History: The Struggle for Liberty

5. War, Peace, and the Industrial Revolution

History the Struggle for Liberty 2003
Ralph Raico

It was thought that the ultimate antidote to war was universal democracy. It was not. Spencer defined liberal democracy as an individual free to control the product of his own efforts on the market. Welfare societies could not rationally be termed democracies.

Globalism perverts the Constitution. Meddling activism has unintended consequences like centralizing the power of the Presidency. Intervention creates blowback.

The effects of the Industrial Revolution are a major issue in Classical Liberalism. From 1750 to 1850 industrialization got slowly underway in Britain. Division of labor and urbanization were considered a catastrophe. It was thought that only labor unions could improve conditions of the working people. This myth created a standing presumption that laissez-faire ruins countries and requires state intervention to protect present victims of capitalism.

An optimist school made gradual headway against these pessimists. They gathered objective data and applied better economic theory. Wages, availability of foodstuffs, and length of life were finally considered in contrast to initial horror stories. In fact, the standard of living improved for most workers. Industrialization allowed tens of millions of people to survive as their populations exploded. The Industrial Revolution was not the problem; it was the solution.

Transcript: Lecture 5 of 10 from Ralph Raico’s History: The Struggle for Liberty.

[This transcript is edited for clarity and readability. The Q and A at the end of the lecture has been omitted. Annotations have been added by Ryan McMaken.]

This morning what I’ll be doing is finishing up some important and contemporary points about the question of war and peace among classical liberals and libertarians. I’ll then discuss a major issue in the whole history of classical liberalism, the effects of the Industrial Revolution.

The Democratic Peace

The point of contemporary interest is an issue that is often referred to as the question of the democratic peace. There are a number of theoreticians that have proposed this and it has drawn some criticism as well. This is a kind of neo-Wilsonian position and it maintains basically that the antidote—the ultimate antidote to war—is universal democracy. The major propositions in regard to international relations that it sets forth can be put in the words of a writer who perhaps you’re familiar with: R.J. Rummel. R.J. Rummel is most famous for his book, Death by Government which is a compendium of the number of people killed by various governments in recent decades in the twentieth century.1 The book would seem to be useful, but I would urge you to be very careful in using his statistics. In some cases, it uses dependable sources. But, with the most important cases of death by government—that is, the Soviet Union—he comes up with a figure of deaths resulting from the policies of the Soviet regime of 61 million people, which is totally preposterous.2 Nobody except him believes that and people who have been critics for a very long time of the Soviet Union have settled on a figure of about 20 million people under Lenin and Stalin, and due to all causes.3 So, I’m saying that Rummel, somebody who is here in his own field of expertise, has to be treated with a certain amount of care.

But he’s come into the debate on the question of the democratic piece and we might as well quote him as well as anybody else. These are the basic propositions of this school of thought. One: democracies don’t make war on each other. Two: democracies limit bilateral violence. And three: democracies are the least warlike of states.

Rummel uses the phrase “liberal democracy,” which he equates with the free society—something that is questionable on a number of grounds—and to Hayek’s notion of spontaneous order. Liberal democracy, according to Rummel, is “a free market writ large: of the economy, society and politics within an overarching legal framework of civil liberties and political rights.”4

According to Rummel, such polities are conducive to compromise and tolerance and are naturally attracted to each other because of their domestic similarities, thus reducing the possibility of violence between them.5

It is claimed that a vast body of data, from the time of the city-states of ancient Greece to the present, confirms these claims. The policy implications are clear and indeed have been adopted by the US government, President Bush himself has said something along the lines of “democracies don’t make war on democracies.” By universalizing democracies, according to Rummel and the other people of this school, we can expect an end to war. The theory of the democratic peace has of course been subject to a great deal of criticism, for example, in articles by Christopher Layne and especially Ted Carpenter of the Cato Institute. Christopher Layne argues that the realist view of international affairs much better explains the lack of armed conflict among democratic nations; that is, the power relations that have existed, for instance, in the Cold War because of fear of the Soviet Union, makes it unlikely that other democracies would have entered into any kind of hostile relationship with the United States.6

Definitions of which countries qualify as democracies appear to be particularly troublesome.7 In order to extend the range of data over 2,500 years, back to “democratic”—according to Rummel—democratic classical Athens, he states that the definition of democracy employed in that case was loosened to include the criterion of at least two-thirds of the males having equal rights. However, this just doesn’t work. Even in classical Athens—leaving aside other Greek city-states and leaving aside women—the majority of the population consisted of persons without political rights, such as slaves and foreigners. The number of actual citizens entitled to vote was quite small compared to the population of Athens.

Cases in which democracies appear to have gone to war against each other are dealt with by denying the name “democracy” to one of the parties in the conflict. Thus, the Boer Republics were not democracies, according to this point of view, despite their being so viewed by Britain and the rest of the world. Nobody at that time thought that if you denied votes to illiterate tribal blacks, you were somehow infringing on democracy. So, we have the Boer War in which Britain and presumably another democracy at that time—the Boer Republic—went to war. In the US Civil War, the Confederate States of America also does not qualify as a democracy because only white males could vote and the president was not directly elected. Here Rummel seems to have forgotten that it was also the case in the Republic founded in 1789. The president wasn’t directly elected, but was elected by a complicated system involving the electoral college, which in those days was not a pure formality. Imperial Germany—that is, the German Reich founded by Bismarck in 1871—was not democratic, according to this view, despite the fact that it had universal manhood suffrage, which Britain did not achieve until decades after that. Because there was no ministerial responsibility to the Reichstag, and the army was not under Reichstag control, Rummel says, “in foreign policy Germany was autocratic without a democratic leash…”8 It is in particular historical cases such as this that Rummel and the other theorists—who were political scientists and not historians—show an astonishing ignorance.

