Mises Daily Articles
The Misesian VisionTags Austrian Economics Overview
[This talk was delivered at the Jeremy Davis Mises Circle in Houston, Texas, on January 23, 2010.]
I'm finding it ever more difficult to describe to people the kind of world that the Mises Institute would like to see, with the type of political order that Mises and the entire classical-liberal tradition believed would be most beneficial for mankind.
It would appear that the more liberty we lose, the less people are able to imagine how liberty might work. It's a fascinating thing to behold.
People can no longer imagine a world in which we could be secure without massive invasions of our privacy at every step, and even being strip searched before boarding airplanes, even though private institutions manage much greater security without any invasions of human rights.
People can no longer remember how a true free market in medical care would work, even though all the problems of the current system were created by government interventions in the first place.
People imagine that we need 700 military bases around the world and endless wars in the Middle East, for "security," though safe Switzerland doesn't.
People think it is insane to think of life without central banks, even though they are modern inventions that have destroyed currency after currency.
Even meddlesome agencies like the Consumer Products Safety Commission or the Federal Trade Commission strike most people as absolutely essential, even though it is not they who catch the thieves and frauds, but private institutions.
The idea of privatizing roads or water supplies sounds outlandish, even though we have a long history of both.
People even wonder how anyone would be educated in the absence of public schools, as if markets themselves didn't create in America the world's most literate society in the 18th and 19th centuries.
This list could go on and on. But the problem is that the capacity to imagine freedom — the very source of life for civilization and humanity itself — is being eroded in our society and culture. The less freedom we have, the less people are able to imagine what freedom feels like, and therefore the less they are willing to fight for its restoration.
This has profoundly affected the political culture. We've lived through regime after regime, since at least the 1930s, in which the word "freedom" has been a rhetorical principle only, even as each new regime has taken away ever more freedom.
Now we have a president who doesn't even bother to pay lip service to the idea of freedom. In fact, I don't think that the idea has occurred to Obama at all. If the idea of freedom has occurred to him, he must have rejected it as dangerous, or unfair, or unequal, or irresponsible, or something along those lines.
To him, and to many Americans, the goal of government is to be an extension of the personal values of those in charge. I saw a speech in which Obama was making a pitch for national service — the ghastly idea that government should steal 2 years of every young person's life for slave labor and to inculcate loyalty to the leviathan — with no concerns about setting back a young person's professional and personal life.
How did Obama justify his support of this idea? He said that when he was a young man, he learned important values from his period of community service. It helped form him and shape him. It helped him understand the troubles of others and think outside his own narrow experience.
Well, I'm happy for him. But he chose that path voluntarily. It is a gigantic leap to go from personal experience to forcing a vicious national plan on the entire country. His presumption here is really taken from the playbook of the totalitarian state: the father-leader will guide his children-citizens in the paths of righteousness, so that they all will become god like the leader himself.
To me, Obama's comment illustrates one of two things. It could show that Obama is a potential dictator in the mold of Stalin, Hitler, and Mao, for the presumptions he puts on exhibit here are just as frightening as any imagined by the worst tyrants in human history. Or, more plausibly, it may be an illustration of Hannah Arendt's view that totalitarianism is merely an application of the principle of the "banality of evil."
With this phrase, Arendt meant to draw attention to how people misunderstand the origin and nature of evil regimes. Evil regimes are not always the products of fanatics, paranoids, and sociopaths, though, of course, power breeds fanaticism, paranoia, and sociopathology. Instead, the total state can be built by ordinary people who accept a wrong premise concerning the role of the state in society.
If the role of the state is to ferret out evil thoughts and bad ideas, it must necessarily become totalitarian. If the goal of the state is that all citizens must come to hold the same values as the great leader, whether economic, moral, or cultural, the state must necessarily become totalitarian. If the people are led to believe that scarce resources are best channeled in a direction that producers and consumers would not choose on their own, the result must necessarily be central planning.
On the face of it, many people today do not necessarily reject these premises. No longer is the idea of a state-planned society seen as frightening. What scares people more today is the prospect of a society without a plan, which is to say a society of freedom. But here is the key difference between authority in everyday life — such as that exercised by a parent or a teacher or a pastor or a boss — and the power of the state: the state's edicts are always and everywhere enforced at the point of a gun.
It is interesting how little we think about that reality — one virtually never hears that truth stated so plainly in a college classroom, for example — but it is the core reality. Everything done by the state is ultimately done by means of aggression, which is to say violence or the threat of violence against the innocent. The total state is really nothing but the continued extension of these statist means throughout every nook and cranny of economic and social life. Thus does the paranoia, megalomania, and fanaticism of the rulers become deadly dangerous to everyone.
It begins in a seemingly small error, a banality. But, with the state, what begins in banality ends in bloodshed.
Let me give another example of the banality of evil. Several decades ago, some crackpots had the idea that mankind's use of fossil fuels had a warming effect on the weather. Environmentalists were pretty fired up by the notion. So were many politicians. Economists were largely tongue-tied because they had long ago conceded that there are some public goods that the market can't handle; surely the weather is one of them.
