TGIF: Socialist Confusion

Recent polls indicate that many people under 30 view socialism and communism favorably. (For Marx, those words were synonyms.) It seems that socialism and communism are "in." What's going on?

A self-described "democratic socialist," Zohran Mamdani, won the Democratic nomination in the New York City mayoralty primary. He promises to set up city-owned nonprofit grocery stores and plans other giveaways. He favors a $30 minimum wage. He also says billionaires should not exist. Will he set up camps?

Members of Congress, such as Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez, also call themselves "democratic socialists," but it's unclear what they mean by the term. When Sanders was asked what he meant by socialism, he said it was the realization that "we're all in this together." That's helpful.

Sanders, Ocasio-Cortez, and their ilk do not call for expropriating and nationalizing the means of production. (I'm not sure about Mamdani.) Instead, they want an even bigger welfare state, for instance, "Medicare for all." That's bad—the welfare state makes people poorer—but it's not socialism. They further illustrate their confusion by claiming that the Scandinavian countries are socialist, which they're not. They score high on rankings of economic freedom. That would be a strange sort of socialism, no?

This tilt toward a murkily defined socialism and communism suggests cultural and ethical considerations, not social science, are at work. These days, it's edgy and romantic to declare oneself a socialist, especially if you wear a Che Guevara T-shirt. I suppose the word democratic is intended to make socialism, the record of which is horrendous, sound humane. It does no such thing, no more than the word national makes socialism sound sweet.

At any rate, as the Cato Institute's Michael Chapman wrote this year:

A recent survey by the Cato Institute and YouGov paints a troubling picture: 62 percent of Americans aged 18–29 say they hold a “favorable view” of socialism, and 34 percent say the same of communism. This is shocking given that communism is responsible for 100 million deaths worldwide and is rooted in socialism, the same philosophy that spawned both Mussolini’s fascism and Hitler’s National Socialism. To favor socialism is to flirt with tyranny.

That is stunning, considering that free-market capitalism, however imperfectly practiced —that is, profit-motivated global investment and trade—has increased per-capita wealth and lengthened life spans worldwide by an astonishing degree over the last few hundred years. What used to be called the "Third World" got wealthier to the extent it had economic dealings with the developed world. If young people don't understand what economist and historian Deirdre McCloskey calls "the Great Enrichment," what does that say about government-run education?

What do fans of liberty and prosperity do about this? We can become better promoters of capitalism and bourgeois culture, which have enabled so many people to achieve such high living standards. In 1947 economist Ludwig von Mises, writing in Planned Chaos, said, "Nothing is more unpopular today than the free market economy, i.e., capitalism." That was shortly after World War II. Despite a few bright spots, how little things have changed! (Trump's devotion to global trade restrictions at least has brought out latent free-trade impulses in some people.)

Mises noticed something that is still true today, despite differences in detail:

Everything that is considered unsatisfactory in present-day conditions is charged to capitalism. The atheists make capitalism responsible for the survival of Christianity. But the papal encyclicals blame capitalism for the spread of irreligion and the sins of our contemporaries, and the Protestant churches and sects are no less vigorous in their indictment of capitalist greed. Friends of peace consider our wars as an offshoot of capitalist imperialism. But the adamant nationalist warmongers of Germany and Italy indicted capitalism for its “bourgeois” pacifism, contrary to human nature and to the inescapable laws of history. Sermonizers accuse capitalism of disrupting the family and fostering licentiousness. But the “progressives” blame capitalism for the preservation of allegedly outdated rules of sexual restraint. Almost all men agree that poverty is an outcome of capitalism. On the other hand many deplore the fact that capitalism, in catering lavishly to the wishes of people intent upon getting more amenities and a better living, promotes a crass materialism. These contradictory accusations of capitalism cancel one another. But the fact remains that there are few people left who would not condemn capitalism altogether.

How convenient to have such a scapegoat for your problems. Unhappy? Blame capitalism. Too few people will speak up for it.

Although capitalism is the economic system of modern Western civilization, [Mises wrote,] the policies of all Western nations are guided by utterly anti-capitalistic ideas. The aim of these interventionist policies is not to preserve capitalism, but to substitute a mixed economy for it. It is assumed that this mixed economy is neither capitalism nor socialism. It is described as a third system, as far from capitalism as it is from socialism. It is alleged that it stands midway between socialism and capitalism, retaining the advantages of both and avoiding the disadvantages inherent in each.

Mises rejected the equation of interventionism with socialism.

There are many supporters of interventionism who consider it the most appropriate method of realizing—step by step—full socialism. But there are also many interventionists who are not outright socialists; they aim at the establishment of the mixed economy as a permanent system of economic management. They endeavour to restrain, to regulate and to “improve” capitalism by government interference with business and by labour unionism.

