Mises Wire

How Statism Destroyed Argentina

The seventy-fifth anniversary of Ludwig von Mises’s Human Action invites us to ponder on Mises’s scholarly achievements and how the economic mainstream has not yet caught up to his advances in economics. Like Jesus Huerta de Soto points out in his preliminary study to the Spanish version of the thirteenth edition of Human Action: few are the treatises on the side of the mainstream that even try to match what Mises does in Human Action.

Mises’s work is not only monumental but pivotal; Austrian economists post–Human Action would define themselves in terms of how they interpret Mises’s magnum opus. Regarding the mainstream and Human Action, much has been and can be said, but the key is that the great tragedy of the mainstream is that what is valuable about them is borrowed from Mises and the Austrian School of Economics and what’s unfortunate comes from their own hypothetical empiricist approach.

Mises places his work in the grand struggle between individualism and collectivism. Not only is methodological individualism a core feature in economics to Mises, but so is the individualist outlook of society as well—the worldview that takes the individual as the only meaningful actor.

The state tends to encourage collectivism because it divides society and creates a friend-enemy distinction between parts of society. It divides and conquers through myth creation. Ludwig von Mises fought his entire life against the statist mythos. He didn’t yield to evil—as his favorite quote said—but proceeded boldly against it. Mises and the Austrian School are debunkers of the system of myths that the state manufactures.

Interesting is the situation of one particular country: Argentina—a country that used to be the richest in terms of gross domestic product per capita toward the end of the nineteenth century but now ranks sixty-third. What I used to think was the “mystery of Argentina” is no such mystery; there is nothing surprising in the downward spiral in terms of prosperity that this country has suffered. It was the massive attack by the state through its collective public programs that has ejected this country from the top ranks of economic well-being.

Compared with other regional countries, Argentina’s progressive administrations have not opted for militarism to control the people but bureaucratic control. Instead of a military army, Argentinians are faced with an army of bureaucrats who only live at the expense of the productive sector of society.

In the name of the “national interest,” what should be managed by private enterprise is instead controlled by the state bureaucrats. These industries include—among many—the public media, the train system, an airline, and a petrol company. All of them are inefficient, but still the progressive story portrays them as heroic and nation saviors from the clutches of multinational corporations. It is mercantilism in our age.

It could be argued that it is much worse than that since both exports and imports are scorned in the progressive discourse. The usual protectionist argument is against imports, but exports are rarely discouraged. However, Argentine progressives have managed to also demonize exports as “taking away products from the local people,” so not only is buying internationally wrong but also selling.

This ideological approach can be easily identified as socialist and protectionist but also as nationalist since the “national industry” is what is championed and what is to be protected from cheaper and better goods. The love toward one’s own nation is what is at stake when arguing about this, according to the national progressives. However, a quick counterargument is that nothing is more patriotic than the general well-being of the people of a nation and not the special interest of a certain sector of the given population.

Recent developments may be stirring public opinion toward the free market, but that affair still has a long way to go. The libertarian and famous president of Argentina, Javier Milei, is trying to reduce the state apparatus and its regulations as well as solve its monetary issues. Regarding the last issue mentioned, much is being done; the Central Bank is conducting monetary policy toward eliminating the control over exchange rates and transactions, which is a feature only found in the most statist countries of the world. Milei, through the central bank and the Ministry of Economics, is targeting this state regulation as the main goal of his program in the short-term. When this is done, he will be able to advance in other state deregulations and tax reductions.

Yet dismantling the bureaucratic army of government employees is a tough task. Not only are the interests of the bureaucrats at stake, but a lot of people who are not part of that looting system but are yet victims of it defend the bureaucrats. This goes back to the myth that surrounds the state and intervention.

Milei’s government officials aren’t followers of the Austrian School of Economics but of the Chicago School. They work based on their models. This can be interpreted positively and negatively since the Chicago School is regarded as the most free-market-oriented approach within the mainstream, but this is when it comes to microeconomics; in macroeconomics, as Austrian economists know well, they are statist. Milei himself is not a praxeologist since he uses neoclassical methods in his economic analyses. He follows what the Austrian School teaches but not its method.

Human Action is clear on this subject, since Mises devotes a large part of it to methodology. It is the aprioristic-deductive method that comes to the free-market conclusions if one were to make policy recommendations based on the Austrian School of Economics. Praxeology is the crucial difference that separates the mainstream and the Austrian School; its method as well as its theory should be embraced to make a comprehensive program of state minimization.

Mises triumphs over his opponents in this way, offering a system of social interaction and constructing it from axioms and sound methodology. Human Action stands as one of the most powerful and complex defenses of capitalism in economic literature. The seventy-fifth anniversary of its publication invites us to think over the achievements of such a grand work and to see the world through the lenses it provides for us.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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