1. Role of Interest Rates

In our economic system, times of good business commonly alternate more or less regularly with times of bad business. Decline follows economic upswing, upswing follows decline, and so on. The attention of economic theory has quite understandably been greatly stimulated by this problem of cyclical changes in business conditions. In the beginning, several hypotheses were set forth, which could not stand up under critical examination.

The crisis from which we are now suffering is also the outcome of a credit expansion. The present crisis is the unavoidable sequel to a boom. Such a crisis necessarily follows every boom generated by the attempt to reduce the “natural rate of interest” through increasing the fiduciary media. However, the present crisis differs in some essential points from earlier crises, just as the preceding boom differed from earlier economic upswings.

1. The Marxian “Anarchy of Production” Myth*

The Marxian critique censures the capitalistic social order for the anarchy and planlessness of its production methods. Allegedly, every entrepreneur produces blindly, guided only by his desire for profit, without any concern as to whether his action satisfies a need.

I. STABILIZATION OF THE PURCHASING POWER OF THE MONETARY UNIT AND ELIMINATION OF THE TRADE CYCLE

1. Currency School’s Contribution

“Stabilization” of the purchasing power of the monetary unit would also lead, at the same time, to the ideal of an economy without any changes. In the stationary economy there would be no “ups” and “downs” of business. Then, the sequence of events would flow smoothly and steadily. Then, no unforeseen event would interrupt the provisioning of goods.

Surely, for one example, there can be no more blatant case of involuntary servitude than our entire system of conscription. Every youth is [p. 80] forced to register with the selective service system when he turns eighteen. He is compelled to carry his draft card at all times, and, at whatever time the federal government deems fit, he is seized by the authorities and inducted into the armed forces.

While conscription into the armed forces is a blatant and aggravated form of involuntary servitude, there is another, far more subtle and therefore less detectable form: the structure of the army itself. Consider this: in what other occupation in the country are there severe penalties, including prison and in some cases execution, for “desertion,” i.e., for quitting the particular employment? If someone quits General Motors, is he shot at sunrise?

On October 4, 1971, President Nixon invoked the Taft-Hartley Act to obtain a court injunction forcing the suspension of a dock strike for eighty days; this was the ninth time the federal government had used the Act in a dock strike. Months earlier, the head of the New York City teachers’ union went to jail for several days for defying a law prohibiting public employees from striking. It is no doubt convenient for a long-suffering public to be spared the disruptions of a strike.

In a sense, the entire system of taxation is a form of involuntary servitude. Take, in particular, the income tax. The high levels of income tax mean that all of us work a large part of the year — several months — for nothing for Uncle Sam before being allowed to enjoy our incomes on the market. Part of the essence of slavery, after all, is forced work for someone at little or no pay. But the income tax means that we sweat and earn income, only to see the government extract a large chunk of it by coercion for its own purposes. What is this but forced labor at no pay?

Compulsory labor permeates our legal and judicial structure. Thus, much venerated judicial procedure rests upon coerced testimony. Since it is axiomatic to libertarianism that all coercion — in this case, all coerced labor — against everyone except convicted criminals be eliminated, this [p. 87] means that compulsory testimony must be abolished as well. In recent years, it is true, the courts have been alive to the Fifth Amendment protection that no alleged criminal be forced to testify against himself — to provide the material for his own conviction.