". . . a republic, if you can keep it."
This essay was the first thing of Hoppe’s I ever read. It blew my mind. It discusses the common ground between Marxism and Austrians and how the Marxists depart down the road to serfdom by misidentifying the exploiters.
Interesting to note that Hoppe began as a Marxist. I think the essay demonstrates his philosophical rigor.
The most remarkable fact in the history of our age is the revolt against rationalism, economics, and utilitarian social philosophy; it is at the same time a revolt against freedom, democracy, and representative government. It is usual to distinguish within this movement a left wing and a right wing. The distinction is spurious. The proof is that it is impossible to classify in either of these groups the great leaders of the movement.
Was Hegel a man of the Left or of the Right? Both the left-wing and the right-wing Hegelians were undoubtedly correct in referring to Hegel as their master. Was George Sorel a Leftist or a Rightist? Both Lenin and Mussolini were his intellectual disciples. Bismarck is commonly regarded as a reactionary. But his social-security scheme is the acme of present-day progressivism. If Ferdinand Lassalle had not been the son of Jewish parents, the Nazis would call him the first German labor leader and the founder of the German socialist party, one of their greatest men. From the point of view of true liberalism, all the supporters of the conflict doctrine form one homogeneous party.
The main weapon applied by both the right- and the left-wing antiliberals is calling their adversaries names. Rationalism is called superficial and unhistoric. Utilitarianism is branded as a mean system of stockjobber ethics. In the non–Anglo-Saxon countries it is, besides, qualified as a product of British “peddler mentality” and of American “dollar philosophy.” Economics is scorned as “orthodox,” “reactionary,” “economic royalism,” and “Wall Street ideology.”
It is a sad fact that most of our contemporaries are not familiar with economics. All the great issues of present-day political controversies are economic. Even if we were to leave out of account the fundamental problem of capitalism and socialism, we must realize that the topics daily discussed on the political scene can be understood only by means of economic reasoning. But people, even the civic leaders, politicians, and editors, shun any serious occupation with economic studies. They are proud of their ignorance. They are afraid that a familiarity with economics might interfere with the naïve self-confidence and complacency with which they repeat slogans picked up by the way.
Read more from mises.org
These two lectures speak to a very subtle, but very important topic underlying economics.
There’s a struggle between empiricists who insist there is no knowledge without experiment, and rationalists who believe in the triumph of reason. When the former, the empiricists reign, economics gets treated like just an opinion true only until it can be refuted, with all theories (including socialism) being valid until experiments are conducted.
The second of these two lectures by Hans Hermann Hoppe is more accessible than the first.
Triple H – The man, the myth, the legend:
I loved this Mises daily article.
Very comprehensive.
Liquidity Trap is a euphemism for institution carrying irresponsible loans who don’t want to go bankrupt. They seek to be rescued (with your savings) from the dreaded liquidity trap. It is at the heart of Keynesianism.
They say there isn’t enough money. People will stop spending. When people stop spending, businesses will go under. When businesses go under, more people will be out of work. And so on in a vicious, self-reinforcing spiral.
This Mises daily article helped me understand the nonsense of this idea, which Keynesians discuss with much subtelty: mises.org/daily/3697
Here’s my short version.
The only time people will stop spending altogether is when they no long want goods and services provided by others. In other words, never.
Price fluctuation can absorb any amount of hording of cash. If people are filling their mattresses with dollars, prices will simply drop. Opportunities will be created for those who choose to buy things.
Most people will save their money in banks. If we lived in a free society, and the interested rate was settled on the free market, the increased savings would create more opportunities for people who want to borrow money. This would be manifest in low interest rates.
High savings create lots of opportunities to borrow and thus low interest rates. Low savings make it hard to borrow and thus high interest rate.
One very important, uniquely Austrian point, is that this harmonizes savings with interest rates. It harmonizes future planning of people (who are saving) with opportunities for entrepreneurs to begin long-term projects.
Keynesianism treats all production equally — long term, short term, building computers, digging ditches — as if humans produced and traded blobs of meaningless GDP. The Austrians identify short and long production processes and their need to be harmonized with savings (which reflect whether people are planning for the short or long term). This distinction gets messed up with the Fed sets the interest rate or rescues institutions from the so-called “Liquidity Trap.”
Fantastic, readable, essay here: mises.org/daily/5407/Is-Higher-Inflation-Inevitable
Nice. Simple. Important.
I think this is a ridiculous combination of Marxism and Keynesianism typical of high-level government officials, with a stress on Marxism, perhaps indicative of a former Labor Secretary.
1) A Marxist devotion to egalitarianism. Good and bad are evaluated in terms of less equal and more equal. Marxisms relies on a fervent hatred of the rich. Here’s an example of why pure egalitarian analysis is flawed:
Imagine a rich town where infant mortality is 3/100,000, and a poor town where infant mortality is 6/100,000. Imagine some technological breakthrough which reduces it by one in each town. So infant mortality becomes 2/100,000 and 5/100,000. Normal people would hail this as an improvement. But Marxists see that it represents an INCREASE in inequality. Instead of infant mortality being twice as high in poor areas, it’s now two and half times as high.
2) He claims we should hate the rich and that there’s a budget deficit because the rich aren’t paying their share.
Shouldn’t the fact that government spending doubled under Bush, and tripled under Obama enter into this analysis? Isn’t that a no-brainer?
Even if the government slaughtered all the rich people and took their money (something which had been attempted in Ukraine and elsewhere), even if the government took 100% of the profits from all fortune 500 companies, we still couldn’t afford the 2011 budget.
Here’s Iowa Hawk’s wonderful illustration: www.youtube.com/watch?v=661pi6K-8WQ#t=2m29s
There’s also the fact the rich aren’t the same people from decade to decade. There’s a lot of mobility.
3) “instead of joining together” workers are competing
The Marxist dichotomy of all workers vs. all employers is bullshit. Workers compete against each other and employers compete against each other. Only politicians claim that the interests of huge groups of people are identical. Politicians need large groups of people to hate and/or fear other large groups of people.
4) The middle class can’t borrow, lacks purchasing power = high unemployment.
Spending does not drive the economy, and debt certainly doesn’t drive the economy. Savings do. When people spend less on consumer goods, it means they are saving more (ie planning for the future). In a free economy, this would mean that investment money becomes available for long term projects that will produce goods in the future.
Certain business need to close but opportunities are created for long term projects. The structure of production needs to change, and we ought to simply let it change.
In our Keynsian economy, the government tries to keep spending going, even though people are trying to save.
5) He’s also suggesting something completely ridiculous and wrong headed. He says that politically connected people have too much sway over government, and wants to fix this by giving the government more power. This would back fire if he ever had his way. Giving more resources and power to government means more incentive for people to control government. Letting people keep more of their money is a much better solution.
Also, Austrian School economist Robert Murphy addresses of glaring falsehoods in the former Labo Secretary’s presentation: