Mises Wire |
- The Success of Socialist Newspeak
- How the "Bourgeois Deal" Enriched the World
- Benjamin Boyce on the Evergreen State Protests and Lessons for America
- Economic Prosperity Is a Prerequisite for All Other Kinds of Prosperity
- Yield Curve Control: Bubbles and Stagnation
| The Success of Socialist Newspeak Posted: 31 Mar 2021 12:00 PM PDT The socialists have engineered a semantic revolution in converting the meaning of terms into their opposite. In the vocabulary of their "Newspeak," as George Orwell called it, there is a term "the one-party principle." Now etymologically party is derived from the noun part. The brotherless part is no longer different from its antonym, the whole; it is identical with it. A brotherless party is not a party, and the one party principle is in fact a no-party principle. It is a suppression of any kind of opposition. Freedom implies the right to choose between assent and dissent. But in Newspeak it means the duty to assent unconditionally and strict interdiction of dissent. This reversal of the traditional connotation of all words of the political terminology is not merely a peculiarity of the language of the Russian Communists and their Fascist and Nazi disciples. The social order that in abolishing private property deprives the consumers of their autonomy and independence, and thereby subjects every man to the arbitrary discretion of the central planning board, could not win the support of the masses if they were not to camouflage its main character. The socialists would have never duped the voters if they had openly told them that their ultimate end is to cast them into bondage. For exoteric use they were forced to pay lip-service to the traditional appreciation of liberty. It was different in the esoteric discussions among the inner circles of the great conspiracy. There the initiated did not dissemble their intentions concerning liberty. Liberty was, in their opinion, certainly a good feature in the past in the frame of bourgeois society because it provided them with the opportunity to embark on their schemes. But once socialism has triumphed, there is no longer any need for free thought and autonomous action on the part of individuals. Any further change can only be a deviation from the perfect state that mankind has attained in reaching the bliss of socialism. Under such conditions, it would be simply lunacy to tolerate dissent. Liberty, says the Bolshevist, is a bourgeois prejudice. The common man does not have any ideas of his own, he does not write books, does not hatch heresies, and does not invent new methods of production. He just wants to enjoy life. He has no use for the class interests of the intellectuals who make a living as professional dissenters and innovators. This is certainly the most arrogant disdain of the plain citizen ever devised. There is no need to argue this point. For the question is not whether or not the common man can himself take advantage of the liberty to think, to speak, and to write books. The question is whether or not the sluggish routinist profits from the freedom granted to those who eclipse him in intelligence and will power. The common man may look with indifference and even contempt upon the dealings of better people. But he is delighted to enjoy all the benefits which the endeavors of the innovators put at his disposal. He has no comprehension of what in his eyes is merely inane hair-splitting. But as soon as these thoughts and theories are utilized by enterprising businessmen for satisfying some of his latent wishes, he hurries to acquire the new products. The common man is without doubt the main beneficiary of all the accomplishments of modern science and technology. It is true, a man of average intellectual abilities has no chance to rise to the rank of a captain of industry. But the sovereignty that the market assigns to him in economic affairs stimulates technologists and promoters to convert to his use all the achievements of scientific research. Only people whose intellectual horizon does not extend beyond the internal organization of the factory and who do not realize what makes the businessmen run, fail to notice this fact. The admirers of the Soviet system tell us again and again that freedom is not the supreme good. It is "not worth having," if it implies poverty. To sacrifice it in order to attain wealth for the masses, is in their eyes fully justified. But for a few unruly individualists who cannot adjust themselves to the ways of regular fellows, all people in Russia are perfectly happy. We may leave it undecided whether this happiness was also shared by the millions of Ukrainian peasants who died from starvation, by the inmates of the forced labor camps, and by the Marxian leaders who were purged. But we cannot pass over the fact that the standard of living was incomparably higher in the free countries of the West than in the communist East. In giving away liberty as the price to be paid for the acquisition of prosperity, the Russians made a poor bargain. They now have neither the one nor the other. [Excerpted from Liberty & Property.]  This posting includes an audio/video/photo media file: Download Now |
| How the "Bourgeois Deal" Enriched the World Posted: 31 Mar 2021 09:00 AM PDT Leave Me Alone and I'll Make You Rich: How the Bourgeois Deal Enriched the World McCloskey and Carden endeavor to explain one of the most striking facts of world history. Since about 1800, there has been an enormous increase in the average standard of living throughout the world. Before that date, almost everyone was poor, but things changed with what they call the Great Enrichment. "The Enrichment was really, really 'great': three thousand percent per person"(p. xi, emphasis in original). The authors contend "that human liberty—and not the machinery of coercion or investment, or even science by itself—is what made for a Great Enrichment, from 1800 to the present" (p. ii). The book is a "popular riff" (p. xvi) by Carden, condensed from three large volumes by McCloskey, but, in style as well as substance, the book is McCloskey's. McCloskey is one of the world's leading economic historians, especially well known for her work on the nineteenth-century British economy, and the book is at its strongest in the refutations presented of a number of theories of the Great Enrichment. According to Marxism, capitalism arose through plunder and slavery. (The authors prefer to speak of "innovism" rather than "capitalism," but I won't join them in using this ugly neologism.) McCloskey and Carden counter this with a devastating objection:
They reiterate this vital point in another key passage:
If imperialism did not create capitalism, neither did it sustain it.