For the market to work to the advantage of all people, it is not enough that property be owned in the strict legal sense. Legal title must be accompanied by real control. When private parties nominally own property while government authorities control property, that is fascism, even if people vote now and then. (Economist Charlotte Twight has coined the term participatory fascism.)

Mises made an important point about interventionism.

If within a society based on private ownership of the means of production some of these means [such as grocery stores] are owned and operated by the government or by municipalities, this still does not make for a mixed system which would combine socialism and private ownership. As long as only certain individual enterprises are publicly controlled, the characteristics of the market economy determining economic activity remain essentially unimpaired. The publicly owned enterprises, too, as buyers of raw materials, semi-finished goods and labour, and as sellers of goods and services, must fit into the mechanism of the market economy. They are subject to the law of the market; they have to strive after profits or, at least, to avoid losses.

Mamdani promises that his city stores will forgo profit and charge only wholesale prices. How then will they pay their expenses, such as wages? Mises addressed that issue:

When it is attempted to mitigate or to eliminate this dependence [on the market] by covering the losses of such enterprises with subsidies out of public funds, the only result is a shifting of this dependence somewhere else. This is because the means for the subsidies have to be raised somewhere. They may be raised by collecting taxes. But the burden of such taxes has its effects on the public, not on the government collecting the tax. [Emphasis added.]

Well, Mamdani may say, he'll tax the rich. It's not that simple, Mises noted:

It is the market, and not the revenue department, which decides upon whom the burden of the tax falls and how it affects production and consumption. The market and its inescapable law are supreme.

If you tax the rich, they will produce less and take more leisure. Or they will move—harming the nonrich, who will have fewer goods, services, and amenities. And more taxes to pay. Do politicians never learn?

But, bad as that is, it is still not socialism.

The system of the hampered market economy, or interventionism, differs from socialism by the very fact that it is still market economy. The authority seeks to influence the market by the intervention of its coercive power, but it does not want to eliminate the market altogether. It desires that production and consumption should develop along lines different from those prescribed by the unhindered market, and it wants to achieve its aim by injecting into the working of the market orders, commands and prohibitions for whose enforcement the police power and its apparatus of coercion and compulsion stand ready. [Emphasis added.]

Ah yes. Behind every progressive interventionist lurks the police force. We should be little comforted that our so-called democratic socialists are not true socialists, but only interventionists on steroids.

However, all the methods of interventionism are doomed to failure. This means: the interventionist measures must needs result in conditions which from the point of view of their own advocates are more unsatisfactory than the previous state of affairs they were designed to alter.

They might hope to produce abundance at low prices, but they will fail, as theory and history have consistently demonstrated.

Minimum wage rates, whether enforced by government decree or by labour union pressure and compulsion, are useless if they fix wage rates at the market level. But if they try to raise wage rates above the level which the unhampered labour market would have determined, they result in permanent unemployment of a great part of the potential labour force.

Government spending cannot create additional jobs. If the government provides the funds required by taxing the citizens or by borrowing from the public, it abolishes on the one hand as many jobs as it creates on the other. If government spending is financed by borrowing from the commercial banks, it means credit expansion and inflation. If in the course of such an inflation the rise in commodity prices exceeds the rise in nominal wage rates, unemployment will drop. But what makes unemployment shrink is precisely the fact that real wage rates are falling....

No less than the socialists, the interventionists despise consensual profit-driven market activity as unsightly and exploitative. This aversion is as much aesthetic as moral, but on both counts it is wrong. That Adam Smith's "system of natural liberty" has improved the lot of mankind, and will continue to do so if left unmolested, is a beautiful thing. Self-made blindness explains why so many people do not appreciate it. Workers and consumers are not victims. They are beneficiaries. The world is increasingly divided into haves and have-a-bit-mores. The have-nots have been moving on up, especially if they work at it.

Mises reminded us that capitalism is not about profits only. It's also about losses, which shines a whole different light on the matter.

In the eyes of the interventionists the mere existence of profits is objectionable. They speak of profit without dealing with its corollary, loss. They do not comprehend that profit and loss are the instruments by means of which the consumers keep a tight rein on all entrepreneurial activities. It is profit and loss that make the consumers supreme in the direction of business. It is absurd to contrast production for profit and production for use. On the unhampered market a man can earn profits only by supplying the consumers in the best and cheapest way with the goods they want to use. Profit and loss withdraw the material factors of production from the hands of the inefficient and place them in the hands of the more efficient. It is their social function to make a man the more influential in the conduct of business the better he succeeds in producing commodities for which people scramble. The consumers suffer when the laws of the country prevent the most efficient entrepreneurs from expanding the sphere of their activities. What made some enterprises develop into “big business” was precisely their success in filling best the demand of the masses.

