Tag Archives: Austrian School

My Associations with Liars, Bigots, and Murderers

by Thomas J. DiLorenzo
by Thomas J. DiLorenzo
Recently by Thomas DiLorenzo: How the Fed Fuels Unemployment

I speak of course of my recent visit to the U.S. House of Representatives to testify at Congressman Ron Paul’s first hearing on the Fed as chairman of the House Financial Services Committee. The Rayburn House Office Building, like most government office buildings in Washington, D.C., is a very creepy place. Knowing that the majority of the congress critters who reside in those offices support the unnecessary wars in Iraq and Afghanistan (and worse), and all the senseless death they have been responsible for, should send chills up any decent person’s spine.

As for the liars and bigots, one of the bigger ones, William Lacy Clay, a congressman from St. Louis who is (unfortunately) a member of the House Financial Services Committee, was in fine form. When he got his turn to question me he first denounced Austrian economics as some kind of fraud because it does not utilize the same positivistic methodology that, say, the Fed economists do. You know, the ones who were completely clueless about both the existence of the housing bubble and what to do once it burst. As Congressman Paul pointed out in the hearing, as late as 2008 Fed Chairman Ben Bernanke was still forecasting an increased pace of economic growth. As seen in a YouTube video entitled “Ben Bernanke was Wrong,” as late as mid 2007 Bernanke was assuring the public on CNBC that there was no sub-prime mortgage problem, and that the world economy was in fine shape. “He had no idea what he was talking about,” Congressman Paul correctly stated.

It was Austrian economists like Mark Thornton, on the other hand, who were warning of a housing bubbleyears before it burst. The Nobel Prize committee would be shocked indeed to learn that Austrian economics is fraudulent, having awarded the best-known Austrian of the twentieth century, F.A. Hayek, the Nobel Prize in Economic Science in 1974. But hey, what does a hack politician from St. Louis know about economics anyway?

Fed apologists are apparently in a state of panic over the first sighting of two economists – Richard Vedder and myself – appearing before their committee to (horrors!) criticize the Fed. Rather than ask me a single question, Congressman Clay decided to lie about my background with a libelous smear. First, some background information: About thirteen years ago three fellow academics from Emory University, the University of South Carolina, and the University of Alabama asked me if I would deliver a few lectures on the economics of the “Civil War” to a group of about twenty students at a week-long summer seminar. Two of them were historians and one was a philosopher, and they wanted to add some economics to the curriculum. They had just started something called “The League of the South Institute.” Since I lecture to students all over the country, and these were three fellow professors who I respected, I enthusiastically agreed. I recall it being a very enjoyable experience, as it always is when I get to teach students who attend a summer seminar for no college credit, just for the sake of learning. Such students are always among the very best that I encounter. That is the only connection I have ever had with the League of the South, which apparently still lists the titles of those old lectures somewhere on its Web site.

Clay lied through his teeth by stating that I “work for” the League of the South, and further stating that, consequently, I must endorse everything everyone associated with that organization has said in the succeeding thirteen years since I spoke to those students about the economics of the Civil War. This makes as much sense as saying that I endorse everything Congress says and does because I gave a presentation there on February 9.

Nor am I bigoted toward the people at the League of the South either, as is Congressman Clay. The oh-so-easily-offended Congressman Clay once told a white member of Congress whose Memphis, Tennessee district is 60% black that he could not collaborate with the Congressional Black Caucus for the benefit of his black constituents “until your skin turns black.” He’s apparently an Obama-style “racial healer.”

Having lied about my non-existent working relationship with the League of the South, making it sound like I pack my lunch and go to work there every day, Clay then declared that the Southern Poverty Law Center (SPLC) apparently disapproves of the League of the South. What a shocker! This is the same SPLC that accused the American Enterprise Institute in Washington, D.C. of “mainstreaming hate” by sponsoring a public debate on immigration policy. Their modus operandi is to label any individual or group that effectively criticizes their far-left, socialistic agenda as a “hater.” Apparently, associating with anyone south of the Mason-Dixon line in any way qualifies one as a “hater” and potential KKK recruit in the warped minds of the hateful and libelous SPLC.

Congressman Clay was not yet finished with his lies. I sent the committee 100 copies of my testimony along with a short one-page bio, as they requested. The bio listed several of my latest books, including Hamilton’s Curse and How Capitalism Saved America. The former discusses such economic topics as the origins and evolution of central banking in America, how America became a corporate welfare state, the economics of public debt, the founding of the Fed, the economic consequences of adopting the income tax, and more. How Capitalism Saved America covers such topics as the meaning of capitalism, anti-capitalism, the superiority of private versus government-operated transportation systems, the benefits to “the working class” of capitalism, the “robber barons,” the history and economics of antitrust, the role of the Fed in igniting the Great Depression, how the New Deal made the Great Depression worse, and the economics of the energy crisis of the ‘70s, among other things. And of course The Real Lincoln tells the story of the seventy-year political war over the “American System” of protectionism, corporate welfare, and a nationalized banking system that was finally cemented into place during the Lincoln administration.

The sleazy Congressman Clay, however, claimed that his crackerjack staff informed him that I have written nothing about economics in the past 15 years. My writings are all about history, he said, oblivious to the fact that economic history is a very relevant field to the question of the performance of the Fed over the past century. Indeed, Ben Bernanke himself claims to be an economic historian, having published numerous academic journal articles on the Great Depression. Several of my books discuss the origins of the first central bank, the Bank of the United States; its (abysmal) performance; its destruction by President Andrew Jackson; its replacement by the Independent Sub-Treasury System, Abraham Lincoln’s critiques of that system; the adoption of the National Currency Acts and Legal Tender Acts by the Lincoln administration; how that system performed over the next fifty years; the creation of the Fed; and its performance. Clay claims that, according to his crackerjack staff, there was nothing in all of this that would be relevant to a hearing on monetary policy.

Congressman Clay slithered out of the hearing room (shortly after the notorious Barney Frank vacated the premises) while a couple of his equally odious, far-left compatriots threw softballs at “their” witness, whose main argument was that the so-called Great Recession was caused by the bursting of the housing bubble, which in turn caused consumers to begin acting more responsibly by spending less and saving more. He didn’t put it that way, of course, but instead made the age-old (and thoroughly discredited) Keynesian argument that spending, and not savings, investment, production and work, is what causes economic growth and job creation. He made no mention at all in his prepared statement of any possible cause of the housing bubble in the first place. That would have been dangerous, for everyone in the room would have pegged the Fed as the Prime Suspect. But at the very end of the hearing he did offer his theory of the boom-and-bust cycle: Prosperity comes about whenever the government hires more bureaucrats and/or gives them more responsibilities; recessions occur whenever government cuts back on the number of bureaucrats and/or their meddling in the private sector. Bursts of regulation, he said, are the cause of prosperity, whereas deregulation is the cause of recessions and depressions. The Democrats on the committee sat there smiling and nodding their heads in approval. Do I really have to comment about such an asinine theory?