The crisis of July 1914: not only was the British public and Parliament in the dark, regarding the secret commitments to France, that brought England into the war, but it transpired that even the cabinet itself was unaware of their true content. That is, the fact that England had obligations that the French were prepared to call in, and insisted on calling in, was not known even to the British Parliament or the cabinet itself. This is when John Morley, the last of the great English liberals, resigned from the Asquith government in protest. The idea that the foreign policy of any of the great powers at the time, including the United States, labored under a “democratic leash” is absurd.

Another example that some of these people use, which shows an appalling ignorance, is how Italy got into the First World War. What they want to say is that Italy was a liberal government, so it reneged on its obligations to Germany and Austria and sided with the liberal countries of England and France.9 That’s not how Italy got into the war. Italy was not a democracy at the time. About 10% of the adult males could vote because of literacy and property qualifications. It was a backdoor, backstairs intrigue that got Italy into the war, once the Italian regime was promised colonial spoils after the war.10 Leaving that aside, I imagine these kinds of details seem a bit arcane to most people, and somewhat obscure. But the fact is that this is a historical argument: do democracies ever make war on other democracies? Is democracy historically a restraining influence on war making? The people who take that position including Rummel, are simply wrong on the history.

Democratic England declared war on Democratic Finland in 1941, to take another small example, as part of Churchill’s desire to appease Stalin.

A striking example is Rummel’s treatment of the Israeli attack on the American spy ship the USS Liberty during the Arab-Israeli War of 1967. I don’t know if you know about that, but there are websites devoted to this problem sustained by some of the remaining survivors of that attack. The attack by the Israelis, which resulted in the death of 34 American sailors and the wounding of 171 others, appears to have been deliberate, by all the evidence. Ordinarily, such an attack would result in a state of war. In this case it did not because among other reasons, President Lyndon Johnson’s position was, according to a US Navy Admiral, “that he didn’t care if the ship sunk, he would not embarrass his allies.”11 In any case, Rummel takes the assault as having been intended by Israelis, and he doesn’t think that it was an accident or a matter of misidentifying the ship. Rummel’s strange grounds for leaving such an act of warfare out of consideration are that Israel was only partially free, owing to its heavily socialized economy.

How Free Are Today’s “Liberal” Democracies?

Do you see how definitions here are being “massaged,” as Carpenter says?12 Rummel seems not to realize what bringing socialized economic elements does to his rosy-eyed view of the liberal democracies in the present world and his equation of democracy and freedom.

We go back to Herbert Spencer—more than a century ago now—who at the end of his life, lived to see people talking so blithely about democracy and how that legitimates anything the government does. This is what Spencer said: “’Free!’ thinks the Englishman. ‘How can I be other than free, if by my vote I share in electing a representative who helps to determine the national transactions, at home and foreign?’”13

But this is what Spencer replies to that position: “Delivering a ballot-paper he identifies with the possession of those unrestrained activities which liberty implies…”14 This is the case nowadays very often, isn’t it? One reason why the government controls public service announcements and insists that everybody has an obligation to vote is so the public equates voting with the most basic freedom of all. But Spencer says, despite the fact that an individual can deliver this paper ballot once every two years or four years or whatever, what is much more important is “the threatened penalty that every day reminds him that his children must be stamped with the state pattern, not as he wills it, but as others will.”15 Spencer is saying that much more important than this 100-millionth of a vote, for instance, that Americans have in a presidential election every four years, is the fact that they’re under the thumb of the system of public education, enforced compulsory attendance, state subsidies, state dictation of content, and the content of your kids’ minds. That’s a lot more important than this mystified, reified idealized paper ballot.

Spencer wrote that “[t]he essential question for the citizen is what part of his work goes to the power which rules over him and what part remains available for satisfying his own wants.”16 What I’m getting at is this: what is this thing, liberal democracy? Spencer gives it a good rule of thumb. An individual is free to the degree that he can control the product of his own labor, the product of his own efforts on the free market. What do we see among these so-called liberal democracies in the world today? What is the pattern of liberal democracy that the United States intends to impose wherever it goes—if it even gets that far and is successful at it? In all likelihood, Spencer would have scoffed at the notion that welfare democracies—that regularly tax away 50 percent or 60 percent of the citizens’ income—can rationally be termed “free societies.” Sure, people have the right to produce and distribute pornography to their heart’s content. I’m not saying that to feud with it, as it’s a personal matter, but I don’t think that that freedom is as important as the freedom to keep what you yourself have earned and to use it for your own purposes and the purposes of your family.

