In a couple of places (notably Middle of the road policy leads to socialism) Mises argues that interventions by government will fail, leading to further interventions, culminating in a fully centrally planned economy.
An acquaintance (Economics PhD, very knowledgeable on Austrian theory, and at a minimum a "fellow traveller") told me he thought it was the issue on which Mises was clearly wrong.
Several years ago, before I would have considered myself an Austrian, I asked David Gordon. He said that perhaps Mises underestimated how long the process would take.
A third response invoked a paper by Ulrich Witt ("The Endogenous Public Choice Theorist" Public Choice 73: 117-129, 1992 - I haven't read it). In short I think the claim is that we have been saved from going down the road to serfdom because endogenous public choice theorists know about it (sounds implausible though, so perhaps I have misremembered).
Ikeda's book (Dynamics of the mixed economy: toward a theory of interventionism) tries to explain the persistence of interventionism. I have looked at it for a year or so. But whilst it struck me as a good book, I don't remember again particularly noteworthy arguments.
What do you think?
I think Mises was 100% correct. The middle of the road leads to Socialism. I don't understand from your post what objections have been raised to claim that it is not necessarily so.
My objection is that we have experienced interventionism (middle of the road policy) for many decades, but an interventionist economy has never led to socialism economy. All socialism has come about through revolutions or public opinion, never as a result of failed interventions. Are there any counter-examples?
Could you elaborate on your claim that Mises was 100% correct? If there is not yet a case of middle of the road leading to socialism, then you might mean you believe it will happen in the future. Do you have any idea when it will happen? Why do you believe it will happen? Are you content to remain completely silent about why it has not happened yet? How far in the pocess have come already? Please give examples of failed interventions which called forth further interventions. I agree that there are some, but they often lead to crises, or are just repealed. It seems in light of this that the process is more complicated than a process leading to socialism. It's provoked comment amongst Austrians. In particular Sandford Ikeda's book, where he tries to account for the stability of the mixed economy.
To reiterate my friend from LSE told me he thought it was the weak spot in Mises. Compare this to other elements in his thought. The twentieth century clearly vindicated or illustrated the impossibility of socialism. The ABCT is a little more controversial, but it appears to have explained many actual business cycles. Do you see my point? What do you think?
I am not raising issues to claim that it is not necessarily so. Rather I am just interested if there are raising why it is necessarily so. And as you do, I am curious about your position.
Austro-Devil:My objection is that we have experienced interventionism (middle of the road policy) for many decades, but an interventionist economy has never led to socialism economy.
So what's healthcare reform every 10 years if not a failure of interventionsm?
How about banking and finanical reforms every time there is a bust ?
Austro-Devil:All socialism has come about through revolutions or public opinion, never as a result of failed interventions.
You misunderstand the curx of the argumnet. It is the failure of the public to recognize the failure of the previous interventions so they support further and futher interventions. Socialism may not be reached only because the system will finanically collapse beforehand. But that would still be a failue of interventionism.
Austro-Devil:Could you elaborate on your claim that Mises was 100% correct?
Mises' argument is that all interventions are bound to fail. The public then has a choice: To remove the previous intervention or to go further and further. Mises does not claim that it is impossible (in theory) for the public to realize that the interventions are the problem, but simply that if they fail to do so, they must go further and further until Socialism of the german pattern is achieved. (unless the system collapses beforehand and reforms in the right direction take place)
Austro-Devil:If there is not yet a case of middle of the road leading to socialism, then you might mean you believe it will happen in the future. Do you have any idea when it will happen?
It is already happening. The healthcare industry is disintegrating right infront of our eyes as a result of prveious failed interventions. The public now is ready to support further interventions. So we are just 1 or 2 steps away from a total national healhtcare system.
Austro-Devil:I agree that there are some, but they often lead to crises, or are just repealed.
If something is repealed, then that does not disporve Mises. Mises claimed that if the interventions are not repealed and you go further with more regulations, then you will eventually reach socialism.
But hardly anything is repealed! For every one or two regulations that are ever repealed, there were 10 new regulations that must have missed your radar.
Austro-Devil: In particular Sandford Ikeda's book, where he tries to account for the stability of the mixed economy.
The stability is an illusion. You wouldn't have to keep cutting benefits, reforming the system, and constantly regulating if there was stability. Sure, with 50 trillion dollars in debt, you can keep the illusion longer.
Austro-Devil:To reiterate my friend from LSE told me he thought it was the weak spot in Mises.
When Iceland goes bankrupt, what is this if not a failure of interventionism? As long as the US and EU are still hanging on, such a small country can get bailed out. What's going to happend when the US defaults on its debt and most government programs will default on their commitment? Will you then consider this a failure of Interventionsm?
Saying that we can reverse course does not refute Mises theory on interventionsim. To reverse course is to simply recognize Mises' warning and to act upon it. This is what he wanted.