February 11, 2011

Thomas J. DiLorenzo [send him mailis professor of economics at Loyola College in Maryland and the author of The Real Lincoln; Lincoln Unmasked: What You’re Not Supposed To Know about Dishonest Abe and How Capitalism Saved America.His latest book is Hamilton’s Curse: How Jefferson’s Archenemy Betrayed the American Revolution – And What It Means for America Today.

Copyright © 2011 by LewRockwell.com. Permission to reprint in whole or in part is gladly granted, provided full credit is given.

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The Elitists Will Not Change Even If they Say They Will.

Our Interests and Their Interests

by Murray N. Rothbard

Excerpted from Rothbard’s 1978 preface to Ludwig von Mises‘s The Clash of Group Interests and Other Essays

In the 20th century, the advocates of free-market economics almost invariably pin the blame for government intervention solely on erroneous ideas – that is, on incorrect ideas about which policies will advance the public weal. To most of these writers, any such concept as “ruling class” sounds impossibly Marxist. In short, what they are really saying is that there are no irreconcilable conflicts of class or group interest in human history, that everyone’s interests are always compatible, and that therefore any political clashes can only stem from misapprehensions of this common interest.

In “The Clash of Group Interests,” Ludwig von Mises, the outstanding champion of the free market in this century, avoids the naïve trap embraced by so many of his colleagues. Instead, Mises sets forth a highly sophisticated and libertarian theory of classes and of class conflict by distinguishing sharply between the free market and government intervention.

It is true that on the free market there are no clashes of class or group interest; all participants benefit from the market and therefore all their interests are in harmony.

But the matter changes drastically, Mises points out, when we move to the intervention of government. For that very intervention necessarily creates conflict between those classes of people who are benefited or privileged by the State and those who are burdened by it. These conflicting classes created by State intervention Mises calls castes. As Mises states,

Thus there prevails a solidarity of interests among all caste members and a conflict of interests among the various castes. Each privileged caste aims at the attainment of new privileges and at the preservation of old ones. Each underprivileged caste aims at the abolition of its disqualifications. Within a caste society there is an irreconcilable antagonism between the interests of the various castes.

In this profound analysis Mises harkens back to the original libertarian theory of class analysis, originated by Charles Comte and Charles Dunoyer, leaders of French laissez-faire liberalism in the early 19th century.

But Mises has a grave problem; as a utilitarian, indeed as someone who equates utilitarianism with economics and with the free market, he has to be able to convince everyone, even those whom he concedes are the ruling castes, that they would be better off in a free market and a free society, and that they too should agitate for this end. He attempts to do this by setting up a dichotomy between “short-run” and “long-run” interests, the latter being termed “the rightly understood” interests. Even the short-run beneficiaries of statism, Mises asserts, will lose in the long run. As Mises puts it,

In the short run an individual or a group may profit from violating the interests of other groups or individuals. But in the long run, in indulging in such actions, they damage their own selfish interests no less than those of the people they have injured. The sacrifice that a man or a group makes in renouncing some short-run gains, lest they endanger the peaceful operation of the apparatus of social cooperation, is merely temporary. It amounts to an abandonment of a small immediate profit for the sake of incomparably greater advantages in the long run.

The great problem here is: why should people always consult their long-run, as contrasted to their short-run, interests? Why is the long run the “right understanding”? Ludwig von Mises, more than any economist of his day, has brought to the discipline the realization of the great and abiding importance of time preference in human action: the preference of achieving a given satisfaction now rather than later. In short, everyone prefers the shorter to the longer run, some to different degrees than others.

How can Mises, as a utilitarian, say that a lower time preference for the present is “better” than a higher? In brief, some moral doctrine beyond utilitarianism is necessary to assert that people should consult their long-run over their short-run interests. This consideration becomes even more important when we consider those cases where government intervention confers great, not “small,” gains on the privileged, and where retribution does not arrive for a very long time, so that the “temporary” in the above quote is a long time indeed.

Mises, in “The Clash of Group Interests,” tries to dismiss war between nations and nationalisms as senseless, at least in the long run. But he does not come to grips with the problem of national boundaries; since the essence of the nation-State is that it has a monopoly of force over a given territorial area, there is ineluctably a conflict of interest between States and their rulers over the size of their territories, the size of the areas over which their dominion is exercised.

While in the free market, each man’s gain is another man’s gain, one State’s gain in territory is necessarily another State’s loss, and so the conflicts of interest over boundaries are irreconcilable – even though they are less important the fewer the government interventions in society.

Mises’s notable theory of classes has been curiously neglected by most of his followers. By bringing it back into prominence, we have to abandon the cozy view that all of us, we and our privileged rulers alike, are in a continuing harmony of interest. By amending Mises’s theory to account for time preference and other problems in his “rightly understood” analysis, we conclude with the still less cozy view that the interests of the State-privileged and of the rest of society are at loggerheads – and further, that only moral principles beyond utilitarianism can ultimately settle the dispute between them.

Reprinted from Mises.org.

Murray N. Rothbard (1926–1995) was dean of the Austrian School, founder of modern libertarianism, and chief academic officer of the Mises Institute. He was also editor – with Lew Rockwell – of The Rothbard-Rockwell Report, and appointed Lew as his literary executor. See his books.

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Rethinking Intellectual Property: History, Theory, and Economics

Mises Daily: Friday, October 22, 2010 by 

In previous decades libertarians viewed intellectual property as a boring and technical area of the law, the province of legal specialists. They also assumed it to be a legitimate, if arcane, type of property in a capitalist, free-market society. After all, it’s in the Constitution, and Ayn Rand blessed it. But we don’t ignore it anymore, and we don’t take its legitimacy for granted. We can’t. The injustices of IP have multiplied in the Internet age and are staring us in the face.

The advent of the Internet, digital information, and easy file-sharing and duplication have been met with ever-more draconian enforcement of the state’s IP law, and with incessant lobbying for legislation to make IP stronger and last longer. Just as the state wants to tax everything that moves, intellectual properteers want to cover ever-more subjects of life with IP protection. But everyone — the young, students, and libertarians — copies files, and we all regularly hear stories about insane patent and copyright lawsuits. Single moms and college students are sued for file-sharing. The IP barons seek three-strikes-and-you’re-out laws banishing accused offenders from the Internet for life. They seek international enforcement of their national monopoly rights, to harass street vendors in third-world countries. The legislators, who are in their pockets, have already outlawed the possession of devices that might be used to crack encryption codes. Their propaganda — in TV commercials, video games, magazine ads, and unskippable warnings at the beginning of DVD movies — hectors kids and college students about how uncool it is to copy.