Anti-Democratic Elements within the American State

Rummel concedes that even within democracies, there are agencies such as the CIA that are virtually totalitarian subsystems under no popular control whatsoever. This he does to forestall the criticism that the United States in recent decades has plotted assassinations and brought into being armed insurrections with states with which we are not at war. The US has actually overthrown or helped overthrow democratically elected regimes in Guatemala, Iran, and Chile, for instance. These actions are hardly compatible with the tolerance and respect for others that democracy in Rummel’s account is supposed to foster. Rummel’s reply is that the solution to this problem—the existence of these subsystems of totalitarian control within a democratic system—is “more sunshine and greater democratic control.”17

That seems fatuous to me. As if it were at all likely to occur: bringing the CIA, the NSA, and all the other intelligence agencies under democratic control, particularly as the United States. These agencies undertake to involve themselves in the internal affairs of countries all over the world in an attempt to transform them into democracies. How many people in America even know that the CIA plotted a number of times to assassinate Fidel Castro? The only question is whether it bothered to inform John Kennedy about if it or kept him in the dark so that he could invoke deniability if it ever was made public. The CIA tried a number of times—with the usual brilliance and invariable success—to poison Castro’s cigars. They tried to have some kind of depilatory agent introduced so he would lose his beard which was allegedly a patriarchal status symbol important to his people.

It’s not surprising that Castro invited Soviet missiles, especially after the Bay of Pigs invasion of Cuba. This is how the CIA operates and the idea that somehow sunshine can be brought into the activities of the CIA is absurd. One aspect of the question that seems to have been overlooked by the democratic peace advocates is this. Let us suppose that all countries could be turned overnight, or in a short amount of time, into well-established democracies meeting the criteria that are used by these theorists: enjoying civil liberties, the rule of law, property rights, etc. Then, leaving other considerations aside, the notion of universal perpetual democratic peace might have a certain superficial plausibility unless that a world of well-established democracies eventuates into a world government.

Short of a nuclear holocaust, a world government is the worst thing that could happen to our race. A universal government with tax harmonization throughout the world; redistribution from America, Europe and Canada to the majority of the world’s population in India, China, Bangladesh, Indonesia, and so on; a world bank where central bankers can inflate to their heart’s content.

Aside from world government, supposing that we still have independent democratic states, well, maybe there could be universal democratic peace. However, the process of universalizing democracy and turning democracy throughout the world into a reality—the crusade to do so— would be a long, drawn-out affair entailing a multitude of unintended consequences. The power and authority of the US government would be enhanced, inevitably, as we see it’s being advanced even in this current war on terrorism. The cost to American taxpayers would increase. How much of the free society would remain is problematical.

Classical Liberalism against Foreign Interventionism

Now I think I’ll end here on some general considerations, drawn from the history of classical liberal thinkers, back to Richard Cobden, William Graham Sumner, and Murray Rothbard, who wrote a lot on this question and others. So, these I propose as general objections to interventionism in foreign affairs.

In the case of the United States—today, by far, the most significant case, since this country is the only existing superpower and a would-be a world hegemon—a number of theoretical considerations would seem to weigh heavily against the policy of interventionism from a libertarian standpoint.

First, there is no reason to suppose that our political leaders are any more competent in international affairs than they are in domestic affairs. You think they’ve made a mess of the economy, that they’ve made a mess of American society? Why suppose that they’re going to be any more competent in the international arena? The process by which our leaders are selected is practically guaranteed to assure general incompetence and ignorance. Foreign interventions will often be triggered by purely partisan political considerations—that is, immediate advantage to the politician or his party. Political leaders know that public opinion polls almost invariably register a shot in the arm, as they say, to the president’s popularity when an overseas imbroglio comes about.

Second, the central insight popularized by the school of public choice is highly relevant in the field of foreign affairs. The decision to intervene is subject, like all political decisions, to the influence of pressure groups who represent constituencies with their own axes to grind. Meanwhile, the interests of the public at large are lost in the process of determining policy.

It cannot be emphasized strongly enough that the American people are “rationally ignorant,”—as the phrase goes among public choice theorists—in foreign affairs. Their knowledge of foreign countries, of their histories, of their problems, even their approximate locations on the map, even the continent in which they are located, is limited, shall we say. It’s been the subject of well-earned ridicule. An interventionist foreign policy will tend, therefore, to be determined by relatively small groups and cliques, with a private interest that is financial and sentimental, in foreign entanglements. Such groups that have influenced US policy abroad include particular capitalist circles, eager to socialize the cost of doing business in foreign countries. Nowadays that includes the oil companies, obviously, and various American ethnic groups with strong emotional attachments to foreign states and political movements. And I don’t just mean the Zionists. There are also the Cuban-American constituency in the crucial state of Florida that keeps pressure on the Republican party to continue this economic blockade of Cuba that’s been going on for over 40 years. The blockade has not toppled Castro, but has just given Castro and the communists an excuse for the failure of the communist economy in Cuba. Castro can blame it on the Americans and the American embargo. Now, across the board, liberal, conservative and centrist political voices say it’s time to end this stupid embargo. It hasn’t done what it was supposed to do, so why has the embargo not ended? To a large extent this is because of the political influence of this constituency in Florida that feels immensely strongly about it.

Third, even supposing that an activist foreign policy were formulated by competent leaders—fat chance!—who never exploited it for personal political advantage and who were invulnerable to pressures from special interests, the world is still such a complicated place that there will likely be negative unintended consequences from American interventions. The classic example is World War I, where US involvement led to total Entente victory. This total victory for England and France at the Paris Peace Conference, which produced the vindictive Treaty of Versailles, set the stage for World War II.

A further point. Following the reasoning of William Graham Sumner: the globalist policy perverts the American constitutional system18, concentrating power in the presidency in the executive branch—in groups like the CIA which are totally impervious to public scrutiny—rather than in Congress. The globalist policy also concentrates power in Washington, instead of in the states and localities. Inevitably, if you have an activist foreign policy, that’s where the power is going to be channeled. It’s going to be channeled to the executive branch because that’s the branch that carries out foreign policy.