Austro-Devil: My objection is that we have experienced interventionism (middle of the road policy) for many decades, but an interventionist economy has never led to socialism economy. All socialism has come about through revolutions or public opinion, never as a result of failed interventions. Are there any counter-examples?
You don't think the consequences of failed interventions influence public opinion?
Marko: "You don't think the consequences of failed interventions influence public opinion?"
The middle of road policy leads to socialism was written by Mises, not me! I think public opinion could be a factor, but it plays no part in Mises' discussion. I started this thread because numerous economists, including Austrians, have observed that middle of the road policy has not led to socialism. I listed a few factors which I thought might be relevant. I'm interested if you have others
I do think consequences influence public opinion. Of course, it's difficult to say what impact this has on policy as public opinion isn't some kind of data we can observe. I'm not sure that this would support your position though. Read a book like Myth of the rational voter (Caplan) and you'll see that overwhelmingly people are anti-market, pro-regulation, and just a bit more observation about attitudes, economic news and debates in the media, and prevailing terminology, and you'll see that when interventionism fails, it is blamed on the matter. Therefore public opinion could be considered to speed up the process. And yet we haven't got anywhere near it.
Austro-Devil: I think public opinion could be a factor, but it plays no part in Mises' discussion.
You have set up a strawman argument here. That's probably what the critique you have read has done also.
The middle of the road policy states that this policy cannot be a permanent solution but only a temporary transitional phase. Either the failed interventions in the past lead the public to pressure for more and more interventions, or the public realizes the failures of the interventions and this policy and pressures to abandon it.
That is Mises theory on Interventionism. And I suggest you learn about it from Mises and not his critics.
Austro-Devil:And yet we haven't got anywhere near it.
I wasn't aware that there was a time limit on how long the process has to take before somebody comes and says Mises was wrong.
The facts remain. Interventions always fail and the public pressures to reform. Either they can regulate further and fruther or they can abandon this middle of the road policy. The system itself is a transitional phase; Either to Socialism or to Laissez-fair if the policy is abandoned. Thus far, public opinion has overwhelmingly chosen to stick to this policy.
I hope this isn't too disorganised and difficult to follow. We agree on about 90% and I think the 10% disagreement is interesting.
DD5: "So what's healthcare reform every 10 years if not a failure of interventionsm?"
I stated that I think interventions fail. You and I agree that interventions fail. So please do not try to misrepresent me as claiming that interventions do not fail. We are simply discussing the implications of failed interventions - my position being that perhaps this process can continue without culminating in socialism.
You rightly point out that Mises noted that failed interventions can be repealed. However, I think there is an important distinction but what he implies in his writing and what happens from time to time. He says interventionism is a contradictory and illogical system and it cannot persist, it must lead always to capitalism or socialism (I'm paraphrasing, but I believe this is a faithful representation). As I understand it, he is saying that interventionism (i.e. interventions en masse) must be repealed. But what we occasionally see is a politician realises a single intervention has failed, rather than the system of interventionism. So the post office could be privatised tomorrow because everyone knows it failed, but alongside a growing need for minimum wages, or a national health care system, because everyone knows it is "different." This is the sense in which interventionism has proved to be relatively stable. There have been some regulations and deregulations but the system of interventionism has progressed or regressed much to capitalism (market economy) or socialism (central planning). Accordingly it seems that within our present system of interventionism there is quite unlikely to be such a move. Consider the ABCT and the boom-bust. There have been several business cycles, but during the bust do we just get more and more interventions? If we did, would we be likely to experience booms again in the future? Wouldn't stagnation a la USSR or North Korea be more likely? The cyclical nature of business cycles seems to cohere somewhat with a more cyclical understanding of interventionism - interventions keep failing and government keeps intervening, not necessarily socialising.
You write: "When Iceland goes bankrupt, what is this if not a failure of interventionism?" Exactly, and what is Iceland today if not a interventionist economy? If Iceland is socialist soon, then we will have our first road trip from middle road to socialism. But I think it is just interventionism as usual.
You note "it is already happening." I think this is right. But it is not entirely clear. The UK introduced the NHS immediately after WWII. For one thing, it was not introduced in response to any failed intervention. I think this may be true of many interventions (this is a very important point - we have to watch out for changes in ideology more than failed interventions).
Almost every country has had nationalised army, police, and some other services for as long as capitalism has existed. I don't think the police has necessarily failed in ways which require further interventions in the economy. The same goes for health. I don't think that has occurred in the UK. Yes healthcare gets worse, it fails in some sense, but that doesn't necessarily mean anything has to be done about it. It fails and we carry on as usual with interventionism.
What do I think?
I think you could be right DD5. But it doesn't seem to me the most likely scenario. I'm not going to attempt to assing a probability. That would make about as much sense as asking you how many years we have left. But I do think some indication of timescale is important.