Who loses when interventionists get their way? Regular people do.

TGIF: What Is Capitalism?

So, what is capitalism? The answer will depend on who's being asked. Language, like markets, basic law, and customs, is a spontaneous order. No one plans it. Words drift in their meaning in ways that probably can’t be fully explained. Language is a tool that people use to think and communicate, so it’s adapted according to needs, changing circumstances, and even confusion.

That doesn’t mean we can say nothing about words like capitalism. My views on that word have changed over the years; I once contributed to a book called Markets, Not Capitalism. The book was meant to show that the free market differs from capitalism. Is it right? Again, that depends on how one defines capitalism. As far as I can tell, most people who dislike capitalism also dislike the idea of a market-based society. Some prominent pro-market thinkers, Nobel laureate F. A. Hayek among them, disliked the word for a variety of reasons. 

At any rate, the word is not going away. Since no one controls the language, we should put communication before personal preferences. Let's define our terms clearly and then talk about reality.

Despite variation in the definition of capitalism, most people would agree that market orientation is at its heart. They evaluate the market differently, but it is the market that they are evaluating. So we have some common ground, even as we disagree over whether capitalism is a good or bad social arrangement or whether it conceptually includes or excludes a given practice.

I, along with many others, consider capitalism to be the social arrangement in which people are free to engage in the production and exchange of goods and services, typically for money. Left unmolested, that is what people do. Those activities generate prices, which reflect supply and demand and guide further action. To live is to act, which is to aim at ends by deploying means, which is to value. The root of this never-ending process is the wish to sustain life and to live in a particular way. (See the work of Carl Menger, Ludwig von Mises, and Ayn Rand for details.)

The institution of interpersonal exchange logically has presuppositions. It stands on a foundation. It presupposes that persons own themselves and the things they nonaggressively obtain; it also presupposes the security of contracts. These things can be violated in practice, but they are departures from the logic of the system. Historical capitalism developed over a thousand years as persons, their property (including their bodies), their contracts, and their enterprises came to be more and more respected—that is, as political power decentralized and, consequently, diminished, thanks in part to jurisdictional competition, that is, the power to vote with one's feet. (People disliked paying taxes for war and having their trade and investments disrupted.) Growing religious toleration played an important role in this process of individual liberation and spreading cooperation.

Where property and contracts became more secure, per capita wealth dramatically increased, setting an example for others. As Adam Smith put it, “Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things.”

This is not to say that injustice and aggression disappeared abruptly and completely. Of course, it did not. Who could have expected that? It would take time. Another way of saying this is that capitalism—to be clear, that means laissez-faire or free-market capitalism—was not fully achieved anywhere. It still hasn't been. But it would be wrong to attribute the great wealth generated by capitalism to injustice such as slavery and conquest. Advanced civilizations of the past conquered, plundered, and enslaved, but they did not produce astonishing, sustained, and widespread wealth. Capitalism and classical liberalism in Western Europe and America did something different, something special.

Societies can be judged by how close they came to achieving capitalism. We can distinguish particular practices and institutions as either capitalist or anticapitalist. It follows that crony capitalism, state capitalism, and political capitalism, etc., are not capitalist variations but moves away from capitalism (that is, from self-ownership, property rights, contract, and free exchange). Those labels are contradictions in terms because they entail limits on peaceful, productive market interaction. The predatory, which supposedly acts in the name of the collective, in effect makes itself the senior part-owner of what was or should have been private property. The system is no longer a fully market system, even if people who own capital ask for the intervention. Thus free-market capitalism is a redundancy.

For example, a political arrangement in which slavery and slave markets exist does not qualify as capitalism. Why not? Because in that basic respect, the arrangement does not fully embody self-ownership, property rights (which flow from self-ownership), and free exchange. Southern slave holders claimed that "their" slaves were property, but that was a category error because persons can be property owners, not property. Good Lockeans, the abolitionists called the slave holders "man stealers." 

Similarly, a political system in which politicians and bureaucrats may interfere with people’s property and free exchange through taxation, regulation, trade barriers, subsidies, government ownership, etc., should not be called capitalist. It would be a mixture of capitalism and interventionism or socialism.

We can sum up by saying that only laissez-faire capitalism—the consistent separation of state and economy—qualifies as real capitalism. Anything less than laissez faire is less than capitalism. The government cannot regulate an economy, which is an abstraction. What it can do is restrict real individuals in their peaceful, productive market interactions. Restriction requires the use or threat of aggressive force and violence. In contrast, a capitalist society is a humane society.

