the "numerous advantages of the socialist state cannot be denied. For example, it can achieve a distribution between production of essential and non-essentials apparently impossible for the capitalist state.... In its concentration on essentials prior to producing non-essentials, the economy of the USSR has much to recommend it...." Among the advantages that Harris lists is this: "The USSR is not troubled by excessive salesman and advertisers."
And what of Hayek's 1946 criticism that planned economies and loss of freedom are all of a piece? Harris claims to show that Hayek has fallen victim to an elementary fallacy. "The fact of concomitant variations (e.g., planning and fascism in Germany)," writes Harris, "does not prove that the planning brought fascism any more than the concomitance of marriages and the appearance of ants in June suggests a causal relation."
That this flippant dismissal of any connection between big government and loss of freedom was considered persuasive is a measure of the ideological climate of the time.
As for the efficiency of the planned economy, there was no need to fear. Exhibit A in the intellectual arsenal of the pro-planning economists was World War II. In the U.S., production was planned, prices controlled, labor conscripted, and consumption regulated. And didn't we win the war? Even more impressively, didn't the war itself bring the gruesome realities of the Great Depression to a close?
The Supreme Court was busy shredding the Constitution and centralizing power in the executive state. In 1949, the court held in Wolf v. Colorado that the search and seizure provisions of the Bill of Rights applied to the states, and that the central government should be charged with protecting people from their respective state governments.
Of course, in the original design of the Constitution, the Bill of Rights was to protect the people of the states from the central government, an intention that was turned on its head with the doctrine of incorporation. But even aside from constitutional law, how absurd it is for the feds to claim to be the guardians of freedom. The centralization of power is one of the greatest threats to liberty ever known.
In these years, the state and the corporate classes were one as well. Every major company was now beholden to the planning state, having been shaped by FDR's Blue Eagle program, wartime price controls, and all-round unionization. The captains of industry were joined at the hip with the regulatory apparatus. The American worker was terrified for his family's livelihood, and in no mood to rock the boat.
Such traditional institutions as advertising and individual initiative were declared dead in plays such as Death of a Salesman and books like The Organization Man.
In retrospect, it is clear that the foundations for the massive step-up in state power of the sixties, and the war on such countervailing institutions as private property, the family, and federalism, were laid in the late forties and early fifties.
The Depression and the war had demolished traditional loyalties and demonstrated the massive power of government, and the 1950s effort to globalize and universalize the planning state set the stage for the continued socialization of society that followed.
The Misesian Solution
Mises, who lived through it all, was singular because he had both the intellectual apparatus to fight what appeared to be an invincible foe, and the moral stamina to do so though he knew he would doom any future he had in academia. And yet he saw what needed to be done, and did it. The very basis of the market economy and the free society needed to be presented anew, and reestablished on a solid intellectual foundation for a new generation.
In the midst of the war, he had already written that the most important postwar priority was to fight the forces of statism on the battlefield of ideas. With Human Action, he would engage in that battle nearly alone. And yet one reason the book stands out is that it is not about politics as such. Rarely does he directly address the burning political issues of the day, and then only in a timeless way. Two thirds of the book is a painstaking reconstruction of the theoretical foundations and applications of economic science.
Mises's intention was nothing short of magnificent. He had concluded from his study of history that the classical economists were the real heroes in the march of freedom. It was they who explained the workings of the free economy and the rationale for eliminating statist restrictions on trade and labor.
In Mises's words, they "reduced the prestige of conquerors and expropriators and demonstrated the social benefits derived from business activity."
While others attributed the rise of the glorious Industrial Revolution to mysterious forces or accidents of history, Mises said it was the economists who exploded mercantilism and made it possible for society to adopt the ideals of freedom.
The history of the American Revolution would seem to bear him out. We hear often about the political education of the founders. But just as powerful were their economic ideals. For example, Jefferson studied the economics of Turgot, whom Rothbard has identified as a founder of the Austrian School.
As Mises looked at the ideological landscape of 1949, he saw the philosophical foundations of freedom being destroyed. Austria had been engulfed in statist ideology, America too, and he was shocked and dismayed at the status accorded to totalitarian regimes like the Soviet Union.
But he also saw that the difference between the New Deal and Stalin's Five Year Plans was not one of kind but of degree, and he set out to do everything in his power to stop the encroaching darkness, and relight the flame of liberty.
In placing blame for the destruction, he again sought an explanation in the intellectual realm. In Germany, it began with fallacies concerning money creation and the supposed benefits of protectionist policies. In the U.S., it was the ideological baggage of Progressivist ideology working hand-in-glove with Keynesian economics, an import from Britain that had socialized much of the birthplace of the Industrial Revolution.
