By popular thinking, increases in demand cause economic growth. According to such thought, whenever the economy falls into a recession what is required is to strengthen demand. Since government is seen as an important part of total demand, what is then required is to increase government outlays, thereby lifting overall demand and hence increasing economic growth.
[These edited extracts, from an interview in the February 1973 issue of Reason magazine, first ran in the June 1999 issue of the Rothbard-Rockwell Report.]
Q: Why, in your view, is isolationism an essential tenet of libertarian foreign policy?
The Federal Reserve has presided over a steady erosion of the dollar’s purchasing power—by design. See for yourself using the government’s inflation calculator that begins in 1913, the year President Wilson signed the Fed into law. Its definition of “price stability” as a perpetual two percent rise in prices would have struck earlier generations as an admission of failure rather than a policy goal.
In Nation, State, and Economy Ludwig von Mises defines a nation as a people group who all speak the same language, even while understanding that shared history, culture, and ancestry contribute to national identity. Mises also distinguishes between nation and state, arguing that a nation is a self-aware community, while a state rules over them.
Joseph Schumpeter, in Capitalism, Socialism and Democracy (1942), offered a starkly realistic definition of democracy: it is not the rule of the people by the people, but “that institutional arrangement for arriving at political decisions in which individuals acquire the power to decide by means of a competitive struggle for the people’s vote.” In this view, democracy functions as an elite contest, politicians and their coalitions vie for office, much like firms compete in a market.
The United States is rapidly heading toward a future that will require a decision from political authorities and elites of all types. The choice will be between peaceful radical decentralization—possibly including secession—on the one hand. On the other hand will be a ratcheting up of coercion and enforced “unity” to ensure political centralization.