Call it what you will, the system that respects our freedom to engage in mutually beneficial market relations—and its prerequisites—is worth defending against its Classic Marxist and Marxist Lite detractors, who have to distort categories like “exploitation” to make their spurious case. Capitalism, despite not being fully embraced, ushered in an era of unprecedented personal freedom and sustained, widespread wealth. Capitalism is anti-exploitationism.

(I have not reinvented the wheel. Thus related reading: “The European Miracle” by Ralph Raico, “Reconsidering Gabriel Kolko: A Half-Century Perspective” by Robert L. Bradley Jr. and Roger Donway, "Capitalism, Socialism, and 'The Middle Way': A Taxonomy" by Bradley and Donway, "Beyond 'The Money-Making Personality': Notes toward a Theory of Capitalist Orthopraxy" by Roger Donway (Journal of Ayn Rand Studies 21:1 July 2021) and The Libertarian Mind by David Boaz (especially chapter 2: "The Roots of Libertarianism.")

TGIF: This Is America First

The Trump battle cry is America First. Revealingly, it is not Americans First. The former signifies, implicitly if not explicitly, national collectivism; the latter, individualism. To the extent Trump has a political worldview, it is not individualist. We cannot doubt that.

All of this is abundantly clear in his Iran policy, which is not just about Israel and Iran. This is not new. His seeming antiwar stance was an opportunistic political ploy. The Republican and Democratic wars of the 21st century were palpable fiascos, so of course he had to distance himself from them if he was to become the president. If he is good at anything, it is in finding his opponent's weakness. But what he says bears no necessary relation to what he believes.

Trump did not originally oppose America's wars. In a 2016 debate against his Republican primary opponents, he said George W. Bush had lied the country into war against Iraq, which is true. But the very next day, when confronted by an old army veteran in South Carolina, he slunk away from the charge, presumably so as not to offend the vet. In 2011, when the U.S.-led NATO assault on Libya was pending, Trump told Howard Stern that since "we" have troops in the neighborhood, they might as well take out Col. Qadaffi. Those are not good credentials for an antiwar candidate. I said from the start that he was not to be trusted.

No one should have expected America First to be linked to the freedom of individuals. Trump could have quoted John F. Kennedy's famous "Ask not what your country can do for you; ask what you can do for your country." For Trump, after himself, the nation is the only important unit. His foreign policy is of a piece with his mercurial yet steady protectionism and anti-immigrationism.

So we should not be surprised by his use of Israel to destroy Iran, which he has an obvious distaste for. It was clear in what he was saying for months before the immoral attack. The offer to negotiate over Iran's civilian nuclear program was a sham since it was always accompanied by the threat of military force. His cancellation of the solid Iranian nuclear deal during his first term was an unmistakable signal of what was to come when he thought the moment was right. As early as 2011 Trump tweeted that "America should not be pressuring Israel to show restraint against Iran." What more did we need to know?

What about MAGA? We'll have to see what happens, but I will be surprised by a wholesale jumping from the Good Ship Trump. Where would they go? Many will probably defer to Trump's claim that the imaginary Iranian bomb is a threat to America. Will MAGA follow Carlson and Bannon, or will they stick with El Presidente? We'll see.

If you have lingering doubts about Trump's honor, listen to him:

“Well, considering that I’m the one that developed ‘America First,’ and considering that the term wasn’t used until I came along [so wrong], I think I’m the one that decides [what it means]. For those people who say they want peace—you can’t have peace if Iran has a nuclear weapon. So for all of those wonderful people who don’t want to do anything about Iran having a nuclear weapon—that’s not peace.”

Who did MAGA think would be deciding, Laura Loomer and Marjorie Taylor Greene? (I don't want them to do the deciding either.)

By the way, no one really thinks Iran has or has even wanted nuclear weapons. That includes American and Israeli intelligence and the International Atomic Energy Agency. The ayatollah issued a fatwa against nuclear weapons as contrary to Islam long ago. That's inconvenient for Trump, so he declared that he does not care what his director of national intelligence, Tulsi Gabbard, thinks.

Yet no one doubts that Israel has such weapons. Unlike Iran, it has not signed the Nuclear Non-Proliferation Treaty and thus is not subject to international inspections.

Also by the way, the surest method to encourage Iran to build a nuke is to attack the country. Nothing would be more effective than a nuclear weapon to deter a future attack, as North Korea's Kim Jong Un knows and Col. Qadaffi learned too late.

Finally, you might think someone who threw around the phrase America First would show some respect for constitutional limits on his power. But we're talking about Trump. He recognizes no limits. 