We hear regularly about multimillion- or even billion-dollar patent lawsuits, and about the millions of dollars spent by corporations on patent attorneys and litigators just to cross-license with each other, leaving smaller companies outside the walls of the barriers to entry erected on these patent arsenals. In the name of IP, books are banned, movies are ordered destroyed, singers are prevented from singing, car owners prevented from photographing their own cars, churches are prohibited from having Super Bowl parties, and imports of watches and reimports of drugs are blocked. And a little mouse keeps getting his life extended, thanks to copyright — from the original 14 years to over 100. Trumped-up charges of IP infringement are used as an excuse by the government to investigate political opponents.[1] IP may still be arcane, but it’s not boring anymore. Scary and outrageous, maybe, but not boring.

Everyone knows something is wrong here. Everyone. Except perhaps for patent lawyers, federal judges, and Orrin Hatch. I take that back. I think even most patent lawyers know something is wrong. But mired in a mainstream, quasi-statist mindset, most people are unable to think clearly about this issue. For libertarians — especially those with a principled view of individual rights and an understanding of Austrian economics — there is more hope.

We must start by taking a close look at the traditional libertarian assumption that IP is, in fact, a legitimate type of property right. And it turns out that advocates of the free market have made a mistake all along. Patent and copyright, to take the two worst manifestations of IP, are nothing but state monopolies that violate property rights. IP is antithetical to capitalism and the free market.

And should this be any surprise? Copyright is rooted in censorship. No wonder it still leads to censorship today. Patent law finds its origins in mercantilist monopoly grants, and even legalized plunder — letters patent were used to legalize piracy in the 16th century — making it ironic for IP to be used against modern-day “pirates” who are not real pirates at all.

Once IP is seen this way, the scales fall from one’s eyes. It’s a transformative moment in one’s libertarian life, akin to the moment when one finally admits to himself that even the minimal state is criminal and thus adopts anarchism. Realizing that IP is not part of a free-market order makes possible a reassessment of aspects of libertarianism, economics, or social thought hitherto neglected or seen confusingly through the IP haze.

But this does not mean that once you realize IP is unlibertarian that is all there is to know. There is so much more. This is a difficult subject in the sense that it requires serious thought, not just a quick intuition. As noted above, libertarians are beginning to grapple with this issue in recent years as we enter the digital-information age. The realization that IP is incompatible with libertarianism is forcing a rethinking about topics that have been neglected or taken for granted.

While the fairly recent advent of the digital revolution has caused most libertarians to turn their attention to this issue, I started focusing on this issue intensely almost 20 years ago, as a libertarian beginning to practice patent law. I have been criticizing the validity of IP in print since 1995,[2] and I kept learning as other insights unfolded in the ensuing fifteen years. The history of IP is illuminating. For example, it was not simply invented by infallible, well-intentioned, protolibertarian framers of the Constitution, but originated in censorship and mercantilism. Seen in this light, IP is seen as another mercantilist-corporatist state intervention in the free market. And one simply must have a sound, coherent, and libertarian understanding of property rights, the nature ofhomesteading, and the nature of contractual exchange, to understand the IP issue. Or, rather, in wrapping your head around IP, you hone and deepen your understanding of property rights, and make new connections. In so doing, new insights become possible, indeed inevitable.

To develop an understanding of property, contract, and homesteading sophisticated enough to understand the nature of IP and exactly how and why it does not fit into libertarianism and the free market, you must look closer at the nature of homesteading (Locke), contract theory (Evers-Rothbard), and at the nature and function of property rights. This last category, in particular, provides a good illustration of why Austrians are especially suited to libertarian theorizing, as it requires a close study of praxeology and the very structure of human action. On this topic, we must examine the work of Austrian luminaries such as Mises, Rothbard, and Hoppe to fully appreciate the relationship between scarcity and property rights, and the unique role of ideas and emulation in a free market and in society in general.

The purpose of my Mises Academy course, “Rethinking Intellectual Property: History, Theory, and Economics” (six weeks, starting November 1, with Monday evening lecture/question-and-answer sessions), is to explore these issues in detail. The history of IP is little known; we will cover it, and expose its statist, mercantilist, monopolistic origins. Advocates of IP are often shamelessly ignorant of the nature and details of the very system they support; even skeptics and critics are often unclear about what IP law is. The course will therefore provide an overview of modern intellectual-property law, distinguishing between the various types of IP, with examples and illustrations.

The course will explore and offer critical analysis of various utilitarian and deontological justifications offered for IP. We will seek to analyze the proper relationship between property, scarcity, and ideas, and to integrate the proper perspective on IP and the nature of ideas, emulation, and information with Austrian economics and libertarian theory.

As to putting some of these ideas into practice, the course will conclude by studying or proposing various legal and political reforms that might be implemented. Finally, because even those skeptical of IP naturally ask, “but how would I make money doing X without copyright and patent?,” we will discuss likely types of market and social institutions and practices that could be expected to arise in a post-IP world.

Here are some of the topics that the course will cover:

  • The statist origins of patent and copyright, and how IP, used to persecute “pirates” today, was used in the past to support actual piracy;
  • The types of IP, and the difference between copyright and patent — and trade secret, trademark, moral rights, reputation rights, database rights, and sui generis IP rights like boat-hull designs and semiconductor maskwork protection;
  • Problems with utilitarian arguments in general, and with utilitarian arguments for IP;
  • Why empirical arguments for IP’s “success” are flawed;
  • How open-source software depends on IP;
  • Why it’s almost impossible to get rid of copyright, and why it’s not hypocritical to oppose IP and still “have” a copyright;
  • Why patent and copyright cannot originate in the common law (also: what is wrong with legislation, anyway; and what “common law copyright” was; bonus: what’s a “poor man’s patent”);
  • What is the most libertarian type of copyright license to use in today’s world;
  • The relationship between scarcity and property;
  • Homesteading theory, the nature of human action and contract, and their relationship to property and scarcity;
  • Why IP cannot be based on contract;
  • How most patent lawsuits have nothing to do with “copying”;
  • Central mistakes and confusions of natural-law arguments for IP;
  • Common fallacies and mistakes of pro-IP arguments, such as the implicit idea that there are property rights in labor, or that creation is an independent source of rights;
  • What Mises, Hayek, and Rothbard, as well as other notable economists such as Fritz Machlup, thought about IP;
  • The IP arguments of early libertarians like Benjamin Tucker and Lysander Spooner;
  • Legal and political reforms to improve or abolish IP; and
  • Market and social institutions and practices that would arise in a post-IP world.