Also I struggle a bit with how the interventions would occur. Like what is the next step. I understand if it just nationalising one industry after another, but what suggests this will happen? Now what is your basis for thinking this?
PS Do you think the Reagan and Thatcher years were an increase or decrease in regulation? This is a serious and sincere question. I honestly do not know what answer I'd give. Perhaps it all comes down to context and perspective, so that either answer is acceptable. But if, like many libertarians, you consider Reagan to have increased regulation, that could present some further difficulties for the middle road road trip: there were lots of subsidies for big business and privatisation, which I think is a different kind of interventionist dynamics, as it strengthens the wealthiest most politicised section of the private sector, so not readily obvious how this leads to central planning. Maybe taking the long scenic route though?!
I'm not sure if you fully grasp Mises's argument, which is that failed interventions will beget yet more interventions until people either realise they fail or that interventionism is the wrong way to go. Some politicians might in individual cases reverse or even strip away regulations, but we're talking about a net effect here, and reversals of their policies probably because a) they were insufficiently laissez-faire and interventionist in their own right, thus causing the problem Mises suggested or b) other interventions were still operative, not allowing deregulation to fully run its course, leaving it to shoulder the blame for their failure. Nor does Mises believe the only reason for interventions in the economy (which, by the way, WWII was most definitely) is prior interventions. His point is that you won't for long have a 'middle of the road' economy as the failure of its interventions will have a domino effect. What are bailouts or bank nationalisations if not interventionism? Modern Western economies have a huge capital base. How long will it take to deplete these? Their existence as social democracies is relatively short, not even 100 years in most cases (and interventionism mostly went on the rise after WWII), not really a very long time frame. Of course the magnitude of the interventions especially in the US may hasten their demise into full socialism. We'll see.
A classic example of his theorem btw is universal education. Why do you think nearly everyone 'needs' a degree nowadays?
Freedom of markets is positively correlated with the degree of evolution in any society...
"The middle of the road policy states that this policy cannot be a permanent solution but only a temporary transitional phase." What do you mean by "permanent" and "temporary transitional phase?" When you use this terms but object "I wasn't aware that there was a time limit on how long the process has to take before somebody comes and says Mises was wrong" it becomes clear that these are not meaningful terms.
The human race may die in 1million years and interventionism is only a temporary phase lasting 1.x million years. So yes I realise that neither you nor I can prove one way or the other. The time issue is really important, because there are people who think they can aid some groups through some welfare policies, and this is probably true in some cases. They will say, look if interventionism will fail in 500 years, lets only have interventionism for 400 years and then repeal it. In the meantime we can help some people who otherwise wouldn't be helped (this isn't my argument of course!). I was under the impression that Mises viewed the situation as dangerous - i.e. people couldn't tell if things were failing, or they couldn't influence government. But you seem to believe they can repeal. In this case it seems that your position is more one of a scare tactic to prevent social democrats from pursuing these kinds of policies. And if your position is just that as long as the human race has an infinite lifespan, at some point interventionism will lead to socialism, then this shouldn't be persuasive to social democrats.
In any case I think we can make significant progress in our analysis of the nature of interventionism over the past century, for instance. To reiterate my point about the circularity of the business cycle and interventionism, the government expands the money supply and depresses interest rates, leading to depression. In response it may alter its policy. It certainly does not repeal the monetary interventionism. A deflationary monetary policy is just as interventionist as an inflationary monetary policy, as I'm sure you'll agree. So interventions replace interventions, the system remains largely the same, and the same problem recur. Business cycles are not getting worse, more severe. Subsequent business cycles do not bring us closer to central planning. And neither do they lead to the repeal of central banking.
"You have set up a strawman argument here. That's probably what the critique you have read has done also." ... "And I suggest you learn about it from Mises and not his critics." Look I have set up a strawman. Also I haven't read any critiques. Ikeda isn't a critique of Mises. My friend from LSE talked to me (didn't write anything) and I haven't read Ulrich Witt. I've read Mises. I think I raise a legitimate point. David Gordon certainly told me so. He acknowledged that perhaps the process was taking longer than Mises thought. This is relevant. I think it is instructive to consider the comparison with the socialist impossibility debate. I think it was Karl Polanyi who said, look socialism is working, it is not actually impossible, with reference to the Soviet Union after several decades. But Polanyi was wrong. That wasn't central planning. They tried that briefly for a year or two, but by about 1922 they had to abandon it. So central planning literally failed, and they tried a slightly more liberal central prohibition economy (see Rothbard, Thornton) which failed more slowly. Then the Soviet Union was a heavily interventionist system and yet no matter all of its failures, and all the political pressures to maintain centralised control, it continued to move toward the market economy. Isn't that exactly the opposite of what you'd expect?
fiddlesticks, of course I meant to say that I haven't set up a strawman
Hopefully no Freudians lurk here
Then the Soviet Union was a heavily interventionist system and yet no matter all of its failures, and all the political pressures to maintain centralised control, it continued to move toward the market economy. Isn't that exactly the opposite of what you'd expect?