Phony Noninterventionists

Call me naive, but I increasingly suspect that much of today's "left" is not antiwar on principle. Rather, it's anti-American war because, in its view, America (not just the government) is rotten to the core: bourgeois, racist, patriarchal, heteronormative, blah, blah, blah. If left-wingers (Marxists, heavy or light) were in charge, they'd likely support foreign intervention under the right conditions, e.g., fighting apartheid in South Africa (which indeed was bad) or Pinochet (also bad) in Chile, or saving Maduro (bad too) from a middle-class uprising in Venezuela. In the 1960s and 70s the so-called radical left favored the communists in the Vietnam War. It was not just against U.S. intervention, as many libertarians were. In the 1970s Noam Chomsky supported Vietnam's intervention in Cambodia; he also favored leaving some U.S. troops in Syria. I note that Max Blumenthal has lately called for intervention against Israel (bad). (By whom I don't know.)

If the left is interventionist at home, then why wouldn't it also be interventionist abroad? It has no principled objection to government power. It just wants aggressive force put to "good" use, such as managing other people's peaceful market relations.

Libertarians are the only comprehensive noninterventionists. The "left" may want the libertarians to tag along to demonstrate that its opposition to the U.S. empire is broad-based. That would make libertarians its useful idiots. I prefer another role, as antiwar libertarians. But deep down, the "left" likely thinks the libertarians are knowing or misguided shills for what they disdainfully call "corporate America"—which they are not. The goal is freedom.

Maybe we libertarians should be called Compnons.

TGIF: "You Didn't Build That"

Remember Barack Obama's profound 2012 campaign speech about success? Here's part of what he said:

There are a lot of wealthy, successful Americans who agree with me -- because they want to give something back. They know they didn’t -- look, if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something -- there are a whole bunch of hardworking people out there.

If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed [!] you to thrive.  Somebody invested in roads and bridges. If you’ve got a business—you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.

The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together. There are some things, just like fighting fires, we don’t do on our own. I mean, imagine if everybody had their own fire service. That would be a hard way to organize fighting fires.

So we say to ourselves, ever since the founding of this country, you know what, there are some things we do better together.... We rise or fall together as one nation and as one people, and that’s the reason I’m running for President—because I still believe in that idea. You’re not on your own, we’re in this together.

Obama was no outlier. Plenty of people would be willing to give that speech today, maybe even Donald Trump.

Where to start? Obama said that he knows wealthy people who want to "give something back." Why? Presumably because of their wealth and success. That makes no sense. If these people made their wealth by producing attractive goods for consumers (which is how most wealthy people get wealthy), then what's to give back? We consumers did not give them money as a favor. We engaged in voluntary exchange. We gave up $X to get product Y because we prefer what we got to what we gave up. They benefitted and we benefitted. Double profit, double "thank you," as John Stossel says. That's how trade works when it's uncoerced. No debt; nothing to give back. End of.

Second, superstar entrepreneurs likely are smarter and more perceptive about the future state of the market than most other people. I doubt they go around bragging about it or minimizing the role of "good breaks." They surely know that things other than sheer intelligence figure into success. But let's not be unrealistically egalitarian about it. Some people are better suited to be entrepreneurs than others. Many of the outside factors that Obama named were also available to others. Why didn't those others succeed?

Next, what's this buncombe about all of us rising or falling together? When a business fails to satisfy us, it falls. Its owners, managers, and employees have to find other work. Its investors lose out. But the rest of us have not fallen. The failed businesses's material factors are now available to produce things we want. The discharged employees are now available to make other things we want. Where's the general failure? Obama spoke collectivist nonsense. Something does—or should—unite people, but it's not what Obama had in mind. They have a stake in a free society, that is, a society in which the government does not try to manage their lives and market relations.

The rest of the passage is Obama's elaboration of this thesis: "If you’ve been successful, you didn’t get there on your own." Was he so ignorant of the case for laissez faire that he thought this was news for defenders of the unmolested market economy? Was he having a laugh? Ludwig von Mises, one of the 20th century's premier champions of individual freedom considered calling his economic treatise "Social Cooperation." That is the second most common phrase in Human Action, right behind "division of labor," which Mises sometimes called the "social division of labor."

So Obama was tackling the scrawniest of strawmen. He was being a demagogue. No market advocate ever suggested that lucrative businesses were built in isolated shacks in rural Montana. Businesses were always described as embedded in the complex network we call the market economy.

I modestly suggest that Obama and every one of his ilk read I, Pencil. That's Leonard E. Read's 1958 essay explaining why no one person can make something as commonplace as a pencil. On the contrary, it takes incredibly complex worldwide cooperation, and it happens without a central authority. The price system, rooted in private property in the factors of production and in trade, directs the myriad self-interested activities that entrepreneurs, under no one's orders, combine to produce the pencil. No kidding. I. Pencil was written three years before Obama was born. Read, founder of the Foundation for Economic Education, had a different lesson in mind from Obama's ignorant message. The former president had a collectivist, interventionist message. Read's was an individualist, free-market message. Read for the win.