The fact that this channels power to Washington rather than the states and communities means more political power is situated in the places furthest from public oversight. It means political activities are centered in the area of policy most distant from the interests and concerns of the people at large.

Speaking of democracy, I think that you’ll find it a common phenomenon that people get most excited—you see it on your local TV news—about whether a traffic light is going to be put up at the corner or not. The people turn out to discuss this, they debate about it, they pressure their councilmen about it, and they know something about it. They have some deep personal interest in it. When it comes to bombing this country or that country, or threatening to bomb this country or that country, or engaging in acts of war—an undeclared war against one country or another— the American people will simply go along with their leaders. After all, the thinking goes that their leaders know much more than they do and they’re certainly impartial and not self-interested in what they’re doing. We’re back to Spencer’s point on democratic voting: we voted for them, these leaders, and they are our leaders. It’s part of the whole democratic myth.

Democracy Does Not Mean Freedom

Finally, focusing on foreign affairs diverts attention from the need to reform at home. Right centrists or center-right people like Rummel may be satisfied that the United States is a free country. Other are not so easily satisfied.

The problems we face in our own country—including numerous threats to freedom—are well documented today by writers like James Bovard, Paul Craig Roberts, and Paul Gottfried.

Gottfried has examined the systematic international campaign on the part of elites in America and Canada and in European countries to destroy the traditional culture of those societies and replace it by what Left intellectuals would much prefer. This includes feminism. This includes attacks on everything the elites consider to be racism.19

The most recent example: some high school kids decided to have, besides a regular high school prom, a high school prom for whites and they were not just attacked by their own school officials and by the politicians in the area. This became a national issue. Columnists from The Washington Post and The New York Times and so on attacked these kids. I don’t think any of them mentioned that everywhere in America there are black-only high school proms.20 And everywhere in America there are black dormitories, there are areas in which blacks prefer to associate with their own kind, but the fact that whites did this becomes an issue and this is the kind of thing that Gottfried is talking about. He’s not defending slavery or racism in any real rational sense. What he’s attacking is a campaign against pseudo-racism, that is, as Paul Craig Roberts says, this means any kind of equal treatment for whites.

Another threat we face is the threat to free speech. Speech codes have gone a lot further in Europe than in America, but through international agreements, and in the future, they may come to the United States also.

Nor is it just speech codes. Some people say we have to somehow control the internet because there’s so much garbage and filth there. Well, I would tend probably to agree with something like that latter part, but what I would suggest is that the first attempt to control the internet, for whatever reason, will inevitably lead to political censorship of the internet. It will mean censorship of anybody considered right wing or “extreme right wing” or any group considered a “hate group.”

They’ll use the usual communist salami tactics. First they’ll start with the most “extreme,” and I can redo this famous thing about the Nazis: first, they’ll come for the fascists, then they’ll come for the extreme conservatives, and anybody who denies their left-liberal egalitarian worldview. So, we have to be worried about any attempt to censor the internet, which is at this point, really, just about all we have in the way of freedom of expression.

These are the kind of problems that Jim Bovard and Paul Craig Roberts deal with. Is the United States a free country—we’re so far ahead, we’re so great, we’re so much the city on the hill— that we can choose right now to simply impose our version of democracy on the rest of the world?

Democracy that is to be imposed on other countries is not going to mean what Thomas Jefferson thought it meant. This democracy will mean introducing into Muslim societies the methods of Planned Parenthood and “reproduction rights” for women, including birth control and abortion. Only Catholic publications have taken note of this aspect of what “democracy” actually entails. I don’t want to deny that there’s a case to be made for a woman’s rights in general. However, this democracy will mean only democracy in the sense preferred by American and Western European elites.

Is America really so perfect that we don’t have to worry about what’s going on here and we can start worrying about the rest of the world? Libertarians wonder to what degree a country can be said to be free if close to 40% of the citizens’ income is confiscated by different levels of political authority year in, year out.

I will finally end with a relevant quotation from Richard Cobden along these lines. Cobden said, “The “true secret” of despots … is to employ one nation in cutting the throats of another, so that neither may have time to reform the abuses in their own domestic government.”21

In other words, the strategy is to direct the attention of the people to foreign enemies and ramshackle regimes such as the Saddam Hussein regime, which according to Tony Blair, was in a position to launch attacks on Britain within 45-minutes’ notice.22

In the book 1984, the book’s hero Winston Smith has a job operating a “memory hole” at the Ministry of Truth. Whenever the party line changes, what he has to do is go back and search out the newspapers where the party had taken a different position from what the party had said earlier. This is important in foreign policy in 1984 because the party’s alliances with foreign countries shift, and it’s important for the regime to convince people that the current enemy has always been the enemy and the current enemy is a country of cannibals and savages. But, in the past, the party was allies with the country that is now the enemy. That means Smith has to go and get the old newspapers and destroy the articles where the party was allied with the country the party now claims is the eternal enemy.

Nowadays, though, the government doesn’t need memory holes. What actually was the case, you can find anywhere on the internet, you can find in major newspapers. The true facts will be in the newspapers in your library, and they’re right on your computer. You can find that the government lied about this, that the government leaders lied about that. But it turns out Orwell was wrong. Orwell thought that somehow people would care if it turned out that they could read in the newspaper that the government had lied. So, Orwell thought all that old information had to be destroyed. We know now that the information doesn’t have to be blocked out. Even though the information is still there, the people don’t care, for the most part.