No. It can go two ways after all. But the USSR had a very incomplete liberalisation which is why it is still such a mess today.
Business cycles are not getting worse, more severe. Subsequent business cycles do not bring us closer to central planning.
Erm, what world are you in? There is increasing pressure to regulate the financial sector now, beyond the onerous regulations already burdening it. BTW, look at how fast Zimbabwe draw near to collapse. What is the salient difference between it, and say, the USA? How much existing wealth it has. So yes, the USA will take longer before it either moves to full central planning (or repudiates it, as it were), merely because it has a more substantial pool of wealth to bleed dry, to blunt the perceived effects of interventionism.
Austro-Devil:PS Do you think the Reagan and Thatcher years were an increase or decrease in regulation? This is a serious and sincere question.
The Myths of Reaganomics
Thanks Jon. You are right that Mises believes there are other reasons for interventions in the economy. I wanted to make the discussion a little more focused, at least initially. I think other reasons for intervention, perhaps given their best description in the Road to Serfdom, are probably more of a threat. I think the US and UK are more likely to abolish liberty under the guise of protecting us from terrorism than the slide towards socialism. I suppose my point is that you need to watch out for these ideological politicians, the ones who implement new policies before anything failed. Like Bush/Blair foreign adventures - wasn't in response to failure, just fit in with their ideology and ambitions.
Social democracies have only existed for a short time, but social democracies are only one kind of interventionism. Adam Smith (1776) was written in response to interventionism. I don't really know how long it had been going on for at that point (I'm not really sure how feudalism should be classified, so that presents difficulties if we go back to 14th century UK) but certainly a little while. So say UK has been interventionist for 3 or 4 centuries. Really for as long as the modern (i.e. not primitive, subsistence) economy has existed, it has been interventionist. Politically I'm prepared to side with Von Kuehnelt-leddihn and say this is not a long time (monarchy has existed much longer than liberal democracy). But economically this is a different matter. Interventionist economies have been on an upward trend. I agree that laissez-faire may be more efficient of course. But in short I think this is quite a long time frame.
"Failed interventions will beget yet more interventions" - I absolutely do agree with this. But let us assume the economy grows at 2% per year, and government, by some measure (I hesitated to make this kind of argument until now because there are no such measures in reality) grows at 1% per year (not necessarily in terms of goverment expenditure, by perhaps just a measure of its intervention). In this way, government can continue to grow, to fail, and to respond to failure by growing more, and yet not grow as fact as the economy. This gives an idea about what might be happening to our economies. Fifty or a hundred years ago there was no regulation for cellphones, computers, etc. I agree that interventions may continue, but I think the ingenuity of the private sector may outgrow it.
Your example of education is interesting. Firstly, do you mean to imply that little education would be undertaken if not for government provision? I think it really just crowds out a lot of private education. But I suspect really you are getting at the fact that a degree today is worth a high school diploma from 1960 or so. Yes, but that is perhaps better explained by Social Limits to Growth (Fred Hirsch, 1976). Insofar as it is a signal (Michael Spence etc.) it is a positional good, so education becomes an arms race. I agree government may have fuelled this, but it probably didn't create it. Regardless the worst elements in education can again be put down to ideology and not to any particular failures. Note the point Sowell makes in his new book on Intellectuals. Intellectuals make ideas which are not tested. They also do not respond to failures. Out of the blue intellectuals and some bureaucrats decide that children need to focus on tolerance rather than knowledge. Then is it any wonder that they "graduate" without any knowledge or skills?
PS (Apologies again for rambling): I'm surprised nobody has referred to the ratchet effect (Higgs - Crisis and Leviathan) yet. OK the government may ratchet up the intervention, and perhaps this is not ideological, but opportunistic. But it is just one choice which politicians may or may not have the foresight to force through.
I said "Business cycles are not getting worse, more severe. Subsequent business cycles do not bring us closer to central planning" and Jon responded: "Erm, what world are you in?" Well I don't think our crisis is worse than the 1930s. Is it? I think really it is remarkably similar to the great depression. That is one reason why Woods, Murphy et al keep drawing this comparison in their lectures.
"There is increasing pressure to regulate the financial sector now" Yes there are all sorts of demands for regulations. In the end the regulations will likely centralise power in the hands a relatively small group of bankers. I see that reference was made to the Myth of Reaganomics above. This seems to me to be further evidence for the position that interventionism may lead to an intensification of corporatism, rather than towards socialism.
Is Zimbabwe centrally planned? I think most countries which have this sort of experience end in chaos, maybe civil war. In any case I think ideology and political institutions were crucial in allowing Mugabe to behave this way. I can't see a US president confiscated land from rich people! He'd have to establish a police state first. I agree with your point about Zimbabwe being a lot poorer than the US. But this is precisely my point too - the economy is outrunning intervention, and getting richer, so it is harder and harder for intervention to destroy the economy. So people who resent that are working overtime to construct new ideologies which can do just that (Al Gore, John Zerzan etc.)