As noted above, coming to grips with IP is not easy. Thinking it through helps firm up the case for property rights and contract. And the implications of what we learn extend far beyond just this area; it reaches into social theory and competition theory as well.

Mises Academy: Stephan Kinsella teaches Rethinking Intellectual Property: History, Theory, and Economics

Those already convinced by the general argument against IP thus have much to learn in this course, which will deepen and extend their understanding of not only IP theory but also libertarian theory and economics. The course is also ideal for those who are on the fence, or who are confused, about IP; no intellectual conformity is required. Libertarians who think there are good arguments for IP are also welcome — at the least, they can test their arguments against the best we critics have to offer, and perhaps strengthen, modify, or deepen their own views about the nature of ideas, government, and property rights. (For further details about the course, see my interview about it with Jeff Tucker.)

This should be a fun course. I look forward to sharing ideas with you!

Notes

[1] Some examples are collected in my post “The Patent, Copyright, Trademark, and Trade Secret Horror Files.”

[2] See my various IP-related publications here.

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About the Author

Photo of Stephan    Kinsella

Stephan Kinsella

Stephan Kinsella is an attorney in Houston, director of the Center for the Study of Innovative Freedom, and editor of Libertarian Papers. See his blog. Send him mail.

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Intellectual Freedom and Learning Versus Patent and Copyright

Introduction

I’ve given several speeches about intellectual property (IP).1 Tonight I’ll take a somewhat different approach to the subject. Let me ask you a general question. Why are you here at this great (government) school? It’s to have fun, right? But it is also to learn; that is the basic purpose of education: to learn. To be sure, we learn things all the time. A university is a more formalized way of learning, but learning as a general matter is very important. This may sound like a trite observation. We make these comments all the time: “Education is important. Learning is good.”

The Role of Learning and Knowledge in Human Action

But this leads me to the focus of my talk, which is about learning and the importance of information and knowledge, and copying and emulation on the market and in life in general. So let’s think about how learning is important and how it’s used in everyday life.

Ludwig von Mises, the famous Austrian economist, the father of modern Austrian economics, systematized the study of human action and gave it a name: praxeology. This is the study of the logic of human action. Mises analyzes action in very simple, elementary terms. He breaks it down. I want you to think about it. If you haven’t heard of praxeology, don’t be daunted by the expression. The idea is to look at what the components of human action are; what we do every day, all the time.2

The Structure of Human Action: Means and Ends

When a human acts, what is he doing? He looks around the world. He chooses an end or a goal that he wants to achieve, some purpose of his, something he wants to happen, something that would not happen without his active intervention in the world. So he chooses one action over another. He chooses his highest value action or end, and demonstrates this preference by his action.

So we have a chosen end, or goal. But how does an actor achieve the goal he has chosen? He has to select certain means. This is what Mises and the Austrians call means: things that are physically efficacious, things that let you causally interfere in the world to achieve some desired goal.

Let’s take an example. You’re all eating now so let’s take a food example. Let’s say you’re hungry. So you say, “I know I like cake. I know I like chocolate cake. I think I’ll try to acquire a chocolate cake.”

You can see right off the bat that knowledge has entered the picture; the knowledge of what you like. Maybe you’ve learned this from experience, but knowledge is already playing a role in your decisions and actions. It has informed your choice of ends.

So how do you achieve your end? How do you get the chocolate cake? Well, you might obtain a recipe for cake and get the ingredients and tools to make the cake: mixing bowl, eggs, flour, spoon, kitchen, oven. Then you spend some time and effort and make a cake. You make that cake instead ofwatching television or getting your car washed or changing your clothes or making a vanilla cake.

This illustrates that human action is the purposeful use of means to achieve a desired end or result.3 Notice that the means you employ have to be physical or scarce resources, things that are real things in the world, things that you can affect, like the mixing bowl and the oven.4 This is what you employ to achieve your goal. The Austrians, especially Mises, go into the logical structure of human action, which we just discussed, and show that it implies so many things.5 For example, it implies opportunity cost. You choose this goal instead of the other ends. The things that you did not choose are the opportunity cost of your action.

Action also presupposes causality. You have to believe there is a way to achieve your result by manipulating the world in accordance with time-invariant causal laws. The structure of human action also has the concept of profit and loss built in, which is not only a monetary concept, but a psychic concept. Not psychic in the Shirley MacLaine sense, but psychic in the sense of pertaining to mental phenomenon, such as value and ends. For example, if you achieve your goal, which is to obtain a nice chocolate cake, and if it is as you envisioned it, and if you enjoyed it like you expected that you would, then you’ve achieved a profit. If it turns out to be a failure or you don’t enjoy it for some reason, then there is a loss.6

Knowledge as a Guide to Action

Where does this leave the role of learning? Learning is important because it is how we acquire information. Information is important because it gives us knowledge of how the world is. The more knowledge you have, the wider is your universe of choices. You have more ends to choose from, for example.7

Let’s say one person only knows the possibility of making a vanilla cake or a chocolate cake. If he learns that it’s possible to make a coconut cake, now he can choose between three possible goals. So his knowledge of the ends can expand and give him a wider array of choices.

Importantly, you also have to have knowledge of means and causal laws of the world because this informs your choice of means. To be able to choose a given end, you also need to know how to achieve it. You need to have a recipe.8 I don’t mean only food recipes. A recipe in this sense is just a general way to do something by exploiting resources in the world to achieve some end.

You know, for example, that if you take an egg, some flour, and chocolate, mix them in a certain way, and bake it, then, after a while, you have something that is edible. So the role of knowledge in action is to guide action. It is not the means of action. For example, you might know five different ways of getting the cake you desire. One may be to steal the cake. It’s immoral, but it’s a possible way. One may be to bake the cake. Another may be to purchase the cake. Yet another is to hire someone to bake the cake for you. So, in other words, the more knowledge you have, the wider the universe of ends and means that you have to draw on. This is the reason why learning is good.

Consider the great creators in the past — Shakespeare, Michelangelo, Bach, say — they drew upon knowledge that they acquired from the culture they were born into. Even the greatest of inventors, innovators, and creators didn’t think of everything on their own.