Cobden’s view is that instead of diverting attention to nonexistent, puffed-up enemies, what we should do is pay attention to reforming our own domestic society. He meant the England of his time, and I would suggest we pay attention to reforming the America of our time.

Why History Is So Important

Well, that’s what I want to say about international affairs and I want to start now to discuss another quite important issue and that is in general, the issue of the Industrial Revolution. Now, there’s a book I suggest to you that has been in print since it was published by the University of Chicago Press. It was edited by Hayek with contributions by a number of different authors and the book is, Capitalism and the Historians.23 It comes from 1954, so the research is somewhat dated, but I’ll deal with that in a moment.

Actually the most important thing in the book is the introductory essay by Hayek, “History in Politics.” Here, Hayek has one of his best essays. It really shows Hayek at his best, his wisdom, his careful statement of issues and careful presentation of his own answers. He says that when we think about it, there’s a very close connection between people’s view of history and their political views. Now, if you’re an economist or a philosopher, if that’s your field, you might feel that this is rather unfair. You might feel that really those are the disciplines which people should study in order to come to conclusions about what’s best for us individually and what’s best for society. However, for better or worse, that’s not the way it’s done and if you think about it, I think that maybe even in your own case for the most part, that your political views have been very strongly influenced—and in many ways determined—by what you think history has shown.

See if this sounds familiar to you: there was a time in America, starting in the last decades of the nineteenth century, that America was under a regime of laissez-faire. Under this regime of laissez-faire, there grew up a class of robber barons who got together and eventually cartelized and monopolized the America economy. Then, thank God—who does look over the United States of America!—we had the Progressive movement, the Sherman Antitrust Law and Progressive leaders like Teddy Roosevelt. These Progressives put an end to this terrible regime of laissez-faire and in that way salvaged the American economy through government intervention. Do you agree that such a view exists? Have you ever heard such an interpretation as that?

That’s one interpretation. Here’s another one. In the 1920s, somehow, we got laissez-faire back and laissez-faire went haywire. People started speculating like crazy on the stock market. There’s a tremendous irrational boom and it ended in the Great Depression, which was thankfully dealt with by the super-savior of American history, Franklin Roosevelt. Roosevelt came in with his New Deal and through government intervention in many different respects, and saved the American economy. Does that sound familiar, this interpretation?

Here’s another one, more in connection with international affairs. In World War I, we had a man as president who was virtually a saint, and who agonized with spiritual issues. Finally, against his will and every inclination, he was forced to bring about a declaration of war against Germany and get us into the First World War. This saint, Woodrow Wilson, harbored a dream and a vision for a League of Nations. God smiled on the United States again, and we were on the winning side in that war and President Wilson went to Paris, to the peace conference in order to bring about his dream and his vision. It was finally agreed to by his other allies—that was part of the Treaty of Versailles with Germany—that a League of Nations should be set up to put an end to war. This sainted spiritually tormented man, returns to America and tries to get the Senate of the United States to agree to this treaty. The Senate of the United States at that time was controlled by a group of men that history knows—or that you at least know, or that I at least know—as “isolationists.” (Isn’t that the term that’s used? Not “noninterventionist” or “people who believed in US neutrality,” but “isolationists.”) So, they turned down the Treaty of Versailles and in this way broke the heart of this sainted American president and kept America out of the League of Nations so that the inevitable result was Hitler, the Second World War and everything that came about from that.

Doesn’t that teach us something? Isn’t this one of the lessons of history? We should follow our sainted and inspired leaders and especially engage in cooperative efforts of collective security through international organizations, such as the United Nations. Does that sound like a very familiar interpretation of history?

Others could be cited. In all of these cases—the case of the so-called robber barons, the case of the Great Depression, the case of the League of Nations—I would suggest that most people who have any views or impressions or ideas at all about the pertinent political issues, take their views from these interpretations. This is what determines their views.

They say: “We tried laissez-faire in the past. It led to monopolies and trusts; it led to the Great Depression. We tried a system of minding our own business and on neutrality for the United States. It led to the rejection of the League of Nations and it led to Hitler and everything else.”

Hayek doesn’t give these examples, but these would be examples confirming his view, I think, that history is a major determinant of the views that people have about politics.

The Industrial-Revolution Myth

Now, why Hayek was into this is that he’s introducing his book, Capitalism and the Historians and he talks about the supreme myth that has been used against capitalism and that is the myth of what happened during the Industrial Revolution.24 That’s what I want to talk about in the time that remains.

We now know that the industrial revolution occurred, even in England, at a much slower pace than originally supposed. It was over a span of time of probably close to a century—let’s say from 1750 to 1850—that industrialization got underway in Britain. But, nonetheless, the main outlines remain the same. It was a question of the introduction of the factory system, where the production of a particular good now took place in different stages, but all under one roof and with the application now of the steam engine and specialized machinery to every step of the process of production. The division of labor was intensified in this way. The world market expanded, urbanization took place and these various aspects constitute what’s known as the Industrial Revolution.