Austro-Devil: The middle of road policy leads to socialism was written by Mises, not me! I think public opinion could be a factor, but it plays no part in Mises' discussion. I started this thread because numerous economists, including Austrians, have observed that middle of the road policy has not led to socialism. I listed a few factors which I thought might be relevant. I'm interested if you have others
That is not true. Every time socialism has been established it was established in a country which previously followed middle of the road policies. Never has there been a case of a laissez-faire country becoming socialist (without going through a middle of the road phase).Allende in Chile, Chavez in Venezuela, Nasser in Egypt, etc, in all such cases you had a situation where middle of the road policy was clearly not working as intended which triggered ever more demands for the government to fix it leading to quasi-socialism (not necessarily socialist in name but de facto no less socialistic than Communist Yugoslavia).
So say UK has been interventionist for 3 or 4 centuries.
It wasn't. Especially not during the 19th century. Regarding feudalism and absolute monarchies I suggest you give Hoppe's Democracy - the god that failed a read. They were substantially less interventionist than any modern democracy.
This gives an idea about what might be happening to our economies. Fifty or a hundred years ago there was no regulation for cellphones, computers, etc. I agree that interventions may continue, but I think the ingenuity of the private sector may outgrow it.
The impact may be enough to eventually stifle growth, or misdirect it into wrong areas (e.g. the housing boom), so not only are such metrics impossible, they would be misleading even if they weren't. 2% growth isn't unqualifiedly good.
But I suspect really you are getting at the fact that a degree today is worth a high school diploma from 1960 or so.
This.
but it probably didn't create it.
With universal public education, how didn't it? Even if the 'arms race' would continue regardless, by aiming for everyone to at least be university educated (50% is the goal in the UK of Labour), it hugely aggravates the need to have a degree to even get an entry level job that may in fact better be suited for someone with more limited education but greater work experience. Of course, many firms now think degree = educated = skilled. Now a degree is seen as a "right".
It is worse than any business cycle we've had in years. Is it worse than the GD? Dunno. There's no imperative that it is. Interventions are not going to necessarily be worse in magnitude. Though this one may well be... This one definitely involves far more wealth destruction though. It will definitely bring in more interventions as I said.
further evidence for the position that interventionism may lead to an intensification of corporatism, rather than towards socialism.
Or fascism. But Mises would class it as a type of socialism anyway, and definitely heavy-handed interventionism.
Is Zimbabwe centrally planned?
Heavily. Especially its banking system.
The first socialist country (USSR) was not really an interventionist economy prior to the revolution. And note that though Bolshevik means majority, they were just a small group of demented misanthropes, so public opinion or demands for government to do this or that had nothing to do with it. I think until 1863 Russia was feudal. I suspect the same is true of China, Korea, Vietnam.
I'll accept that you are more knowledgeable about the events leading up to Allende, Chavez and Nasser. But going back to Mises, doesn't he give the example of fixing the price of milk at below equilibrium price, which leads to shortages or low quality (maybe watered down). So you give orders, or subsidise or nationalise industries or whatever. In this way, "pragmatic" politicians may establish socialism without trying. But Allende and Chavez (don't know about Nasser) were certainly always trying for socialism. And I don't think they responded to any failures, but they just KNEW that markets inherently fail, so they did all they could as soon as they could to implement socialism.
As I say, I do not know the extent of the middle of the road policies in Chile, Venezuela or Egypt before Allende, Chavez or Nasser. But you note they "triggered ever more demands for the government to fix it." I think this is less plausible in the US. Despite a lot of hypocrisy surrounding it, socialism is a swearword. The constitution is something people think they like, and all the old sayings: "Get the government off our backs" and "rugged individualism." The underlying ideology in the US is diametrically opposed to that of South Americans, and that means the transition to socialism would have to be gradual, as each intervention failed, rather than sudden as I suspect is the case in the countries you mention. And this is what I have a hard time envisaging!
It's reliant on a far broader misconception: that of the state and capitalism as opposing machines bred by the one-dimensional economic spectrum, with "pure" capitalism being on one end and the "pure" command economy on the other, and all existing economies falling in "the middle" and therefore being "mixed" between state and market forces. In reality, however, considering the entirely theoretical nature of any form of "purity," capitalist economic structure has always relied on the state as an integral stabilizing agent. For example, consider trade policy. As noted in Ha-Joon Chang's Kicking Away the Ladder:
Contrary to the conventional wisdom, the historical fact is that the rich countries did not develop on the basis of the policies and the institutions that they now recommend to, and often force upon, the developing countries. Unfortunately, this fact is little known these days because the “official historians” of capitalism have been very successful in re-writing its history. Almost all of today’s rich countries used tariff protection and subsidies to develop their industries. Interestingly, Britain and the USA, the two countries that are supposed to have reached the summit of the world economy through their free-market, free-trade policy, are actually the ones that had most aggressively used protection and subsidies.