Obama named particular things, such as the internet, which got started or built under government auspices. But, as usual, he overlooks what is not seen. (Also see "I, Website.") Obama thinks that if the government does not do something, it does not get done. But if the government did not build roads, bridges, airports, ports, schools, and the internet, would those things never have come into being? That's beggars belief. We know it's not true. People privately built public infrastructure before the government did. It didn't happen "on its own." Profit-seeking individuals and their free associations made it happen.

Businesses that relied on the infrastructure paid for its services. "Take what you want, said God, and pay for it," the Spanish proverb says. That's the market; no need for coercion. Why the mystery? Obama ignored all of the amazing things that free and private enterprise has created over the centuries, not without any assistance, but without government assistance. If he knows better, he's a demagogue.

Here's how Ludwig von Mises addressed the issue in Human Action in 1949, long before Obama  was born (but the year I was born):

The interventionists and the socialists contend that all commodities are turned out by a social process of production. When this process comes to an end and its fruits ripen, a second social process, that of distribution of the yield, follows and allots a share to each. The characteristic feature of the capitalist order is that the shares allotted are unequal. Some people—the entrepreneurs, the capitalists, and the landowners—appropriate to themselves more than they should. Accordingly, the portions of other people are curtailed. Government should by rights expropriate the surplus of the privileged and distribute it among the underprivileged.

Now in the market economy this alleged dualism of two independent processes, that of production and that of distribution, does not exist. There is only one process going on. Goods are not first produced and then distributed. There is no such thing as an appropriation of portions out of a stock of ownerless goods. The products come into existence as somebody’s property. If one wants to distribute them, one must first confiscate them. It is certainly very easy for the governmental apparatus of compulsion and coercion to embark upon confiscation and expropriation. But this does not prove that a durable system of economic affairs can be built upon such confiscation and expropriation.

Before the interventionists dispense more advice, they might learn some economics.

 

TGIF: Police-State Progressives

Progressives see themselves as, well, progressive. But they aren't. Even at their best, in opposing the national security state, they support massive government power in other realms of life. At heart they are social engineers. They seek a "moral equivalent of war," that is, regimentation without bloodshed. They are even anti-democratic when it suits them.

We can see all of this through the eyes of Ludwig von Mises. This is from his book Planned Chaos (1947; free audiobook here). Mises, of course, championed the unhampered market economy, or laissez-faire capitalism. He wrote:

In the market economy the consumers are supreme. Their buying and their abstention from buying ultimately determine what the entrepreneurs produce and in what quantity and quality. It determines directly the prices of the consumers' goods and indirectly the prices of all producers' goods, viz., labour and material factors of production. It determines the emergence of profits and losses and the formation of the rate of interest. It determines every individual's income. The focal point of the market economy is the market, i.e., the process of the formation of commodity prices, wage rates and interest rates and their derivatives, profits and losses. It makes all men in their capacity as producers responsible to the consumers. This dependence is direct with entrepreneurs, capitalists, farmers and professional men, and indirect with people working for salaries and wages. The market adjusts the efforts of all those engaged in supplying the needs of the consumers to the wishes of those for whom they produce, the consumers. It subjects production to consumption.

TGIF: Watch the Forest as Well as the Trees

It's always important not to miss the forest for the trees. U.S. government announcements, such as its report of the turnover to the Afghan government of the seventh and last military base in Afghanistan, Bagram, should lead no one to think that U.S. foreign policy has changed worldwide or even in that particular region. Far from it. This is true even if virtually all U.S. troops, except for 600 military personnel, most of them left to guard the U.S. embassy, have left Afghanistan, as reported by Politico. (Who knows what the special operations forces will be up to?)

White House spokesperson Jen Psaki (at 1:03) said, "We have every intention of continuing an ongoing presence in Kabul, which is continuing even after we bring our military who are serving home by the end of August." But will those people come home or be redeployed? Can we expect cuts in the military budget? That may hold a clue.

A month earlier Psaki said, "The United States will remain deeply engaged with the Government of Afghanistan to ensure the country never again becomes a safe haven for terrorist groups who pose a threat to the U.S. homeland." In part I translate this to mean that the military contractors need not lose any sleep.

Note that Psaki invoked the old "safe haven" case for being ready to do something more in Afghanistan--or anywhere else, really. This is the argument that if we aren't careful, certain failing countries could become headquarters for terrorist groups bent on attacking America or Americans. Chief case in point, according to the convention wisdom, is Afghanistan after the Russians left and the U.S. government turned its attention elsewhere. Then came al Qaeda, supposedly given safe harbor by the Taliban.