All around him, Mises saw assaults on the basic tenets of sound economics. It was said that the price system does not work, that property rights are a hindrance rather than the path to economic progress, that business does not serve society but exploits it, that laborers have a friend and not an enemy in government, that government can innovate better than the market, that the freedom of contract is a source of waste rather than the embodiment of efficiency.
Mises predicted that civilization "will and must perish if nations continue to pursue the course which they entered upon under the spell of doctrines rejecting economic thinking."
So strong was his faith in ideas that he dared begin at the very beginning, with the general science of human action, with the nature of man as a choosing agent, with the foundation of economic knowledge itself.
People who pick up Human Action for the very first time are perhaps startled to discover that the first 200 pages consist of a closely argued treatment of such foundational issues. It is not until page 201 that we find a discussion of market institutions like prices and money. And it is not until very late in the book that we find the ways in which government policy wrecks the operation of the market.
Clearly, Mises had tremendous confidence in his readership, a confidence that was confirmed when his massive treatise was made a selection of the Book of the Month Club, and became an academic bestseller nearly overnight.
More importantly, he believed that it was only through a painstaking reconstruction of economic science that the tide of history could be turned.
Mises lived to see the free-market movement reborn as a consequence of this book. He died knowing that he had given the Austrian School a new birth, and he thrilled to see brilliant young students, especially Rothbard, picking up the torch. But he did not live to see how his ideas would have a broader impact in world affairs.
Human Action almost did not see the light of day. Only kind benefactors such as Lawrence Fertig, a friendly director of the Yale University Press, and good colleagues such as Fritz Machlup and Henry Hazlitt made it all possible. Mankind is very much in their debt.
The Politics of Human Action
But as we explore the political message of Human Action, I would first like to focus on an issue that was most pressing in Mises's time, and continues to affect our present dilemma.
This concerns a section of Human Action that is not often discussed, Chapter 34, on "The Economics of War." He begins with this startling statement: "The market economy involves peaceful cooperation. It bursts asunder when the citizens turn into warriors and, instead of exchanging commodities and services, fight one another."
Now, in 1949, this statement flew in the face of conventional wisdom. It was widely believed that the Second World War, far from being contrary to economic efficiency, was the means by which the U.S. and its allies had pulled out of the Depression.
Government had funded a massive amount of capital expenditure, boosted aggregate demand, provided work to millions, and eliminated idle industrial capacity. War was not economically destructive, it was said, but constructive and productive.
Mises argued that war and the market economy, war and high civilization, are incompatible. To be sure, he said, sometimes people must fight wars. But if it is necessary, only the classical form of warfare is acceptable.
International law still applies. Civilians must be left out of the battle. Neither must the civilian economy be touched. Prices are not to be fixed and production is not to be planned. Wars should be defensive and limited in duration and scope, and conscription is out of the question.
Today, he says, the ideology of the total state has given us total war as well. It involves the whole of the civilian population and the whole economy. As Mises writes, "modern war is merciless, it does not spare pregnant women or infants; it is indiscriminate killing and destroying. It does not respect the rights of neutrals. Millions are killed, enslaved, or expelled from the dwelling places in which their ancestors lived for centuries."
Mises says this is a direct result of the ideology that makes the state the center of a nation's life and worship. Indeed, when you consider the U.S.'s aggressive war against Iraq, and the millions of lives that its bombs and embargoes have cost, you gain a glimpse of what Mises was referring to.
This is why it is utterly preposterous for modern conservatives to pretend to combine love of the free society with love of the culture of warfare and military might. What too many conservatives mean when they invoke a strong national defense is not defense at all, but the preservation and expansion of empire.
But if we follow Mises, we see that if we want freedom, we must embrace a foreign policy that rose up with the advance of freedom in the 18th and 19th centuries. That is to say, we must reject militarism, imperialism, and foreign entanglements, and embrace trade instead of conflict as the basis of international relations.
The immediate retort from today's pundits is that the U.S. cannot afford to withdraw from a dangerous world. People are dying in Kosovo, Somalia, Haiti, Liberia, Rwanda, Sudan, Angola, Nigeria, Congo, and everywhere else, and the U.S., as the world's indispensable nation, has a responsibility for doing something about it.
Left unexamined is the assumption that the U.S. should destroy regimes that U.S. political leaders dislike. Whence this impulse to free the world of State Department-defined sin, regardless of the cost in lives and freedom? Mises traces it to Wilson. "Under laissez faire," he says, "peaceful coexistence of a multitude of sovereign nations is possible.... The tragic error of President Wilson was that he ignored this essential point."