Almost all of today’s rich countries used tariff protection and subsidies to develop their industries. Interestingly, Britain and the USA, the two countries that are supposed to have reached the summit of the world economy through their free-market, free-trade policy, are actually the ones that had most aggressively used protection and subsidies.
The infant industries example is my personal favorite because of the illustration of the fact that state forces ultimately act as a boon to market forces in the context of the capitalist economy, as the strategic protection of infant industries results in the long-run maximization of dynamic comparative advantage. And we see that rather than being "closer" to socialism, liberal and social democratic capitalism are in fact greater foes of socialism than more rightist forms of capitalism, as their greater incorporation of state intervention boosts efficiency, thereby sustaining the private ownership of the means of production. It's therefore ironically the rightists that are the greater allies of socialism, as introduction of their proposed measures will cause economic instability and might possibly inspire violent revolution against capitalism.
The workmen desire to get as much, the master to give as little as possible...It is not difficult to foresee which of the two parties must force the other into a compliance with their terms. -Adam Smith
If i had bashed you over the head with a brick once a day, everyday in your life, then I too could claim that every success in your life could be attributed to the brick and that any dreamworld of brick-free success is an a-historical chimera. I would then be as smart as Ha-Joon Chang.
Where there is no property there is no justice; a proposition as certain as any demonstration in Euclid
Fools! not to see that what they madly desire would be a calamity to them as no hands but their own could bring
Leviathan, how are you defining "state"? How are you defining "capitalism"? What definitions do you understand to be that of the Austrian school for "capitalism" and "state"?
To paraphrase Marc Faber: We're all doomed, but that doesn't mean that we can't make money in the process. Rabbi Lapin: "Let's make bricks!" Stephan Kinsella: "Say you and I both want to make a German chocolate cake."
nirgrahamUK:If i had bashed you over the head with a brick once a day, everyday in your life, then I too could claim that every success in your life could be attributed to the brick and that any dreamworld of brick-free success is an a-historical chimera. I would then be as smart as Ha-Joon Chang.
If you had a group of people bashed over the head with bricks once a day everyday that were demonstrably more successful than those that weren't, you just might be.
Daniel Muffinburg: Leviathan, how are you defining "state"? How are you defining "capitalism"? What definitions do you understand to be that of the Austrian school for "capitalism" and "state"?
The state is the centralized and formal managerial government present with a de jure presence in every country in existence and a de facto substantial influence over policy in the majority. Capitalism is a system of social organization that involves the private ownership of the means of production, market exchange as the primary means of resource allocation, and wage labor in a form that involves general separation between ownership, management, and work. The reason for the rejection of the Austrian association of "capitalism" with "laissez-faire free markets" and dubious application of the terms "corporatism" or "state capitalism" to present conditions is because of its function as a no-true Scotsman fallacy intended to dismiss the failings of capitalism.
Daniel Muffinburg:Leviathan, how are you defining "state"? How are you defining "capitalism"? What definitions do you understand to be that of the Austrian school for "capitalism" and "state"?
well you see, the state is like this brick that you can hit people over the head with that makes them succesfull. for evidence refer to history
Austro-Devil: The first socialist country (USSR) was not really an interventionist economy prior to the revolution. And note that though Bolshevik means majority, they were just a small group of demented misanthropes, so public opinion or demands for government to do this or that had nothing to do with it. I think until 1863 Russia was feudal. I suspect the same is true of China, Korea, Vietnam.
In the war years all powers involved in the first war became heavily interventionist.
Austro-Devil: I'll accept that you are more knowledgeable about the events leading up to Allende, Chavez and Nasser. But going back to Mises, doesn't he give the example of fixing the price of milk at below equilibrium price, which leads to shortages or low quality (maybe watered down). So you give orders, or subsidise or nationalise industries or whatever. In this way, "pragmatic" politicians may establish socialism without trying. But Allende and Chavez (don't know about Nasser) were certainly always trying for socialism. And I don't think they responded to any failures, but they just KNEW that markets inherently fail, so they did all they could as soon as they could to implement socialism.
It is irrelevant that all three were socialists by conviction. The important thing is that they were all popular leaders and that the public opinion was behind their reforms, because of the failure of previous policies.
Leviathan: Daniel Muffinburg: Leviathan, how are you defining "state"? How are you defining "capitalism"? What definitions do you understand to be that of the Austrian school for "capitalism" and "state"? The state is the centralized and formal managerial government present with a de jure presence in every country in existence and a de facto substantial influence over policy in the majority. Capitalism is a system of social organization that involves the private ownership of the means of production, market exchange as the primary means of resource allocation, and wage labor in a form that involves general separation between ownership, management, and work. The reason for the rejection of the Austrian association of "capitalism" with "laissez-faire free markets" and dubious application of the terms "corporatism" or "state capitalism" to present conditions is because of its function as a no-true Scotsman fallacy intended to dismiss the failings of capitalism.
