In all ages, pioneers of new ways of thinking and
acting could work only because private property made contempt
of the majority's ways possible - Mises in Liberty and
Why is it that socialism retains
followers and even credibility in spite of the historical evidence
that its disregard for the economics of market systems is, at root,
the main downfall of every socialist system of organization?
For all of our own inquiry into the
topic of the conflict between left and right, I have found the best
explanations within the insights offered by the forefathers of the
US Constitution, particularly as they regard the morality of mankind.
They should know. After all, they had designed an entire document
whose legally bound principles were intended to enable every American
to thwart those forces of human nature, which could undermine their
individual freedoms through an over concentration of power in government,
which by the way, "is" typically controlled by the few.
Yes, I know, government is supposed
to be "We" the people. But is it? I don't think so. Not today. Incidentally,
Microsoft's Word (word processor) can't understand the We, and instead,
recommends using "Us."
What I'm getting at though is power.
For all the talk that emanates from Mr. O'Neill's mouth in favor
of policies that do not favor the few it is ironic how much power
the Treasury and Fed have, both economic and political. The Congress
has been rendered without power because the Fed isn't really considered
constitutional in the first place, and they know it. But they know
that if they did anything about it, financial ruin would encroach
quickly. The Fed has a metaphorical gun to our heads in that we
have no choice but to accept its legitimacy, and thus power.
About the Power, Stupid!
We found that in the end, rather than the beginning, communism was
about power. So it is with most socialist systems, above all, in
the end. Many writers have well documented the conflicts arising
between individual and the State over the course of history. The
chief conflict being about liberty. This was so apparent to Benjamin
Franklin (one of the forefathers) that in his "Papers"
several years prior to 1792 he said:
"Those who would give up essential Liberty, to
purchase a little temporary Safety, deserve neither Liberty nor
What a toughie, heh?
The conflict was so vivid to Ayn
Rand, who was brought up in Communist Russia, she wrote several
books to enlighten the rest of us about the fact that in the end,
it always comes down to a matter of life and death. As far as I
could tell, she truly believed it ultimately did. Though we are
talking about a timeline, not an immediate instance. We're also
talking about the progression of economic systems specifically.
There's a reason the US Constitution
has such devout fans. There is probably more truth in that one document
than there is in any economics or history book we offer to our children.
And I think I'm being nice.
But this is not about the educational
system or the Constitution, though at root, that document is in
no small way about preserving the liberty of the individual "from
It is important to note that prior
to the advent of capitalism in the 18th century, socialism didn't
actually exist because freedom was not defined the same way it is
It has been documented by many economic
historians that the rise of capitalism was concurrent with the rise
of individual liberty. The pre capitalist era did not see it as
a fundamental right of the individual to have freedom. The writers
of the day wrote of freedom for the noble classes. Everyone else
was just people with not even the right to vote. Their perception
of freedom was entirely different.
It wasn't until a new class of entrepreneur
sprang to power out of the factory strata that broad suffrage was
awarded. This birth of individual freedom was one of the by products
of the Industrial Revolution, I (too) contend, and thus one of its
But having only been recently awarded
this liberty after thousands of years of near to full slavery we
are probably not cognizant of all its enemies. Most socialists or
Statists by definition see a future where all the nation's resources
can be shared, or divided up, equally or not, with varying caveats
and according to a grand design.
What is taken for granted is the
notion that liberty is a fundamental "human" right, which
Indeed, the only example of individual
freedom exists as a social contract between men (and women today).
It isn't as if there is something in nature that guarantees this
Ludwig von Mises, an economic scientist,
or Praxeologist by his words, said in his essay on Liberty
"Romantic philosophy labored under the illusion
that in the early ages of history the individual was free and
that the course of historical evolution deprived him of his primordial
liberty. As Jean Jacques Rousseau saw it, nature accorded men
freedom and society enslaved him. In fact, primeval man was at
the mercy of every fellow who was stronger and therefore could
snatch away from him the scarce means of subsistence. There is
in nature nothing to which the name of liberty could be given.
The concept of freedom always refers to social relations between
"As regards the social apparatus of repression
and coercion, the government, there cannot be any question of
freedom. Government is essentially the negation of liberty"
- Section V, On Liberty and Property, 1958.
Who's the Primary Actor anyway?
We could argue, and in fact have argued, that individual freedom
is only required to the extent that the system of production is
capitalism. It is only under this system, which works according
to free market principles, where it is compulsory the individual
have the power to choose what is good for him or her.
Otherwise markets don't function,
as they are capable of. The freedom of individuals to do as they
please empowers the market mechanism. Although Adam Smith never
really expounded on the sovereignty of the consumer in a free market
system, Ludwig von Mises did, and he did it almost 200 years later.