What, then, did create the Great Enrichment? McCloskey and Carden say that it was new ideas.
There is a great deal to this, but McCloskey's theory seems open to objection, or, at any rate, qualification. As the authors rightly note, the Great Enrichment has spread all over the world, including to China, but high economic growth there has not been accompanied by political liberalism. This is not merely a matter of the inertia of the past failing to catch up with the theory professed in that country by the advocates of free market reforms. To the contrary, those who opened up the Chinese economy did not at all renounce the dictatorship of the Communist Party. Even applied to the model case of Britain, McCloskey's theory needs to be modified. Did the British classical liberals claim equal legal standing to the Crown and to the aristocracy? Certainly they claimed legal rights that the Crown could not set aside, but, with some exceptions, they did not go so far as the position McCloskey ascribes to them. If we cannot fully accept McCloskey's theory, we must acknowledge its considerable merits, based as it is on her profound knowledge of economic history. Unfortunately, this is not enough for her, and she ventures into disciplines such as the history of political thought, where she displays a less sure hand than she does in economic history. She tells that the
Contrary to what she here suggests, the state of nature for Hobbes is one without any government at all, not a society lacking an absolute monarch. People living in the limited monarchies of the Middle Ages, though their situation was for Hobbes unsatisfactory, were not in the state of nature. Further, although it is indeed true that Hobbes preferred monarchy to other forms of government, he recognized other sorts of rule as legitimate, and, though the point is much in dispute, he appears to have accepted Cromwell's rule after he returned to England. She is no better on Rousseau. She says that Rousseau "imagined that the right of a free and dignified individual to say no should be trumped by a mysterious 'general will,' which Rousseau and similarly placed experts or Communist Party officials could so easily discern, and impose on others by coercive measures" (p. 180). Though McCloskey is right that Rousseau opposed individual rights as understood by classical liberalism, she has grievously misrepresented the general will, which is established by popular vote under certain conditions, not imposed by experts. In a valuable discussion, McCloskey says that the "word honest shifted from aristocratic to bourgeois honor" (p. 149, emphasis in original). In its aristocratic meaning, "[h]onest here meant 'dignified and suitable to rank,' and the honesty was a matter of social standing…. The modern use of honest as 'truth-telling and keeping one's word' does appear in English as early as 1500, but the meaning 'honorable by virtue of high social standing' dominates its usage until the eighteenth century" (p. 150, emphasis in original). This, to repeat, is a valuable point, but if it is intended to suggest, as I think it is, that aristocrats before the bourgeois era would have felt free to lie in business dealings, since doing so would not tarnish their honor, that is dubious in the extreme. The teaching of the church, expounded for example by St. Augustine and St. Thomas, was that lying was absolutely forbidden. McCloskey writes in a clear and lively style, though it not to everyone's taste: a sample of what I have in mind is the "Double gak" comment in the passage on Hobbes quoted above. Fortunately, the longueurs in other books of hers about "Aunt Deirdre" are absent, perhaps excised by Carden. I am surprised at the solecism in this passage: "They will continue their virtuous labors with the hearty approval of we economists and economic historians and liberal philosophers." (pp. 52–53, emphasis added). The frequent references to Trump, evidently a King Charles's head for McCloskey, are a bit annoying. To sum up, in Leave Me Alone and I'll Make You Rich, McCloskey and Carden help us to understand the Great Enrichment, a central fact in world history. They rightly stress the importance that ideas about liberty and free markets played in bringing about that development, and they decisively refute Marxist and other myths about economic history. In my remarks above, I have ventured a few criticisms of the book, so I cannot complain against them that although I have left them alone, they have failed to make me rich.  This posting includes an audio/video/photo media file: Download Now |
| Benjamin Boyce on the Evergreen State Protests and Lessons for America Posted: 31 Mar 2021 08:30 AM PDT Benjamin Boyce is a writer, interviewer, and filmmaker who rose to fame by relaying his experiences as a student during the infamous Evergreen State protests in 2017. He talks with Bob about the lessons we can learn as the rest of the country follows the same trajectory of identity politics. Mentioned in the Episode and Other Links of Interest:
For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on Apple Podcasts, Stitcher, Spotify, and via RSS.  |
| Economic Prosperity Is a Prerequisite for All Other Kinds of Prosperity Posted: 31 Mar 2021 05:00 AM PDT Both Ludwig von Mises and Abraham Maslow understood that unless we first secure the benefits of economic progress, it becomes impossible to pursue higher human wants and needs. Original Article: "Economic Prosperity Is a Prerequisite for All Other Kinds of Prosperity" This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