For a long time a myth prevailed, the myth that Hayek refers to. It was thought that the Industrial Revolution represented a catastrophe for the working classes of Britain. And Britain was a test case of the results of the Industrial Revolution. Everybody agreed to that. The Industrial Revolution eventually spreads to other countries and so on, but historians and scholars want to focus on Britain, see what happened there, and whether it was a bad or a good thing. The first idea was that it was a catastrophe. The new factories, it was claimed, ushered in a nightmare world of slave-like conditions for working men, that were even worse for women and worst of all, for children. Cruel poverty, filthy slums, rampant pollution, and a host of other social evils, were the end result of giving free reign to the heartless regime of laissez-faire. As the story goes, only in the last years of the nineteenth century with the introduction of effective factory laws and other government measures and above all, with the rise of labor unions, did the condition of working people start gradually to improve.

How Britain and France Spread the Anti-Laissez-Faire Narrative to the Developing World

The lesson taught by this presumed historical example—repeated endlessly in popular literature, from clerical and political pulpits, in schoolrooms, and university lectures—was clear and decisive. The university lecture halls are of particular interest here because of what happens in the first decades of the twentieth century.

In Britain and France especially—but also in other Western European countries that had colonial empires—the elites from the colonies are often brought to the home country in order to undergo advanced education there and in this way the rulers of each empire hope to meld the native populations of the colonies more to the home country’s ways of thinking. After the Second World War, leaders of places like Ghana, Indonesia, and Vietnam—many of whom later became communist revolutionaries—had studied at British and French universities. They had learned these alleged lessons of the Industrial Revolution and they were determined that yes, they would industrialize their countries, but they wouldn’t industrialize their countries through awful laissez-faire. In their minds, they thought “look at what Laissez-faire had done to Britain and other countries that had had to endure it during their industrial revolutions!” That all came out of the intellectual and academic arena. In the political arena, meanwhile, this myth about the industrial revolution created a standing presumption in favor of state intervention to protect the present-day victims of capitalist exploitation.

However, things began to change in the 1920s when what has been called the “optimist school” among historians of industrialization made gradual and then more rapid progress against what are called “the pessimists” in the higher levels of scholarship.25 This change was based on the steady accumulation of more objective, less politically contaminated data. The change included the refinement of statistical techniques and the application of better economic theory. The earlier view had largely been based on the “blue books” collected by parliament and the House of Commons’s commissions on the condition of working people in the mid-nineteenth century and after that. These are called blue books and what was behind these commissions is of interest and importance.

Liberalism in Britain

In England following the Napoleonic Wars of 1815, Parliament was still “unreformed.” There are heavy tariffs to the advantage of the land-owning nobility. They control all public offices. The Church of England bases its income largely on tithes extorted from nonbelievers, from Presbyterians and Baptists and Quakers and others. In other words, you have a parasitic established church and many other elements of conservative control and domination of English society.

At this time, there’s a powerful liberal movement in England that threatens the domination of the older establishment. The liberals threaten also, for instance, the slaves owned by the absentee plantation owners—mainly English noblemen— and the slaves in Jamaica and other places. The liberals want to do away with slavery. So, they want a general reform of British society and they’re making a lot of noise and they’re agitating public opinion.

Now, the Tories and the defenders of the establishment and the status quo come back with a counterattack. They say, “you liberals, you great lovers of the oppressed, don’t you have your own oppressed? Aren’t you yourselves slave owners in a sense? What about the workers in your factories? Why don’t we go in and investigate what’s happening there?”

Parliamentary commissions are set up with the political aim of exposing the factory system at the base of the economic power of these liberals and these reformers. And, just as when US Congress sets up some committee or subcommittee to investigate sweatshop condition in Chinatown in San Francisco or elsewhere, the investigators bring in people who are ready to tell them the worst horror stories. The commissions don’t generally consider why these people are working in sweatshops in San Francisco when they could be “enjoying” life in Shandong Province.

And then the congressional committee issues its findings. They are compendiums of horror stories: one after another about terrible conditions, people working 16-18 hours, women working, children working, as well. It was on the basis of these collections of the supposed data that the first interpretations and histories of the Industrial Revolution were composed.26 Friedrich Engels who, of course, was Marx’s collaborator, wrote a book, The Condition of the Working Class in England in 1844. The book is based on these parliamentary commissions.27 Other people began lecturing and writing about the Industrial Revolution and took the same tack.

In the early twentieth century things began to change because better, more detailed, and more comprehensive data begins to be collected on wages, on available foodstuffs, on longevity, length of life, and so on. Once this other data became available, people don’t have to depend on, what we might call “contaminated data.” Now we can go to the sort of data that historians can debate—more objective facts. Moreover, new probing questions were asked—the sort of things that didn’t occur to earlier writers opening novel perspectives. You had a different and contrasting interpretation of the Industrial Revolution beginning with J.H. Clapham,28 an older historian of the 20s and 30s. But we especially see the change in the 40s and 50s. T.S. Ashton, for example, was represented in Hayek’s collection, Capitalism and Historians.29 More recently, there is Max Hartwell—who is retired now—at the University of Chicago and Oxford.30

Fundamentally what came out of this newer research is this: for most of the working people of Britain, the standard of living did not deteriorate, let alone collapse, as a result of the industrial revolution. Rather, the standard of living improved slowly from around 1780 to 1850, and more rapidly thereafter. This occurred despite powerful factors working in the opposite direction— countervailing factors that tended to depress the standard of living—so that even if it were discovered that actual living standards had fallen, this would not necessarily count against industrialization. It could have been that industrialization permitted people to have a higher standard than they would have otherwise, even though, let’s say, in actuality, living standards fell because of other factors that I’ll talk about.