Scarcity, the Free Market, and Abundance

Now, let’s think about the role of scarcity in the free market. Given the above-mentioned understanding of what human action is, this very simple structural view of human action — that we use knowledge to guide our choices of ends and of what means to use to achieve the chosen ends — what is the role of external resources? That is, external objects, scarce things in the world? The role of these things is to be used by men to achieve their ends. Knowledge guides your action. It helps you choose what you want to do.

So reflect on the purpose of the free market system. What is its purpose, its role? What is its function or result? It is to help us achieve abundance. We live in a world of scarcity. We don’t live in the Garden of Eden.9 We live in a world where survival is not easy. It’s difficult. We have to find ways to survive because there is scarcity. There aren’t bananas hanging from every tree, enough for everyone to survive off of, but the free market operates to unleash creative energy and to allow tremendous productivity.

If you think about it, although we have scarcity and there is nothing we can do about this fundamental fact of the universe, the free market, in a way, helps us fight and overcome this situation.10 The thing is, the only way you can do this is by having a free market. A free market has to be built on private property principles. The reason we have to have private property is because these things are scarce. Economists call them rivalrous because you can have rivalry or fighting over them. For example, for a productive use to be made of the spoon, in the cake example, someone has to own the spoon. Someone has to be the one person who has the right to control that spoon. How do other people know that a given resource is owned, and who owns it? Property rights set up objective borders. They tell you who owns things. They’re visible and observable.11

This doesn’t mean there is no crime. This doesn’t mean that everybody respects these property rights. There can be thieves, but at least with thieves we can theoretically deal with them with crime prevention techniques. Paraphrasing Hans-Herman Hoppe, thieves and criminals are just a technical problem.12 People who want to live in harmony and use these resources productively have to have a system of property rights to allocate the use of the spoon.

Sometimes it’s said that libertarians believe in property rights and that other political systems do not uphold property rights. This is true in a sense, if you mean property rights in a particular way, but if by “property rights” you mean the right to control a scarce resource, which is what property — ownership — is,13 then every system on the face of the earth upholds some form of property rights. Every system on the earth will have a legal rule that says who is the owner of this platform, who is the owner of that factory, who is the owner of your paycheck.

For example, in the modern quasi-socialist welfare state that we live in today, the ownership rule is that the government owns about half of my paycheck. It’s clear there are property rights. It’s just that I only have about half and the government has the other half.

So in every society the legal system assigns an owner to a given contestable resource. What’s unique about libertarianism is not that we believe in property rights; everyone does. Rather, it’s our particular property rights scheme, which is basically the spinning out of the Lockean idea that the person who owns a given contested resource is the first user of it, or someone that he sold or gave the property to. The purpose of property rights is to permit us to peacefully, productively, and cooperatively use these things that are, unfortunately, scarce and cannot be used by more than one person at a time.14

Cooperation, Emulation, and Competition

I don’t know if all of you have heard of the Misesian “calculation argument,” but in the 1920s, Ludwig von Mises published a seminal paper that explained why socialism cannot work, why economics is literally impossible under full-fledged socialism.15 The reason is there is no way to compare competing projects unless you can do so in cardinal, numerical terms. It’s a very simple idea. You can’t compare building a bridge to planting an orchard. They’re not comparable units. Mises realized that in a free market system with money prices, everything resolves in terms of money. You can compare with money prices. The problem in socialism is you don’t have real money prices. You don’t have real money prices because there is no private property in the means of production. This is the basic insight of Mises as to exactly why a private property system permits the free market to be prosperous and to generate wealth and to fight this condition of scarcity.

The market is producing more things all the time. It doesn’t ever eliminate scarcity, but it fights it. If we had the government off of our backs, you could probably buy a Mercedes for $500. You could buy a microwave oven for a penny. It would not be infinitely plentiful, but it would be so plentiful everyone could have what they wanted.16

What are the key elements of a free market economy that allow this to happen? One is cooperation. The free market, by setting up property borders, allows people to cooperate instead of fighting over a resource.

It also gives rise to competition. My friend Jeff Tucker, of the Mises Institute, related to me a really good formulation of what competition is that was given to him by Larry Reed who is now the president of FEE, the Foundation for Economic Education. Reed’s formulation is “competition is the striving for excellence in the service of others.” That’s true. That’s what it is. You try to constantly improve what you’re making to try to please the customer. This gives rise to a relentless effort on the part of the people in the market to lower cost, to make things more efficiently, to serve customers the best you can because you’re in competition with others.

But we’ve left out one thing. Remember we talked about human action. A key aspect of human action is knowledge. You have to have knowledge to guide your actions. So how does this relate to the market? What’s the role of knowledge in human action, in the market context? It’s emulation.17 If you see someone successful in the market, you emulate them. This is how competition arises. You see someone attracting customers. Let’s say some guy invents a slushee stand and he’s getting a lot of customers. You might build your own slushee stand to compete with him. You copied his idea. So what? Customers are better off. Now the original guy might improve his slushee stand. He might offer more flavors.

This relentless striving to please the customer benefits everyone. This is the process of the market and it presupposes the idea of copying information, learning information, emulating. Competition means you can compete with someone, but you have to respect their property rights. You cannot trespass against them. You can’t steal your competition’s property, but you can “steal” their customers because they don’t own their customers.

Let’s tie this back to the structure of human action. Remember, we said human action uses means and it is guided by knowledge. So the means of action need to be privately owned only because they’re scarce. That’s why we have to have property in those things. Now, you can’t say scarcity is a bad thing, as it’s part of the nature of reality, but it’s definitely a challenge. We humans have to try to overcome scarcity. The free market allows us to create wealth.

Creation of Wealth versus Creation of Property

Now, I want you to think about this for a second. What does it mean to create wealth? Does it mean to actually create an object out of thin air? No. It means to make things that you own more valuable. That increases wealth.18

Imagine two people engaging in a simple exchange. I give you my goat and you give me some eggs from your chickens. Was anything physically created? No. There was just an exchange. But as we know from very basic Austrian economics that one transaction increased the sum total of wealth in society because I wouldn’t have given you my goat if I didn’t want the eggs more. So after the exchange, I’m better off and the same thing for the other guy.19

So just by allowing people freedom and respecting property rights, you can increase wealth, but the key thing to recognize is that wealth is not an object. Value is not a substance. Things are more valuable because they’re in a different shape. They’re more valuable to customers, for example. When we talk about creating wealth, what we mean is we are rearranging things that we already own, rearranging scarce resources to make them more valuable to customers or to yourself.

So, yes, you use your creativity, you use labor to do these things. Labor and creativity can be said to create wealth, but that is just another way of saying that one’s labor and actions are guided by knowledge to transform things that you own already to make them more valuable to you or to others.