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| Yield Curve Control: Bubbles and Stagnation Posted: 31 Mar 2021 04:00 AM PDT Central banks do not manage risk, they disguise it. You know you live in a bubble when a small bounce in sovereign bond yields generates an immediate panic reaction from central banks trying to prevent those yields from rising further. It is particularly more evident when the alleged soar in yields comes after years of artificially depressing them with negative rates and asset purchases. It is scary to read that the European Central Bank will implement more asset purchases to control a small move in yields that still left sovereign issuers bonds with negative nominal and real interest rates. It is even scarier to see that market participants hail the decision of disguising risk with even more liquidity. No one seemed to complain about the fact that sovereign issuers with alarming solvency problems were issuing bonds with negative yields. No one seemed to be concerned about the fact that the European Central Bank bought more than 100 percent of net issuances from eurozone states. What shows what a bubble we live in is that market participants find logical to see a central bank taking aggressive action to prevent bond yields from rising … to 0.3 percent in Spain or 0.6 percent in Italy. This is the evidence of a massive bubble. If the European Central Bank was not there to repurchase all eurozone sovereign issuances, what yield would investors demand for Spain, Italy or Portugal? Three, four, five times the current level on the ten-year? Probably. That is why developed central banks are trapped in their own policy. They cannot hint at normalizing even when the economy is recovering strongly, and inflation is rising. Market participants may be happy thinking these actions will drive equities and risky assets higher, but they also make economic cycles weaker, shorter, and more abrupt. Central banks have exhausted tools like repurchasing bonds and cutting rates, the diminishing returns are evident. Now they look to Japan, of all places, to look at yield curve–control policies. Many articles hail the Bank of Japan's curve control strategy as a big success. It has managed to keep bond yields inside a narrow range around 0 percent, since it adopted its yield curve control (YCC) policy in 2016. However, all this has done is disguise risk and lead the economy to massively indebted stagnation. Why? The central bank applies constant changes in its purchases of sovereign bonds with different maturities to prevent the yield curve from steepening and bond yields from rising above a certain level, which could cause an economic crisis as risk-off takes over. There is a deeply flawed view of markets in this theory. YCC does not reduce the risk of a crisis, simply disguises it by manipulating the price of sovereign bonds, the alleged lowest risk asset. As such, market participants always take significantly more risk than what they want or should, because the price of risk and the shape of the curve is artificially managed by the central bank. The idea behind YCC is that savers will stop purchasing or selling sovereign bonds when they perceive that the economic cycle is changing, and that investors' funds will be directed to finance the productive economy and put to work to invest in industry and provide credit to households. However, that does not happen. Market participants know that the shape of the yield curve is manipulated, and that risk is hidden, so most of the funds go to liquid, short-term assets and to refinance zombie firms that are already in high debt. Overcapacity is perpetuated, risky asset inflation soars, those that are already indebted are refinanced eternally and low interest rates push high liquidity to the least productive parts of the economy. It is no coincidence that the number of zombie firms has soared in the period when YCC was implemented. It is even less of a coincidence that unproductive debt has ballooned. Allowing rates to adjust to reality through free float would be more effective to transfer liquidity to the productive segments of the economy and strengthen the recovery. It would also reduce the incentive to overspend from governments. Central banks say they do not cut rates but just follow market demands. If that is the case, let them float freely. But they will not. YCC will likely be openly implemented by the ECB and the Federal Reserve, but it is in place de facto already. It will not solve anything. Just make bubbles larger and the economy weaker. Just like in Japan, it will not prevent a crisis nor make the economy better prepared to face it, it will not lead to stronger economic recoveries either. The only thing that YCC does is to perpetuate bloated government spending and zombify the economy at the expense of real wages and the productive sectors. Once YCC fails, like all other financial repression tools, central banks and governments will say that it did not work because they did not do enough. It is never enough when they use other people's money.  This posting includes an audio/video/photo media file: Download Now |
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