Enough years go by, and what do you have? Politicians from all over the world — every last one of them a huckster of some sort, only pretending to represent his nation — gathering in a posh resort in Europe to tax the world and plan its weather down to precise temperatures half a century from now.
In the entire history of mankind, there has not been a more preposterous spectacle than this.
I don't know if it is tragedy or farce that the meeting on global warming came to an end with the politicians racing home to deal with snowstorms and record cold temperatures.
I draw attention to this absurdity to make a more general point. What seems to have escaped the current generation is the notion that was once called freedom.
Let me be clear on what I mean by freedom. I mean a social or political condition in which people exercise their own choices concerning what they do with their lives and property. People are permitted to trade and exchange goods and services without impediment or violent interference. They can associate or not associate with anyone of their own choosing. They can arrange their own lives and businesses. They can build, move, innovate, save, invest, and consume on terms that they themselves define.
What will be the results? We cannot predict them, any more than I can know when everyone in this room will wake up tomorrow morning, or what you will have for breakfast. Human choice works this way. There are as many patterns of human choice as there are humans who make choices.
The only real question we should ask is whether the results will be orderly — consistent with peace and prosperity — or chaotic, and thereby at war with human flourishing. The great burden born by the classical liberal tradition, stretching from medieval times to our own, is to make believable the otherwise improbable claim that liberty is the mother, not the daughter, of orderliness.
To be sure, that generation of Americans that seceded from British rule in the late-18th century took the imperative of liberty as a given. They had benefitted from centuries of intellectual work by true liberals who had demonstrated that government does nothing for society but divide and loot people in big and small ways. They had come to believe that the best way to rule a society is not to rule it at all, or, possibly, to rule it in only the most minimal way, with the people's consent.
Today, this social order sounds like chaos, not anything we dare try, lest we be overrun with terrorists and drug fiends, amidst massive social, economic, and cultural collapse. To me this is very interesting. It is the cultural condition that comes about in the absence of experience with freedom. More precisely, it comes about when people have no notion of the relationship between cause and effect in human affairs.
One might think that it would be enough for most people to log on to the World Wide Web, browse any major social-networking site or search engine, and gain direct experience with the results of human freedom. No government agency created Facebook and no government agency manages its day-to-day operation. It is the same with Google. Nor did a bureaucratic agency invent the miracle of the iPhone, or the utopian cornucopia of products available at the Wal-Mart down the street.
Meanwhile, look at what the state gives us: the Department of Motor Vehicles; the post office; spying on our emails and phone calls; full-body scans at the airport; restrictions on water use; the court system; wars; taxes; inflation; business regulations; public schools; Social Security; the CIA; and another ten thousand failed programs and bureaucracies, the reputations of which are no good no matter who you talk to.
Now, one might say, Oh sure, the free market gives us the dessert, but the government gives us the vegetables to keep us healthy. That view does not account for the horrific reality that more than 100 million people were slaughtered by the state in the 20th century alone, not including its wars.
This is only the most visible cost. As Frédéric Bastiat emphasized, the enormity of the costs of the state can only be discovered in considering its unseen costs: the inventions not brought to market, the businesses not opened, the people whose lives were cut short so that they could not enjoy their full potential, the wealth not used for productive purposes but rather taxed away, the capital accumulation through savings not undertaken because the currency was destroyed and the interest rate held near zero, among an infinitely expandable list of unknowns.
To understand these costs requires intellectual sophistication. To understand the more basic and immediate point, that markets work and the state does not, needs less sophistication but still requires some degree of understanding of cause and effect. If we lack this understanding, we go through life accepting whatever exists as a given. If there is wealth, there is wealth, and there is nothing else to know. If there is poverty, there is poverty, and we can know no more about it.
It was to address this deep ignorance that the discipline of economics was born in Spain and Italy — the homes of the first industrial revolutions — in the 14th and 15th centuries, and came to the heights of scientific exposition in the 16th century, to be expanded and elaborated upon in the 18th century in England and Germany, and in France in the 19th century, and finally to achieve its fullest presentation in Austria and America in the late-19th and 20th centuries.
And what did economics contribute to human sciences? What was the value that it added? It demonstrated the orderliness of the material world through a careful look at the operation of the price system and the forces that work to organize the production and distribution of scarce goods.
The main lesson of economics was taught again and again for centuries: government cannot improve on the results of human action achieved through voluntary trade and association. This was its contribution. This was its argument. This was its warning to every would-be social planner: your dreams of domination must be curbed.
In effect, this was a message of freedom, one that inspired revolution after revolution, each of which stemming from the conviction that humankind would be better off in the absence of rule than in its tyrannical presence. But consider what had to come before the real revolutions: there had to be this intellectual work that prepared the field of battle, the epic struggle that lasted centuries and continues to this day, between the nation-state and the market economy.