But the "safe haven argument is a myth—a false but widely believed tale used to justify continuing a policy of perpetual failure," Scott Horton has repeatedly pointed out. (See also Horton's invaluable Fool's Errand: Time to End the War in Afghanistan.) As Horton summarized in The American Conservative in 2017, apart from the particular case of Afghanistan, from which the tiny remnant of al Qaeda has long departed, "terrorists don’t need safe havens from which to strike. As we’ve seen in recent attacks in the United States and Europe, one or two men with rifles or a truck can do plenty of damage with no more preparation space than a rented apartment."

Moreover, he adds, "The few dozen core al Qaeda members who survived the initial Air Force bombing campaign in Afghanistan fled the country by the end of 2001 [largely to Pakistan]. They were a non-factor in the war against the Taliban regime, and at no point did they have major influence in the insurgency against the occupation that grew up in later years. If any did come back they would be irrelevant. Afghanistan is exile, as far as anyone can get from anywhere. It provides no special access to any Western target." (Emphasis added.)

Just to drive the point home, Horton goes on: "The September 11 hijackers, none of whom were Afghans, gained entry to the United States under regular tourist and student visas. The terrorists launched the attacks from Massachusetts, Virginia, and New Jersey. They had planned them in Malaysia, Germany, Spain, California, Florida, and Maryland." (See the article and the book for details on how distant the Taliban was from Osama bin Laden, despite U.S. government efforts to conflate the two.)

Needless to say, the safe-have myth has cost many lives, Afghan and American. And the myth seems not to have outlived its usefulness. The case for the United States as guardian of the globe echoes the myth, even when it is not invoked outright. Never forgetting 9/11 apparently means that the U.S. military and CIA need to be ready to pounce anywhere and everywhere. Nothing that goes on the world can be allowed to escape the attention of our best and brightest, lest we are caught asleep again.

But as Horton points out in the case of Afghanistan and the Middle East, the allegedly vigilant policies are actually counterproductive: rather than avert threats, they produce threats that then are used to justify U.S. intervention. It's been well-documented that 9/11 grew out of long years' of American intervention in the Middle East, especially the close ties with Israel and the Saudi monarchy and the 1990s child-killing sanctions against the Iraqis. (For details, in addition to Fool's Errand, also see Horton's encyclopedic Enough Already: Time to End the War on Terrorism.)

Provoking threats in order to respond to them is a very old game of state. Whenever U.S. troops suffer casualties in some remote place, I can almost hear a U.S. official saying, "That's why we need U.S. troops there. Without them, who would defend the U.S. troops there?"

In our efforts to keep track of the details of particular interventions, we must not lose sight of the big picture: the U.S. government's lethal and costly self-appointed mission to police the world and its rationalizations for that role. If liberty matters, it's a "little America" policy that we must promote.

TGIF: Democracy Can't Fix Socialism

However you feel about democracy, it can’t fix what’s wrong with socialism. 

In theory, modern representative democracy — unlike ancient Greek direct democracy — means that people vote for so-called representatives to fill various executive and legislative government offices. Those officials then enact and enforce rules that people are expected to obey under threat of fine and/or imprisonment. 

In theory, socialism has mostly been understood as direct government economic planning through public, that is, state, ownership of the means of production. In no real sense can a public own — meaning control — factories, farms, etc. In reality public ownership means control by the collection of politicians and bureaucrats called the state. Thus socialism until recently has been understood to entail abolition of private property, money, and markets. Competition, cooperation, and exchange give way to monopoly, command, and compliance.

(For the record, in the late 19th and early 20th centuries, socialism in some circles was an umbrella term for any “left-wing” alternative to [state or political] capitalism. Thus some left individualist anarchist libertarians, such as Benjamin Tucker and his compatriots, embraced the term while joining with other nonstate socialists to oppose corporatism, or neomercantilism, the alliance of state and favored business interests. In a linguistically more perfect world, socialism would denote the opposite of statism. In that sense, market anarchism is socialism because the arena of decision-making is society — the network of voluntary relations — rather than the state — the network of coerced relations.)

These days, at least in America, socialism no longer means only formal government ownership of the means of production and central planning. (It’s useless to complain: like it or not, words “move” and always have.) By socialism, Bernie Sanders and his followers intend it to mean a much bigger welfare state: “free” medical care for all, higher education, etc. Sanders says his models are in Scandinavia, but those are not socialist countries; rather they are highly market-oriented welfare states. At least these days, Sanders does not propose to abolish private property and markets. He does propose, of course, to interfere with market relations through taxation and decrees such as minimum-wage legislation. He seeks not to abolish markets but to forcibly modify their outcomes more to his liking. (Not that he deserves praise for that.)