You avoided my last question, but worry not, we are not the state, we won't force you to answer that question.. No wait, perhaps, for the benefit of the greater good (of the forum members), we will force you to answer that question. J/k.
Leviathan: The reason for the rejection of the Austrian association of "capitalism" with "laissez-faire free markets" and dubious application of the terms "corporatism" or "state capitalism" to present conditions is because of its function as a no-true Scotsman fallacy intended to dismiss the failings of capitalism.
The reason for the rejection of the Austrian association of "capitalism" with "laissez-faire free markets" and dubious application of the terms "corporatism" or "state capitalism" to present conditions is because of its function as a no-true Scotsman fallacy intended to dismiss the failings of capitalism.
You could be accused of doing the same thing. This is the weakness of responding to arguments by calling out logical fallacies; you should make the case, not state it.
"Or fascism. But Mises would class it as a type of socialism anyway, and definitely heavy-handed interventionism."
I'm somewhat sympathetic to this interpretation. But it can become difficult to distinguish. Where fascism emerged, corporatism seemed like a good deal for big business to protect against socialism (the main thing for Mussolini, not nearly as important for Hitler but still on the agenda, and arguable fascists like Franco and Pinochet - here is an irony, were Franco and Pinochet socialists?). So again ideology is the crucial ingredient. You need approx 1/3 of the electorate ready to vote communist to scare big business into signing up for corporatism. But this is not the variety of corporatism that exists now. No, it is more about campaign contributions (read public choice, or Thomas Ferguson - Investment Theory of Politics, or pretty much any libertarian!) in order to get favours. So Government Motors and plenty of banks get lots of favours, but I don't see this as hastening central planning. In fascist corporatism, once fascists had seized power they were in control. But now the president is always thinking about the next election - he is more constrained in his attempts to control big business. So I don't think this crisis moves us toward anything like socialism.
Austro-Devil: So Government Motors and plenty of banks get lots of favours, but I don't see this as hastening central planning.
When profits of corporations become more and more dependent on political favors, then by the nature of things, these corporations become accountable to the government and not consumers. The person that provides (or secures) the revenues for the firm determines what the corporation should produce, how much, and at what quality.
Command and control regulations are substituted for consumer sovereignty. Private property is meaningless if the owner does not have control over his property. Since government regulations effectively transfer control from private owners to government bureaucrats, there is also a transfer of ownership. What you are failing to realize is that these regulations serve as a means to confiscate private property and to hand it over to government officials.
Austro-Devil:In fascist corporatism, once fascists had seized power they were in control. But now the president is always thinking about the next election - he is more constrained in his attempts to control big business. So I don't think this crisis moves us toward anything like socialism.
And as explained above, control over production is gradually transferred from entraranuers to the government. Consumers gradually loose control over production as more and more of production is directed by a beuracracy. Example; the current health care system and the proposed reforms, which only takes this process further. another example is the banking industry. And you will be surprised, but our entire economy is now infected with this.
Fascism is socialism in the guise of Capitalism, as Mises use to say. There is no difference.
Fair enough DD5. But are saying then that big business always loses from regulation in the long run? Even though big business tends to be the an important force demanding regulation?
I reckon either good be the case.
So heavily interventionist capitalism should not be called state capitalism and should be conflated with what Austrians argue for... because? Pfft.
Look around you.
"If we wish to preserve a free society, it is essential that we recognize that the desirability of a particular object is not sufficient justification for the use of coercion."
Jonathan M. F. Catalán:You could be accused of doing the same thing. This is the weakness of responding to arguments by calling out logical fallacies; you should make the case, not state it.
I could, but not with any very sound basis. I've always found it extremely ironic that the same economic rightists who would accuse socialists (mainly socialists that were libertarians and anarchists) of committing no-true Scotsman fallacies in denying the legitimacy of authoritarian "socialism" would insist that we lack true conservatism/capitalism, etc. Now you've progressed beyond that somewhat; your insinuation is that we "cancel each other out." The fact is, however, that a substantial amount of self-described socialists condemned authoritarian "socialism" from the period of its initial emergence throughout its dominance in the USSR and its satellite states. Conversely, implementation of economically rightist policies most closely associated with "laissez-faire" principles have a record of engineering economic recession. Have a look at John Ranelagh's Thatcher's People:
[A colleague in 1975] prepared a paper arguing that the "middle way" was the pragmatic path for the Conservative Party to take, avoiding the extremes of Left and Right. Before he had finished speaking to his paper, the new party leader [Margaret Thatcher] reached into her briefcase and pulled out a book. It was Friedrich von Hayek's The Constitution of Liberty. Interrupting our pragmatist, she held up the book for all of us to see. "This," she said sternly, "is what we believe," and banged Hayek down on the table.