Make no mistake: it is this battle's outcome that is the most serious determinant in the establishment and preservation of freedom. The political order in which we live is but an extension of the capacities of our collective cultural imagination. Once we stop imagining freedom, it can vanish, and people won't even recognize that it is gone. Once it is gone, people can't imagine that they can or should get it back.
I'm reminded of the experience of an economist associated with the Mises Institute who was invited to Kazakhstan after the fall of the Soviet Union. He was to advise them on a transition to free markets. He talked to officials about privatization and stock markets and monetary reform. He suggested no regulations on business start-ups. The officials were fascinated. They had become convinced of the general case for free enterprise. They understood that socialism meant that officials were poor too.
And yet, an objection was raised. If people are permitted to open businesses and factories anywhere, and we close state-run factories, how can the state properly plan where people are going to live? After all, people might be tempted to move to places where there are good-paying jobs and away from places where there are no jobs.
The economist listened to this point. He nodded his head that this is precisely what people will do. After some time, the government officials became more explicit. They said that they could not simply step aside and let people move anywhere they want to move. This would mean losing track of the population. It could cause overpopulation in some areas and desolation in others. If the state went along with this idea of free movement, it might as well shut down completely, for it would effectively be relinquishing any and all control over people.
And so, in the end, the officials rejected the idea. The entire economic reform movement foundered on the fear of letting people move — a freedom that most everyone in the United States takes for granted, and which hardly ever gives rise to objection.
Now, we might laugh about this, but consider the problem from the point of view of the state. The whole reason you are in office is control. You are there to manage society. What you really and truly fear is that by relinquishing control of people's movement, you are effectively turning the whole of society over to the wiles of the mob. All order is lost. All security is gone. People make terrible mistakes with their lives. They blame the government for failing to control them. And then what happens? The regime loses power.
In the end, this is what it always comes down to for the state: the preservation of its own power. Everything it does, it does to secure its power and to forestall the diminution of its power. I submit to you that everything else you hear, in the end, is a cover for that fundamental motive.
And yet, this power requires the cooperation of public culture. The rationales for power must convince the citizens. This is why the state must be alert to the status of public opinion. This is also why the state must always encourage fear among the population about what life would be like in the absence of the state.
The political philosopher who did more than anyone else to make this possible was not Marx nor Keynes nor Strauss nor Rousseau. It was the 17th-century philosopher Thomas Hobbes, who laid out a compelling vision of the nightmare of life in the absence of the state. He described such life as "solitary, poor, nasty, brutish, and short." The natural society, he wrote, was a society of conflict and strife, a place in which no one is safe.
He was writing during the English Civil War, and his message seemed believable. But, of course, the conflicts in his time were not the result of natural society, but rather of the control of leviathan itself. So his theory of causation was skewed by circumstance, akin to watching a shipwreck and concluding that the natural and universal state of man is drowning.
And yet today, Hobbesianism is the common element of both left and right. To be sure, the fears are different, stemming from different sets of political values. The Left warns us that if we don't have leviathan, our front yards will be flooded from rising oceans, big business moguls will rob us blind, the poor will starve, the masses will be ignorant, and everything we buy will blow up and kill us. The Right warns that in the absence of leviathan, society will collapse in cesspools of immorality lorded over by swarthy terrorists preaching a heretical religion.
The goal of both the Left and Right is that we make our political choices based on these fears. It doesn't matter so much which package of fear you choose; what matters is that you support a state that purports to keep your nightmare from becoming a reality.
Is there an alternative to fear? Here is where matters become a bit more difficult. We must begin again to imagine that freedom itself could work. In order to do this, we must learn economics. We must come to understand history better. We must study the sciences of human action to relearn what Juan de Mariana, John Locke, Thomas Jefferson, Thomas Paine, Frédéric Bastiat, Ludwig von Mises, F.A. Hayek, Henry Hazlitt, Murray N. Rothbard, and the entire liberal tradition understood.
What they knew is the great secret of the ages: society contains within itself the capacity for self-management, and there is nothing that government can do to improve on the results of the voluntary association, exchange, creativity, and choices of every member of the human family.
If you know this lesson, if you believe this lesson, you are part of the great liberal tradition. You are also a threat to the regime, not only the one we live under currently, but every regime all over the world, in every time and place. In fact, the greatest guarantor of liberty is an entire population that is a relentless and daily threat to the regime precisely because they embrace the dream of liberty.
The best and only place to start is with yourself. This is the only person that you can really control in the end. And by believing in freedom yourself, you might have made the biggest contribution to civilization you could possibly make. After that, never miss an opportunity to tell the truth. Sometimes, thinking the unthinkable, saying the unsayable, teaching the unteachable, is what makes the difference between bondage and sweet liberty.
The title of this talk is "the Misesian vision." This was the vision of Ludwig von Mises and Murray N. Rothbard. It is the vision of the Mises Institute. It is the vision of every dissident intellectual who dared to stand up to despotism, in every age.
I challenge you to enter into the great struggle of history, and make sure that your days on this earth count for something truly important. It is this struggle that defines our contribution to this world. Freedom is the greatest gift that you can give yourself and all of humanity.