Socialism (in the older sense) and welfare-statism, along with other forms of interventionism, for all their similarities and common shortcomings, are not identical, as Ludwig von Mises noted. (For the common shortcomings, find a copy of Israel M. Kirzner’s classic essay, “The Perils of Regulation: A Market Process Approach.” Also see Kirzner’s “Competition, Regulation, and the Market Process: An ‘Austrian’ Perspective.”) For example, Medicare-for-all and free college would be better described as welfare-statist because, as envisioned, the government would not own all the hospitals and colleges or employ the doctors, nurses, and teachers. The services would be regulated by bureaucrats and paid for by the taxpayers whether they like it or not.

I hasten to add that the difference I’m alluding to between socialism and interventionism is not moral but economic and institutional. Whether politicians and bureaucrats direct our behavior directly though government ownership or indirectly through regulation of nominally private arrangements makes little difference morally. Either way, our rights and freedom are violated.

Leaving the distinction between socialism and interventionism aside for now, let’s understand that socialism, however defined, would not have its intrinsic flaws eliminated by placing democratic in front of it, that is, by having officials elected. The reason is simple. If socialism were to have any chance of delivering on its extravagant promises, politicians, bureaucrats, and the public would have to know things that they could not possibly know. Here I invoke the rich critique of centralized power provided by Mises and F. A. Hayek. 

Mises showed, beginning a century ago, that the abolition of markets — which would necessarily include the elimination of authentic money prices — would bring chaos because the prices generated by people’s marginal decisions about scarce resources in markets are indispensable for economic calculation. Calculation is important because resources are scarce and we don’t want to waste them. Prices, which contain vital information, guide action throughout society. Without them, no one could make smart economic decisions for himself, much less for an entire society.

Hayek emphasized that central planners necessarily would be ignorant not only of prices but of the scattered, incomplete, and ever-changing underlying knowledge about supply and demand, including subjective consumer tastes. Specifically, he showed that much of the information that generates prices is not explicitly known data even to the relevant actors; we all possess tacit knowledge that influences our actions when we face unanticipated alternatives between two or more goods or courses of action. Not only is it the case that central planners could not know this information; we could not convey it to them even if we had a timely way to do so. Economic planning without true prices is like flying in a fog without instruments. The choice is between free pricing (which requires private property, markets, and free exchange) or what Mises called “planned chaos.”

Relevant to this discussion, Kirzner, in The Perils of Regulation, showed that a regulatory state would suffer from a similar “knowledge problem” as socialism. The regulators could not know what they would have to know to efficiently regulate an “economy” that accorded with the preferences of the individuals they ruled. Their ignorant interventions would distort prices, leaving the hampered economy less able to serve us. (In reality, there is no “economy”; there are only people who trade goods and services. We are the economy that demagogic politicians seek to regulate.)

So we ask: how could the knowledge problem be solved by democracy? As individuals, voters may know much about their own and their families’ situations, but how much do they know about their neighbors’, not to mention the rest of the country’s. I am certainly not qualified to choose among candidates offering competing plans for how much steel, aluminum, etc. should be produced next year and at what price, what kind of cars should be manufactured, or how much wages should rise. Are you? Freed markets (unmolested by politicians) do this reasonably well. And unlike politicians, markets constantly correct for errors.

Clearly, democracy cannot fix the economic flaws of socialism or interventionism. It can’t fix the moral flaws either. However you define socialism — unless it’s in the Tuckerite sense — it must entail state interference with peaceful cooperative interaction. (I reject the bogus distinction between personal and economic activities, just as I reject the distinction between personal and economic liberty. What’s more personal than our decisions about what to buy and sell?) Whether the intrusive government officials are elected or not makes no moral difference. Just as no autocrat ought to be able to tell me what peaceful actions I may and may not engage in, so no politician appointed by 50 percent plus one of voters ought to be able to tell me what I may and may not do.

I suppose the adjective democratic is meant to convey that the advocate wants socialism without the nastiness that Castro et al. brought with them: including the jailing in labor camps of various “undesirables” and enemies of the revolution, such as gays and independent-minded librarians. (It seems odd for Sanders to praise Castro for his literacy programs when the dictator also expressly rejected freedom of the press.) But as Hayek pointed out in The Road to Serfdom, what begins as democratic socialism may not stay that way. It could become autocratic socialism as the legislators talk endlessly about how exactly the economy should be planned or guided. After all, even if everyone believed that the government should plan society, it wouldn’t follow that everyone agreed on the plan’s details. So at some point an impatient president might decide to put a stop to the idle chatter and take matters into his own hands through executive order.

Democratic or not, socialism and interventionism are unfit for human beings. 

TGIF — The Goal Is Freedom — appears occasionally on Fridays.