We don't even need to look to Hayek or the more distant Friedman to witness examples of economically "libertarian" rightists rubbing shoulders with Pinochet when we can look to George Reisman's eager endorsement of his policies on this very website.
Jon Irenicus:So heavily interventionist capitalism should not be called state capitalism and should be conflated with what Austrians argue for... because? Pfft.
You misunderstand. I identify the nature of "vulgar libertarianism" as Kevin Carson does. Austrian economics specifically poses no threat in terms of its "ideal" economic principles because their fanciful utopianism prevents their implementation. What is harmful is that adherents of the school shift from an ideological defense of the "free market" to a defense of actually existing capitalism, despite its basis in state intervention. An example is found in another Pinochet post from the aforementioned Reisman.
Even if a socialist government were democratically elected, its first act in office in implementing socialism would have to be an act of enormous violence, namely, the forcible expropriation of the means of production. The democratic election of a socialist government would not change the fact that the seizure of property against the will of its owners is an act of force. A forcible expropriation of property based on a democratic vote is about as peaceful as a lynching based on a democratic vote. It is a cardinal violation of individual rights.
This is a defense of the ethical legitimacy of the wealth and resource distribution generated not by his utopian "free market" capitalism, which is and will remain perpetually nonexistent, but that generated by actually existing capitalism, which involves substantial state intervention as a means of maintaining stability and has generated property distribution based on NAP-violating force or fraud, since all property was actually directly acquired through force or fraud at some point in time or was created by other resources acquired through force or fraud at some point in time. If he were consistent, he would need to support extreme redistribution.
Leviathan, stop meshing all Austrians into one being. I doubt there are any Austrians that completely agree with all the other Austrians. Please stop making straw mans or taking someone's argument to be that of another. I'm sure you find it fallacious when someone here calls you a socialist.
Also, I'll take post-Lincoln-till-1913 USA if you take Soviet Russia or Communist China as real-world examples of the massive manifestation of our respective ideologies.
Daniel Muffinburg:Leviathan, stop meshing all Austrians into one being. I doubt there are any Austrians that completely agree with all the other Austrians. Please stop making straw mans or taking someone's argument to be that of another.
It is an economic school associated with a political ideology characterized by homogeneity far more than heterogeneity. There is some disagreement. There is not substantial disagreement to any extent that rivals that of any major political or economic school. Even a non-Austrian like Friedman is closely allied with the likes of Hayek in the support of Pinochet and Thatcher because of a shared political philosophy built upon the same moral foundations.
Daniel Muffinburg:I'm sure you find it fallacious when someone here calls you a socialist.
Not particularly.
Daniel Muffinburg:Also, I'll take post-Lincoln-till-1913 USA if you take Soviet Russia or Communist China as real-world examples of the massive manifestation of our respective ideologies.
Why bother, when statism finds such endorsement from "libertarian" scholars while legitimate libertarian socialists expressed only opposition to the political situations in "Soviet" Russia and "Communist" China?
Actually he is right. Some Austrians like Reisman (mainly due to inconsistent Objectivist views) do fall into the trap of so-called vulgar libertarianism, but the more consistent of us condemn all statism alike. Hayek was never Mr Libertarian, so he is a poor example to use. He was, however, a brilliant economist amongst other things (as is Reisman.)
Leviathan:Why bother, when statism finds such endorsement from "libertarian" scholars while legitimate libertarian socialists expressed only opposition to the political situations in "Soviet" Russia and "Communist" China?
I always get a kick out of it when anybody tries to present socialism as a freedom-oriented ideology. Taking away the freedom of individuals to make decisions is definitely libertarian! Wow, after a group of people forces me at gun point to surrender what I produce by my own capabilities because they arbitrarily believe that somebody else has a right to it, then I'm free to live as I please. You should do stand-up comedy, Leviathan. You really are that hilarious.
Agree with Chris.
But anyway, this discussion has wandered into the forest somewhat, instead of viewing it from the hilltop.
Mises never made any predictions of temporal progression from middle-of-the-road to socialism.
Views on intervention, more or less, and the opinions of the various scholars of the Subjectivist-Marginalist Tradition are not about this issue.
Mises simply said, quite formally: if the price control is above the equilibrium to which the controlled product would otherwise tend to, there is a shortage.
If the shortage is the opposite of what was wanted (e.g. more milk, not less), then the factors of production of milk must also be fixed with price controls. And the factors of those factors must also be fixed with price controls. And so on; each step causing a shortage, requiring either admitting the shortage or further price controls.
If the process has not led to socialism, it means that the government stopped at some point and admitted the shortage. That does not mean it renounced price controls. It simply means it has paused and remains satisfied in some way politically with the shortage. No more; no less.
Chris:I always get a kick