Recall too that Wilson was no advocate of free markets. He was a progressivist academic and early socialist, as Rothbard argued so persuasively. It should not surprise us that the president who gave us the income tax, the Federal Reserve, and the direct election of senators would also be the first president to believe that the U.S. government had a holy mission to rid the world of all heads of state whose values are different from those celebrated in the District of Columbia.
It is long past time for us to come to terms with the fact that our country is host to an imperial power. We are loved the world over for our people and commerce, just as our government is loathed and despised.
If you believe in the old ideal of America upholding the light of freedom for the whole world to see, this an uncomfortable truth. But nonetheless it is a priority for us to come to terms with the deadly damage that the U.S. government has inflicted throughout the world, and to oppose it with all our might.
Mises also addressed another crucial issue of our time, namely poverty. As he points out, there was no question about poverty or riches in the precapitalistic era. For the huge majority of the population, there was only poverty.
Capitalism made possible continuously rising living standards for the masses. As a result, the only people who are poor by any historical standard are those unable to care for themselves, or who refuse to do so.
Contrary to the stereotype, Mises was a strong advocate of private charity. He celebrated both religious and secular groups that care for those who cannot care for themselves, as well as the families that provide care in times of need. He praises them for accomplishing marvels. And he also points out that private charity is dependent on the flourishing of a market economy, since the more capitalism increases wealth, the more is available for giving.
But Mises refuses to take at face value the claims of politicians who say they want to abolish poverty, since they also desire equality. The goal of equality, Mises says, poses a huge danger to the market economy. If pursued far enough, it is capable of destroying the market, since it depends on inequality. That is to say, it is the radical inequality of individuals, the fact that people are unique, that brings about the desire to exchange goods and services to the mutual betterment of everyone involved.
It is no coincidence, Mises says, that the "most despotic system of government that history has ever known, Bolshevism, parades as the very incarnation of the principle of equality."
In a similar vein, he writes that egalitarianism "is very clear in its abomination of large fortunes. It objects to big business and great riches. It advocates various measures to stunt the growth of individual enterprises and to bring about more equality by confiscatory taxation of incomes and estates. And it appeals to the envy of the injudicious masses."
The result, says Mises, is an accumulation of power in the hands of a political elite, the destruction of private savings, and the dramatic curtailing of private initiative. Until we learn to celebrate natural inequality, we cannot appreciate the greatest virtue of the market economy: its ability to coordinate the needs and desires of all individuals through peaceful exchange.
In Mises's section on interventionism, he advances a theory concerning the inevitable exhaustion of the reserve fund, his phrase for the capital stock built up under capitalism. He predicts that as the reserve fund is increasingly looted by government, society will grow poorer and more stagnant and eventually the system will fail.
The market economy will then be reestablished only if the right intellectual conditions are in place. He confidently predicts in 1949 that we will exhaust the reserve fund in the United States, just as Britain had. And yet it does not appear that the interventionist state has exhausted itself. Government spending is at an all-time high and tax revenues are as well. Was Mises wrong?
Well, let's look at the sectors of the economy that are most unworkable, most dilapidated, and most stagnant. We can start with the public schools, the postal service, the government transit system, the military, the courts, and the inner cities that have received so much attention from government over the last few decades.
In every case we see stagnation, waste, vast bureaucracy, and lack of innovation, that is, we see the hand of the state. These institutions are incapable of rational economic calculation, and they look increasingly ridiculous and broken-down when compared to the market-driven sectors.
So Mises was right: these institutions have largely exhausted themselves. In the coming decade, and possibly sooner, they will crumble. Meanwhile, the sectors governed by market forces and voluntary choices, which thus enjoy the fruits of innovative human energy, will continue to thrive and grow and eventually displace the old, creaking interventionist apparatus. Mises was right: interventionism is not a permanent system of social organization.
If we set out to list all the areas in which Mises was prescient, we would be here all afternoon. Just for starters, he demonstrated the economic impossibility of socialist economy and foretold its collapse. He saw early on in his career that central banking would lead to inflation and business cycles. He predicted that social welfarism would lead to social disintegration. He saw that socialized medicine would produce the ironic result of less good health. He foresaw that interventionism would lead to the opposite results of those promised by its proponents.
Mises on Public Opinion
I would like to draw your attention to a paragraph on page 859. Here Mises talks about the role of public opinion, a subject much in the news today. He writes that one of the great benefits of the market economy is that members of the public can benefit from technical expertise that they themselves do not possess.
You do not have to know how to build a website to order a book from Amazon.com. You do not need to know how to pilot a 747 to fly coast to coast.