I emphasize this because there’s an insidious argument that is commonly used, even by libertarians, by proponents of this idea of intellectual property. The argument goes like this:

Oh sure, I agree with you that if you find something in the state of nature that was never owned, you’re the owner. Finders keepers. Yes, that is one source of ownership. And sure, I agree that if someone transfers something to you by contract, which can include gifts, a contractual consensual voluntary transfer, that is another way you can come to own something.20 That’s another way of acquiring property rights.

So, they admit that we’re right on two things: you can come to own some scarce resource by finding it or buying it.

But they say if you create it, you also own it. It just seems natural. We’re used to thinking about this because what do we say in America? “You makemoney.” Now, all that really means is you had a profit from a certain entrepreneurial endeavor. These metaphors can mislead us if we’re not careful.21 You don’t really make money. (Now the Fed makes money, but that’s a different story! They don’t make real money. They make these artificial tickets we have now by printing them.)

Then they will say there are three ways to acquire ownership of things: you can find it, you can buy it, or you can create it. If you create it you should own it. It’s natural. If there is a thing that someone created, and it’s got to have an owner, well I guess it’s got to be the creator. He’s got the best connection to it. It just makes sense, right? Then they’ll say, well, who created that song? Didn’t you create that song? Who created that painting? Didn’t you create that painting? So, you’re the owner of it. The problem is they’re wrong. Creation is not a third means of acquiring ownership of things.

We can see it in the examples I gave already. Creation just means transforming things you own already. Think about a man who has a big chunk of marble. He owns it because he found it. He didn’t create any new ownable thing. I guess you could say he’s creative in finding it, but he’s not creative in the modern intellectual property sense. His neighbor sneaks over in the middle of the night and carves a statue out of it. Who owns the statue? Under current law, it’s indeterminate. Under libertarian law, the original guy owns it. This is a clear example that creation by the neighbor is notsufficient to give rights. It’s also not necessary since the first guy acquired ownership because he found it. So you can see that creation is neither necessary nor sufficient for property rights and things. Creation is not an independent source of ownership or property rights.

This is the mistake that is made over and over again by pro-IP libertarians. One libertarian philosopher says there are ontologically many types of things out there. Sure there are tangible things, but there are poems and movies. Why can’t we own those too?22

But what about, say, welfare rights? If rights are good, why can’t there by welfare rights? What do modern liberals say? They say, “oh, I believe in property rights, but there is “also” a right to education and a right to food. Now, of course, we libertarians already understand that the problem with this idea is that these rights are not free. They come from something else. When you have a set of rights allocated and you start giving out more rights, they have to start chipping into the previous ones recognized. They have to come from something else. Rights and obligations are correlative. If you have a right to education or welfare, someone’s got to provide it. They have to provide it out of their property. So recognizing “new” rights just amounts to a redistribution of property.

It’s the same thing with intellectual property, which is nothing but a redistribution of rights. It is a redistribution of property rights from the original owner of a thing, to someone who applied at a state agency for some kind of monopoly certificate that gives them the right to go to government courts to ask the court to point their guns at the original owner and tell them “you have to share your property with this guy, or you can’t use it in this way without this guy’s permission.” It is a way of redistributing property rights. The idea that you can just add IP rights to the set of property rights in scarce resources is a pernicious one that leads to redistribution of control that owners have over their property, to other people.

Here is what’s perverse about it. As I’ve already pointed out, the free market is working to let humans overcome scarcity. Yet, you have people who advocate intellectual property rights in the name of the market. What’s going on here? They’re actually imposing an artificial scarcity on things that are non-scarce by their nature.23 The free market is trying to overcome the problem of scarcity. These people are saying, “let’s make something that is already free and not scarce artificially scarce just like real things are.” Why would we want to do this?

Let’s imagine we had the ability to change physical laws so that you could easily duplicate a car just by looking at it. I look at your Rolls Royce and I blink my eyes and I have my own. It didn’t take anything from you. You can still drive your car around. Who would be against that? Well, the auto workers’ union would be against it I guess, but normal people wouldn’t be against this. This would be free wealth — a good thing.

Yet, we already have this idealized situation in the case of knowledge. We have an expanding base of knowledge that we have all benefited from. It is growing all the time with every succeeding generation. The idea of shackling it is crazy. Why would libertarians support the government in imposing restraint on information?

IP as Censorship and Monopoly

There was one free market economist who actually wrote for one of the free market think tanks that many of you have probably read from before. He explicitly says “patents and copyrights slow down the diffusion of new ideas for a reason: to ensure there will be more new ideas to diffuse.”24 We can debate whether he’s right about this means (slowing down the diffusion of ideas by means of state grants of monopoly privilege) achieving this end (ensuring there are more new ideas generated). I think, of course, that he’s wrong — obviously wrong — but he’s admitting that IP advocates want to slow down the spread of ideas. They want to make it more difficult to spread ideas.

There was a recent Salon magazine article about copyright in China. The magazine article’s author sort of innocently stated that “We may have more to gain, economically, from removing impediments to the widespread distribution of knowledge than from attempting to restrict them.”25 Oh really!

It should be no surprise that patent and copyright have such perverse effects. If you realize the history of these statutes, it is no surprise at all. Patents originated in the granting of monopoly privileges by monarchs. The first modern patent statute is called the Statute of Monopolies of 1623 in England. A patent was given to Sir Francis Drake, a notorious pirate, or privateer as he was euphemistically called, in the late 1500s, which authorized him to go around looting Spanish ships. The origin of patents is in privilege, monopoly, and real piracy. So all these proponents of intellectual property who point their fingers at today’s “pirates” and are against piracy, well, there is a link between piracy and intellectual property: they go hand in hand.26

Copyright’s origin is literally in censorship. Before the printing press, the state and the church found it pretty easy to control the distribution of thought. There were certain scribes who would copy books by hand. So the state and church could stop people from copying what they didn’t want copied. The printing press started to upset matters and so the state established an elaborate system of monopolies and controls over the use of printing presses. This led to the Statute of Anne in 1710 in England, is the first modern copyright statute. Actually, part of the reason that some authors in the French Revolution, and even in England, were in favor of modern copyright laws was they wanted the control back. The government was controlling whether their own works could be reproduced. It wasn’t a desire to get this monopoly from the state to go around suing people to stop them from reading their work. It was a desire just to have the ability to have it reproduced and copied.27 So the entire history of patent and copyright lies in statism. It lies in piracy — real piracy — pirates that kill people and break things, not guys that have a Jolly Roger banner on their website.