First, there was the destructionist effects of a whole generation of war with the French Revolutionaries and Napoleon. It was the most expensive war in history to that time—from 1793 when England declared war on Revolutionary France after the execution of the king—to Waterloo in 1815. During that time there was just one year—around 1804—of truce. There was a whole generation of war. All of the wealth and assets that England poured in to this war included all of the ships and the furnishing of men, the artillery, other munitions, and the subsidies given to Britain’s allies on the continent to fight against the French. This immense amount of wealth was, you could say, used for a good purpose, the defeat of Napoleon. Nonetheless, this wealth was not available for productive uses for the general British public. It was wealth that could have gone into increasing the capital stock of England and therefore tending to raise wages, producing more for the British consumers, including working people. This wealth simply disappeared. It was used in the war effort.

Secondly, a sharply regressive system of taxation was used to finance the war and an array of counterproductive government measures and policies further depressed living standards.

How Industrialization Solved the Problem of Overpopulation

Now, finally, I’m going to elaborate on some of these points.

One important related topic is population and population growth. In the middle of the eighteenth century, the population of England was six million. It had never been higher than that and the population of none of these European countries had ever been substantially higher than was the case in the middle of the nineteenth century. There had been some temporary peaks at one time or another, but basically the population in the mid-nineteenth century was the limit of population.

Yet, you see now the population of Europe as a whole from 1800 to 1900 increased from around 180 million to over 500 million. This was an unprecedented population explosion in the history of mankind. It was not limited to Europe, by the way. You found this in other areas, of course, such as Eurasia. The reasons for it are not totally clear. Nonetheless, this is the fact of the matter. So, the question is: what were different societies going to do about this population explosion? How could these new tens of millions of people be fitted into the older mercantilist guild-controlled economy with the older methods of production?

I started off this series of lectures by quoting Mises on the European miracle. Here Mises again puts his finger on the essential point which is that on the eve of industrialization, Europe was faced with this unprecedented population explosion, and the Industrial Revolution was Europe’s and America’s answer to this problem.31 Ultimately, industrialization was the way that these tens of millions of people were able to survive. So, our friend Ayn Rand says that people should get down on their knees and celebrate the smokestacks of the factories of the Industrial Revolution. That’s a novelist’s way of saying it, maybe, but she is perfectly right.32

Ultimately, you understand, I hope, that you don’t actually work a lot harder than your grandfather and your grandparents, or your great grandparents and the people before them worked. You might think that you’re like some draft animal and work so hard. But, it’s not really the case, and the reason that you enjoy a higher standard of living has to do with the accumulation of capital and the workings of the capitalist system. That’s what people began to acknowledge to a small degree, then a little bit more. In any case, it’s what people began to experience during industrialization.

These population figures are about the best we can get, the best I’ve been able to find, and they’re interesting in their own right.

The population of France in 1750 must have been about 20 million. Notice that France always historically—up until the nineteenth century—always had a much higher population than England did. In fact, up until around the time of the French Revolution and also the Russian participation in the partition of Poland, France had the largest population of any country in Europe. This is one reason why France was the standard military power of Europe for so long. But then the English population begins to explode and overtake the population of France.

France, of all the great countries, is the only one whose population remains quite steady. What social reasons are behind that—having to do with the inheritance of land or early introduction of birth control procedures—I don’t think is clear. Meanwhile, the population of Italy was increasing enormously, despite the fact that millions upon millions of Italians immigrated. Italians formed, for instance, the largest ethnic group—biological, not linguistic—in Argentina. As we know, many Italians have come to America and enriched our American culture almost infinitely.33

Unlike in England and France and Germany, overpopulation remained a steady problem for the Italians because in southern Italy, industrialization has never taken place. That is, the region south of Rome: Naples, Calabria, Sicily and so on. In the south they have this endemic unemployment, which has been going on for so long, along with many other social problems.

At the same time, you see very significant growth in population in Germany. So, by the end of the century there are 36 million, more or less, French and 50 million Germans. There are even more inhabitants of Austria-Hungary. In Ireland, in the middle of the century—closer to 1840 than 1850—the population would be six and a half million people, which is more than it’s ever had since.34 That’s many more than it’s ever had since because three-and-a-half million emigrated afterwards because of the Irish famine. The vast immigration of the Irish—the diaspora of the Irish—was partly due to the terrible death rate, although these people didn’t die generally from starvation. They died from the diseases caused by malnutrition. You could also talk about Russia or Poland, and the rest of Europe would be parallel. The question is: “what’s to be done with all these new people?” You can read about the answer in Rosenberg’s and Birdzell’s book How the West Grew Rich. As they say, the Industrial Revolution was not the problem, it was the solution.35

  • 1

    R.J. Rummel, Death by Government (New Brunswick, NJ: Transaction Publishers, 1994).

  • 2

    Rummel suggests a total of 61.9 million deaths—labeled as “the most probable estimate”—for the Soviet Union from 1917 to 1987. Rummel, Death by Government, p. 82.

  • 3

    Raico here partly contradicts his 1988 article in which he endorses an estimate (from historian Robert Conquest) of 20 million deaths for the Stalin period alone. To this, it would be necessary to add six to ten million additional deaths from the Lenin period. Of course, such estimates combined nonetheless come in well below the 61-million estimate offered by Rummel. See Ralph Raico, “Marxist Dreams and Soviet Realities,” in Great Wars and Great Leaders: A Libertarian Rebuttal (Auburn, AL: Ludwig von Mises Institute, 2010) p. 153.