But matters are different regarding economic policies. The practical use of the teachings of economics presupposes their endorsement by public opinion, Mises writes. He is very emphatic on this point. "The best theories are useless if not supported by public opinion. They cannot work if not accepted by a majority of the people. Whatever the system of government may be, there cannot be any question of ruling a nation lastingly on the ground of doctrines at variance with public opinion."
Because Mises held this view, he devoted enormous personal resources to teaching average people about the benefits of economic freedom. Here Mises was basing his practice on the theory of la Boetie and Hume: that all governments—no matter how powerful seeming—are fundamentally fragile, and cannot rule solely by fear and coercion because the enforcers are always in the minority. They depend on some measure of public willingness to be ruled.
Thus all governments pursue policies that are in some measure—at least tacitly—supported by the people. Hence, the New Deal was only made possible by the dying public consensus in favor of the market economy. And hence, the always economically disastrous Soviet Union finally collapsed when the public turned against socialist theories and those who used them as a cover for their power.
But what can we say about our own time? What does public opinion support today? In the media, we hear that the public is very happy with the rule of Clinton. The polls seem to indicate support for his policies, a factoid which has caused supporters of the market much despair.
In an effort to sort out this mysterious subject, I would like to distinguish three methods of discerning public opinion. The first is that which Mises identified: the practical workings of the market economy. If we seek a society in which the desires of the public are manifest in the use of social resources, the market economy provides it. Only here do we have the means of discovering the values of the masses and signaling businessmen what to produce and in what quality and quantity.
The failure to understand this leads the likes of Janet Reno to complain that the wrong firm has temporarily won the software war, or that a toy retailer is too large. Others complain that the wrong products are chosen by the people. For example, cigarettes are more valued than copies of the state-of-the-union address.
But the truth is that the market is a daily and hourly plebiscite over who or what will be the winners and losers. The market has proven itself capable of serving a vast range of interests. Classical music afficionados are served as efficiently as those who prefer country music. Moreover, we can have some confidence in the outcome of this vote, because people are laying their own personal property on the line, and putting their money where their values are.
In all of human history, philosophers have sought to find a system of social organization that truly embodies the will of the people. With the market economy, we have that system.
How disgraceful that week after week on Sunday talk shows, we hear politicians explaining to us that the American people want this and the American people want that. How can they know? The polls they cite represent nothing but words in the air. Just once I would like one of these politicians to tell the truth: we know what the American people want based on which entrepreneurs and companies make the most money.
We cannot know whether the American people truly want national education standards, but we can know, because we have eyes to see, that they want imported cars that work, books delivered to their doorsteps overnight, and lots of do-it-yourself home improvement products. We know this because the companies that effectively deliver them are prospering.
The Truth About Polls
Well, what about those public opinion polls? Their dirty secret is that they nearly always consist of random calls to people's homes, and two-thirds of the people who pick up the phone hang up without answering the questions. If you've received a call from a polling firm, you know why people are reluctant. There is nothing in it for you. It feels like an invasion of privacy. You have no way of judging the veracity of the caller.
If your political opinions are politically incorrect—that is, if you disagree with respectable media opinion—you are far less likely to talk. An official pollster might as well be from the Justice Department, for all the citizen knows. Hence, participants tend to have conventional opinions they feel safe in spouting off to a perfect stranger on the phone. Most people are unwilling to express an un-pc opinion at a cocktail party, much less to a pushy character interrupting their dinner.
Pre-election polls provide a good test of all this. And they are less and less able to predict actual results. The more unconventional an opinion is—for example, that a pro wrestler nicknamed "The Body" ought to be governor—the less polls are able to discover. Political outliers, even if they are in the majority, fly under the polling radar screen.
The question of whether a president ought to be removed from office falls into the potentially dangerous category. If the person agreeing to the poll senses that he will be regarded as a kook for saying the president ought to be tried and convicted, on the margin he will say what he is supposed to say and not say what he is not supposed to say.
This thesis is easily tested. Find a medium that represents something of a cross section of the population, where people can express their political opinions without fear of reprisal or consternation. Compare answers on that medium to the results of the typical phone poll. As it happens, in the last year, massive Internet news sites like AOL, CNN, and MSNBC have become such outlets.
Phone polls show 65 to 70 percent (of 500 compliant people) favoring a censure resolution in the Senate (the very thing the media are clamoring for). But web polls (with hundreds of thousands of willing clickers) show exactly the opposite. In addition, the results of these web polls fit with most people's experience of their neighbors' opinions.
Now I know that these polls always have this caveat: they "are not scientifically valid surveys." But in what sense is a phone poll of 500 self-selected people browbeaten into saying what they are supposed to say any more "scientific" than an Internet poll soliciting the opinions of tens or hundreds of thousands of separate and anonymous mouse clickers?