Let me give an example of a mousetrap. Let’s say some guy makes a mousetrap. He gets the idea to improve the standard mousetrap by coating it with Teflon. He figures these rat guts are sticky; they keep sticking to my mousetrap. I’ll coat it with Teflon and this will make a better mousetrap. So maybe he sells some and when he sells his mousetrap a lot of people learn about it. The realize, “Hey, it’s possible to make a mousetrap out of Teflon. It works even better.”

Let’s say I have some Teflon and a mousetrap. I improve my own mousetrap by adding Teflon to it. Now, the first guy has a patent on his Teflon-coated mousetrap. He can actually get a court order, an injunction, that tells me I cannot make this mousetrap even in the privacy of my own home or I will go to jail. This is really the force of government. So this is just an example of how patent rights literally rob people of their property rights. (Note: the patentee can do this to me even if I independently came up with the idea of a Teflon-coated mousetrap; even if I came up with it first.)28

The IP Mistake

Why did this happen? How did my property get transferred to this patentee? Ultimately, causally, it was transferred because of a mistake, a mistake in the law, a mistake in people’s thinking, a mistake in believing that ideas can be owned. Ideas cannot be owned. Ideas guide action. Means of action are scarce. Property rights are recognized in means because they’re scarce. Ideas are not scarce things. They are infinitely reproducible. The growing body of knowledge is a boon to mankind.

We need to cast off the mistakes of the past. The young libertarians — you get this. You’re immersed in the internet, digital information, easy access to online books and online information, billions of pages of information available at your fingertips, yeasty productivity, copying, emulating, file-sharing, social networking and borrowing. The movie The Social Network depicts Mark Zuckerberg, the creator of Facebook, as being accused of stealing the Winklevoss twins’ idea. He was rightly outraged at the suggestion. He says, “Does a guy who makes a really good chair owe money to anyone who ever made a chair”?29

He’s right. The very idea is ridiculous. Copying information and ideas is not stealing. Learning is not stealing. Using information is not trespass. I urge you young libertarians to stay on the vanguard of intellectual freedom. Fight the shackles of patent and copyright and keep on learning.

Thank you.

~*~

Stephan Kinsella is an attorney and libertarian writer in Houston, Senior Fellow of the Ludwig von Mises Institute, the founder and editor ofLibertarian Papers, and founder and Director of the Center for the Study of Innovative Freedom (C4SIF). His most recent book is Property, Freedom, and Society: Essays in Honor of Hans-Hermann Hoppe (co-editor, with Jörg Guido Hülsmann; Mises Institute, 2009).

♡ 2011 Stephan Kinsella. Copying is an act of love. Please copy and share.

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Endnotes

  1. This paper is based on my speech of the same title delivered Nov. 6, 2010, at the 2010 Students for Liberty Texas Regional Conference, University of Texas, Austin; audio and video available at www.stephankinsella.com/media/. A previous version was published under the same title in Economic Notes No. 113 (Libertarian Alliance, 2011).All of my articles cited herein may be found at www.stephankinsella.com/publications/. For more extensive treatment of some of the ideas dealt with in this article, see my monograph Against Intellectual Property(Mises 2008), and my articles “The Case Against IP: A Concise Guide,” Mises Daily(Sep. 4, 2009), “Intellectual Property and Libertarianism,” Mises Daily (Nov. 17, 2009), and “What Libertarianism Is,” Mises Daily (August 21, 2009). []
  2. For further discussion of the structure of human action and its relationship to IP, see note 13 and accompanying text, et pass., of my article “Ideas are Free: The Case Against Intellectual Property,” Mises Daily (Nov. 23, 2010). []
  3. For further discussion of the nature of human action, see n.4 and accompanying text of my “Ideas are Free”; also Stephan Kinsella & Patrick Tinsley, “Causation and Aggression,” The Quarterly Journal of Austrian Economics 7 no. 4 (Winter 2004): 97–112. []
  4. Non-scarce things are classified by Austrians as “general conditions” of action, as opposed to scarce means or goods. See Ludwig von Mises, Human Action(Mises Institute, 4th ed., 1996), ch. 4, sec. 1, and Murray N. Rothbard, Man, Economy and State (Mises Institute 2004), ch. 1, sec. 2, both available at mises.org. []
  5. See Hans-Hermann Hoppe, “Praxeology and Economic Science,” in Economic Science and the Austrian Method (Mises Institute, 1995), text following n. 18 (“All of these categories—values, ends, means, choice, preference, cost, profit and loss, as well as time and causality—are implied in the axiom of action.”); idem, A Theory of Socialism and Capitalism: Economics, Politics, and Ethics (Mises Institute 2010 [1989]), p. 141; and idem, “In Defense of Extreme Rationalism: Thoughts on Donald McCloskey’s The Rhetoric of Economics,” Review of Austrian Economics 3, no. 1 (1989), p. 200; both available athanshoppe.com/publications. []
  6. See Mises, Human Action, ch. 4, sec. 4; Rothbard,  Man, Economy and State, ch. 4, sec. 5.C. []
  7. For related commentary, see my post “Knowledge is Power,” C4SIF Blog (Dec. 28, 2010). []
  8. See Rothbard, Man, Economy and State, ch. 1, sec. 8; Kinsella, “Ideas are Free”; and Jeffrey A. Tucker & Stephan Kinsella , “Goods, Scarce and Nonscarce,”Mises Daily (Aug. 25, 2010). []
  9. See Tucker & Kinsella, “Goods, Scarce and Nonscarce,” text at notes 4­–5. []
  10. See the concluding three paragraphs of my “The Death Throes of Pro-IP Libertarianism,” Mises Daily (July 28, 2010). []
  11. See notes 23­–24 and accompanying text of my “Intellectual Property and Libertarianism.” []
  12. See Hans-Hermann Hoppe, “Rothbardian Ethics,” LewRockwell.com (May 20, 2002) (“The existence of Friday the gorilla poses for Crusoe merely a technical problem, not a moral one. Crusoe has no other choice but to learn how to successfully manage and control the movements of the gorilla just as he must learn to manage and control the inanimate objects of his environment.”); idem, Democracy: The God That Failed (Transaction, 2001), pp. 201–202. []
  13. See note 4 to my “Intellectual Property and Libertarianism.” []
  14. For elaboration, see my “What Libertarianism Is.” []
  15. See Ludwig von Mises, Economic Calculation in the Socialist Commonwealth (1920), idem, Human Action, ch. 16, secs. 1–3, and other references in Kinsella, “Knowledge vs. Calculation,” Mises Economics Blog (July 11, 2006). []
  16. See Stephan Kinsella, “How much richer would be in a free society? L. Neil Smith’s great speech,” StephanKinsella.com (Nov. 7, 2009). []
  17. See Jeffrey Tucker’s talk “The Morality of Capitalism,” FEE Freedom University (2010). []
  18. See “Intellectual Property and Libertarianism,” text at n. 26; and Kinsella, “Locke on IP; Mises, Rothbard, and Rand on Creation, Production, and ‘Rearranging,’” Mises Economics Blog (Sep. 29, 2010). []
  19. See Murray N. Rothbard, “Toward a Reconstruction of Utility and Welfare Economics,” Mises Daily (July 8, 2006). []
  20. See Kinsella, “A Libertarian Theory of Contract: Title Transfer, Binding Promises, and Inalienability,” Journal of Libertarian Studies 17, no. 2 (Spring 2003): 11-37. []
  21. See Kinsella, “Objectivist Law Prof Mossoff on Copyright; or, the Misuse of Labor, Value, and Creation Metaphors,” Mises Economics Blog (Jan. 3, 2008). []
  22. See Kinsella, “Owning Thoughts and Labor,” Mises Economics Blog (Dec. 11, 2006). []
  23. Kinsella, “IP and Artificial Scarcity,” Mises Economics Blog (Dec. 3, 2009). []
  24. See Kinsella, “Shughart’s Defense of IP,” Mises Economics Blog (Jan. 29, 2010). []
  25. Andrew Leonard, “The key to economic growth: Stealing,” Salon (Aug. 18, 2010). []
  26. See Kinsella, ““How Intellectual Property Hampers Capitalism,” Mises Institute Supporters’ Summit 2010 (Oct. 8-9 2010, Auburn Alabama). []
  27. See Michele Boldrin & David K. Levine, Against Intellectual Monopoly (Cambridge 2008), at ch. 2, text at n. 27 et pass. []
  28. See Kinsella, “Common Misconceptions about Plagiarism and Patents: A Call for an Independent Inventor Defense,” Mises Economics Blog (Nov. 21, 2009). []
  29. See Jeffrey A. Tucker, “A Movie That Gets It Right,” Mises Daily (Oct. 26, 2010). []