Therefore, we see it as an advance in capitalist, market, or economic
theory (note to Larry Kudlow).
It was clear to him that a key feature
of the Industrial Revolution
was that economic sovereignty shifted from producer to consumer.
It was quickly found that as market systems adjusted to consumer
tastes and preferences rather than producer preferences, wealth
and enchantment spread through the land, so to speak.
In all socialist systems, it is really
the producer or government that holds sovereignty, and in so doing
socialists reject the laws of the markets that have ruined one tyrant
after another, as well as take for granted their own freedom as
individuals within a union.
Under any system where the consumer
isn't sovereign his or her liberty is in danger of repossession,
if you will. It isn't necessary, and in fact, could be a threat.
Guess what? Just because the consumer has money and can buy things
doesn't mean he's got sovereignty. Indeed, according to Jude Wanniski,
one of the authors of Supply-Side economic doctrine, which turned
out to be Reagan's economic platform, it is the producer that is
sovereign, at least in his economic model. Is there any wonder that
governments are fans of his? And all of this focus on the consumer
today while policymakers are busy operating under the Supply Side
umbrella is very thick in irony.
I don't know if we can say this objectively, but I find that socialists
are by and large uninformed of the conflict between individual and
State, ignorant of their clear rejection of Say's Law (a basic economic
principle of supply/demand), and other market & economic realities,
but especially of the political history of power, if not their own
desire for it.
That's right, greed is not isolated
to capitalists. Indeed, that would be like endorsing poly-logism
among different races or ethnic backgrounds. Greed is a human trait.
Some would say a right.
But socialists argue that greed is
propagated in a free market system, as if it couldn't exist otherwise.
They associate capitalism with money as if money isn't necessary
otherwise. Finally, some may even claim that capitalists are glorified
fascists. Even worse, some may think we're Republicans.
It's enough to make one dizzy from
all of the head shaking. We watch today as the global media frame
(unbridled) capitalism, for
the rise in global poverty that has inspired often-violent protests
against the World Bank and IMF.
Their aim is right, I believe, but
their understanding of the situation is so poor that it unnerves
me to watch the violence people will resort to without fully understanding
the state of affairs.
The irony is that these are socialist
institutions as is any central bank. They all claim to exist as
safety nets, but are in reality simply the instruments of wealth
transfer, or power. The history of central banking in the United
States is controversial for this very reason. They oppose the libertarian
principles of the Constitution, and their legal stature is in question
to this day.
Here's a well-known quote whose subject,
or maybe even author, most people might scoff at today, but which
might only prove we are right about the Republic's diminution.
learns to make interested uses of every right and power, which
they possess, or may assume. The public money and public liberty...
will soon be discovered to be sources of wealth and dominion to
those who hold them; distinguished, too, by this tempting circumstance,
that they are the instrument, as well as the object of acquisition."
- Thomas Jefferson (Notes on Virginia, 1784)
We could easily argue that the rise
of socialism, in its rawest form, was a rejection of the Industrial
Revolution and the coming on of capitalism in the first place, and
those seeking to retain their established power advanced it. If
anyone disagrees we need only refer them to the fact that Marx himself
came from nobility, which elitist class represented the dying institution
of his day, and that his and Engel's thesis on Communism arrived
70 years after the dawn of the Industrial Revolution in 1848, when
capitalism's tentacles had already
spread through Europe.
Socialism is about power, and those
institutions erected in its name are instruments of power, not instruments
of capitalism. Having said that, Capitalism does not reject governments.
It only requires that the individual have reasonable means to object
to the government's will. This is the reason for a sound system
of private property rights - to preserve the consumer's (not
Thus anything that undermines that
sovereignty must be an abuse of power. As benign as that may seem
at times, it probably is always a matter of life and death in the
Everybody loves the Fed today. But
that's because it still isn't clear what it has done to their money,
economy, and liberty. We've only seen the sunny side of the hill
so far. But like Greenspan said to a Senator as the Fed's Humphrey
Hawkins mandate expired in 1999, all of the roads from the top of
a mountain lead down. So far he's made it an easy (no pun intended)
We may look at the world today and
conclude that with the fall of the Berlin wall in Germany and the
Soviet Union in Russia, capitalism has been victorious finally.
But it hasn't. The rejection of capitalism is alive and well today,
and it is underwritten by the largest, most powerful, and richest
central planning establishment in the history of the world, which
most people paradoxically see today as the instrument of capitalism.
That misperception may very well
be the downfall of capitalism, and thus by extension, freedom, at
least as we know it today. When politicians talk of a new world
order, maybe now you'll know what they mean. It's about power not
Or maybe we're making a big deal
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