The most absurd public opinion polls are those on taxes. Now, if there is one thing we know about taxes, it is that people do not want to pay them. If they wanted to pay them, there would be no need for taxes. People would gladly figure out how much of their money that the government deserves and send it in.
And yet we routinely hear about opinion polls that reveal that the public likes the tax level as it is and might even like it higher. Next they will tell us that the public thinks the crime rate is too low, or that the American people would really like to be in more auto accidents.
Society's Ideological Structure
When Mises writes of public support for market economics, he is speaking on a different level. He is addressing the most basic ideological preferences of the public. What kind of society do we want to live in? One planned by government or one in which free individuals have control over the means of production and can accumulate wealth through serving the consuming public? A society in which the government confiscates income or one in which wealth can be passed to new generations? These are fundamental questions, and the ways they are answered really do determine, in the long run, how a political system is organized.
The public's passion for a free society was destroyed by the intellectual class of the progressive era, and this culminated in a dramatic shift in public opinion during the 1930s, away from market economics and toward a planning mentality. The years between 1930 and the mid-1970s were characterized by a notable lack of support for freedom among the intellectual classes.
The glorious news that I can report to you today is that this has begun to change. When the Mises Institute was founded in 1982, I was thrilled to find even one student interested in the thought of Mises and Hayek and Rothbard. Today, we are overwhelmed, and even lack the resources to serve them all as we would like. And these are not marginal students but rather the best, the ones so smart that even their left-wing professors dare not dismiss them.
Since 1982, we have developed a massive network of dissident intellectuals to fight the socialistic status quo on campus. And what thrills me most is not the numbers–after all, more will attend this year's Socialist Scholars Conference than our own Austrian Scholars Conference—but rather the trend.
The energy, the excitement, the new ideas, and the genuine scholarship are all working in our direction. Meanwhile, the left is tired, spent, and increasingly desperate.
The Last Days of Statism
The obvious objection to my thesis is that the government is not getting any smaller. The regulators are on the march, and the judges are monsters. Never before in American history, outside of world war, has the government controlled so much of our lives and taken so much of our property.
All true: but let me tell you about an insight passed on to me by Yuri N. Maltsev, who worked as an economist during the Gorbachev era. Contrary to what the U.S. press said at the time, the sheer viciousness of the state was more on display in the 1980s than under Brezhnev.
Gorbachev's anti-drinking campaign alone led to mass spying, mass arrests, and mass confiscation of income. Huge vineyards were plowed under. Distilleries were destroyed. People were frogmarched through the streets and dragged into jail in public humiliation. Moreover, Gorbachev raised instead of lowered taxes. Managers were granted less, not more, autonomy.
Yuri says that it was precisely this step-up in enforcement that led to the downfall of the Soviet system. The public consensus for Soviet statism was no more, and in a few years the apparatus of socialism came tumbling down.
His point is that at the end times for a regime, we can expect it to behave like a wounded rat, more vicious in its death throes than in full health.
Does that consensus against government really exist today? The seeds are planted and growing, but we have much work to do. At the Mises Institute, we are convinced, as was Mises, that it is far more important to raise up a new class of intellectuals than it is to get the right people elected to office.
It is also important to teach businessmen that what they do as a matter of course is extremely beneficial to their fellow man. As Mises says, "Economics must not be relegated to classrooms and statistical offices and must not be left to esoteric circles. It is the philosophy of human life and action and concerns everybody and everything. It is the pith of civilization and of man's human existence."
And it is the natural commercial and professional elites of society, working with a liberty-minded class of intellectuals, that will ultimately tip the balance in favor of freedom, and bring about the end of the interventionist state.
It was the genius of Mises that he could even imagine this possibility in the dark days in which he wrote his treatise. But he knew that society was the product of a body of ideas, and to his mind, it was an unfortunate but reversible reality of 1949 that the wrong intellectuals and the wrongs ideas had triumphed.
From time to time, I hear freedom lovers despair over our supposed lack of progress and the unlikelihood of victory. But the evidence of our eventual triumph is all around us. Mises, the master economist who showed us the way, did not have the benefit of seeing what we see, and yet he never gave up hope and he never stopped working for freedom.
The members and faculty of the Mises Institute have a special understanding of what it will take to succeed, and what it will require to defend the basis of civilization against those who would destroy it. Therefore it is our moral obligation, it is our intellectual duty, it is our profound privilege, to carry on the work of Mises, and to make proper use of the rich treasury of knowledge he left us, for the advancement of human liberty.