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The State’s ‘Inception’ Fails

by Llewellyn H. Rockwell, Jr.

Two years ago, the economy was seriously dragged down amidst an amazing banking crisis that spread throughout the world. The illusion created by loose credit – that housing could go up in price forever and we could enjoy permanent prosperity due to monetary expansion – was shattered by events. Reality had dawned. We found ourselves in the midst of an economic depression.

At that point in policy, we were at a fork in the road. The wise direction was to let the depression happen. Let the bad investments wash out of the system. Let housing prices fall. Let banks go broke. Let wages fall and permit the market to reallocate all resources from bubble projects to projects that make economic sense. That was the direction chosen by the Reagan administration in 1981, and by the Harding administration in 1921. The result in both cases was a short downturn followed by recovery.

The Bush administration, in a policy later followed by the Obama administration, instead attempted a tactic of dream incubation as portrayed in the recent film Inception. The idea was to inject artificial stimulus into the macroeconomic environment. There were random spending programs, massive buyouts of bad debt using phony money, gargantuan tax tricks, incentive programs for throwing good money after bad, and hiring strategies to weave illusions about how all is well.

In the movie, the goal of the dream incubation was to implant an idea into an unsuspecting subject’s head that would cause him to act differently than he otherwise would have. In the real life version of inception, the state tried to implant in all our heads the idea that there was no depression, no economic collapse, no housing crisis, no push back on real estate prices, and really no serious problem at all that the state cannot fix provided we are obedient subjects and do what we are told.

In the movie version, the attempted inception is on a time clock. The dream weavers can only keep the subject in a state of slumber so long. In the real life version, things are much messier. The headlines have spoken about the impending recovery every day for all this time, and yet the evidence has never really been there. All the stimulus really did was forestall events a bit longer, but it hasn’t prevented them.

Now, with the stock markets melting and the near-universal consensus that we are back in recession, everyone is awake. It is pretty clear that the inception did not take. The unemployment data look absolutely terrible. As the Wall Street Journal points out, only 59% of men age 20 and over have a full-time job (in the 1950s, that figure was 85%). Only 61% of all people over 20 have any kind of job now.

That’s only the most conspicuous problem. No one really knows just how much further the real estate market would fall under market-clearing conditions. The actual status of the car industry is anyone’s guess. Business borrowing is going nowhere. Total industrial and commercial loans are actually at their lowest point of the whole depression. Payrolls generally are still sweeping downwards.

With an economy like ours, and a population to support with its long-held expectations of material investment, an environment like this can produce despair. People are talking about the death of the American dream, perhaps even the collapse of the American empire along the lines of Rome in days of old. Evidence is emerging by the day, as municipalities shut down street lamps and cut back on the hours at public schools. Governments that do not have access to the printing press are curbing everything.

Meanwhile, the state, as if it is trying to keep us hooked up to its failed machine, has its central bank trying to pump in more money and credit, with interest rates nearly zero. No matter how much this tactic has failed, our money masters still can’t seem to face the fact that it is not working. There are very few takers these days for the phony-money loans. There is a widespread perception that inflation is on a hair trigger, so that if the expansion campaign ever really does stick, we could find ourselves in a ghastly disaster of hyperinflation.

The only really good trends exist in two worlds right now. In the digital world, we see growth and expansion and progress. This sector is not as heavily hooked up to manipulations of the Keynesian elite, and its development has proceeded at a clip even in a depression.

The other sector that shows great improvement is the intellectual sector. The Austrian School of economics is sweeping away Keynesian fallacies. The Keynesians took on this depression and they have lost the battle. That much is obvious to everyone but the most dedicated New York Times economics columnist. For anyone with an open mind, the economics of the Austrian School has become the prevailing mode of thinking for our time.

I wish Murray Rothbard were around to see this. Ludwig von Mises, F.A. Hayek, and Henry Hazlitt, too. Their ideas on economics were forged against great resistance of the mainstream. Today, they are becoming the new mainstream among anyone who is not engaged in lucid dreaming of prosperity, made possible by the printing press.

August 21, 2010

Llewellyn H. Rockwell, Jr. [send him mail], former editorial assistant to Ludwig von Mises and congressional chief of staff to Ron Paul, is founder and chairman of the Mises Institute, executor for the estate of Murray N. Rothbard, and editor of LewRockwell.com. See his books.

Copyright © 2010 by LewRockwell.com. Permission to reprint in whole or in part is gladly granted, provided full credit is given.

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