  • 4

    R. J. Rummel, “Democracy and War: Reply,” The Independent Review 3, no. 1 (Summer 1998): 103. 

  • 5


  • 6

    Christopher Layne, “Kant or Cant: The Myth of the Democratic Peace, International Security 19, no. 2 (Fall 1994): 47.

  • 7

    Ted Galen Carpenter, “Democracy and War: Rejoinder,” The Independent Review 3, no. 1 (Summer 1998): 109. 

  • 8

    Quoted in Carpenter, “Democracy and War: Rejoinder”, p. 105.

  • 9

    This view is presented by Michael Doyle, “Kant, Liberal Legacies, and Foreign Affairs, Part I,” Philosophy and Public Affairs 12, no. 3 (1983): 216.

  • 10

    John MacMillan, for example, concludes that Italy’s main concerns were territorial expansion and joining the winning side. See John MacMillan, “Democracies don’t fight: a case of the wrong research agenda?,” Review of International Studies 22, no. 3 (1996): 282.

  • 11

    James Bamford, “The cover-up” The Guardian, August 7, 2001, https://www.theguardian.com/world/2001/aug/08/israel.

  • 12

    Ted Galen Carpenter, “Democracy and War,” The Independent Review 2, no. 3 (Winter 1998): 435-41.

  • 13

    Herbert Spencer, “Imperialism and Slavery” in Facts and Comments (New York: D. Appleton and Company, 1902) p. 165.

  • 14


  • 15


  • 16

    Ibid., p. 168.

  • 17

    R. J. Rummel, “Democracy and War: Reply,” The Independent Review 3, no. 1 (Summer 1998): 108.

  • 18

    See William G. Sumner, The Conquest of the United States by Spain (Boston, MA: Dana Estes and Company, 1899).

  • 19

    See Paul Gottfried, After Liberalism: Mass Democracy in the Managerial State (Princeton, NJ: Princeton University Press, 1999) and Paul Gottfried, Multiculturalism and the Politics of Guilt: Towards a Secular Theocracy (Columbia, MO: University of Missouri Press, 2002).

  • 20

    This is likely a reference to a 2003 case at Taylor County High School in Butler, Georgia. The high school had held its first integrated prom in 2002. The next year, some students revived segregated proms. This was condemned in numerous media outlets. For example, see unsigned editorial “Times Aren’t A-Changin’,” The Washington Post, May 16, 2003, https://www.washingtonpost.com/archive/opinions/2003/05/18/times-arent-a-changin/e8eae570-6bef-4d93-b730-d1e4b60b7147/.

  • 21

    Richard Cobden, 1793 and 1853 in Three Letters (London: W. & F. G. Cash, 1853) p. 44.

  • 22

    What came to be known as the “45-minute claim” originated in a September 2002 report released by the Blair government in an effort to increase public support for the US and British invasion of Iraq in 2003. The claim was later debunked: Andrew Sparrow, “45-minute WMD claim ‘may have come from an Iraqi taxi driver,’” The Guardian, December 8, 2009, https://www.theguardian.com/politics/2009/dec/08/45-minutes-wmd-taxi-driver.

  • 23

    F.A. Hayek, ed., Capitalism and the Historians (Chicago: University of Chicago Press, 1963).

  • 24

    F.A. Hayek, ed., Capitalism and the Historians (Chicago: University of Chicago Press, 1963). pp. 3-29.

  • 25

    Dilemma,” Scandinavian Economic History Review 10, no. 2 (1962): 245-261.

  • 26

    One of the most notable of these reports is the Sadler Report, published in early 1833, which reported a number of testimonies from factory workers about conditions in the mills. 

  • 27

    Frederick Engels, The Condition of the Working Class in England in 1844 (New York: John W. Lovell Co., 1887).

  • 28

    J.H. Clapham, An Economic History of Modern Britain (Cambridge: Cambridge University Press, 1963).

  • 29

    See  T.S. Ashton, “The Treatment of Capitalism by Historians” and “The Standards of Life of the Workers in England, 1790-1830” in F.A. Hayek, ed., Capitalism and the Historians (Chicago: University of Chicago Press, 1954).

  • 30

    See  R.M. Hartwell, “The Rising Standard of Living in England, 1800-1850,” The Economic History Review 13 no. 3 (1961):397-416, and R.M. Hartwell, The Industrial Revolution and Economic Growth (New York: Routledge, 1971). 

  • 31

    Ludwig von Mises, “Individualism and the Industrial Revolution” in Marxism Unmasked: From Delusion to Destruction (Irvington-on-Hudson, NY: Foundation for Economic Education, 2006) pp. 35-42.

  • 32

    The original quotation is “Anyone over 30 years of age today, give a silent ‘Thank you’ to the nearest, grimiest, sootiest smokestacks you can find.” Found in Ayn Rand, The New Left: Anti-Industrial Revolution (New York: Signet, 1971) p. 138. 

  • 33

    Raico is being sarcastic here and joking about his own Italian ancestry. 

  • 34

    This refers specifically to the Republic of Ireland which had a population of 6.5 million in 1840. In 2022, the Republic’s population was about 5.1 million. 

  • 35

    See Nathan Rosenberg and L.E. Birdzell, Jr., How the West Grew Rich: The Economic Transformation of the Industrial World (New York: Basic Books, 1986) p. 147. The authors write: “By now, it is quite clear that the new factories and towns were a large part of the solution to Europe’s problem of employing a rising population outside of agriculture; they were not part of the problem.”