Control vs. Competition: Striking the Balance

Rare is the person who doesn’t have a definite view of how the world should be — at least those aspects of it that are important to the person. Even “libertarians” have proven themselves of dictatorial bent in such matters as the state-enforced redefinition of marriage as between anyone and anyone.

Having held a senior management position that made me responsible for the business side of a think-tank full of prime donne analysts (my customers), I know that control is necessary in any organization which strives to survive and thrive. Control is always there, if not in minute-to-minute micromanagement then in the design of processes and performance standards. The more indirect the ways and means of control the happier (generally) will workers be. (There are, of course, some workers who need and seek close direction, and some who need but reject it. Neither type fared well in my regime.)

If you are intelligent and competent, the urge to control can be very strong in you, especially if you are highly conscientious. You want to get things done, and done right. And you aren’t often sure that the people who work for you are capable of doing things right unless you (a) give them a lot of direction and (b) establish processes that help to ensure that their jobs are performed well.

The urge to control — in the manner I just outlined — may seem to conflict with “libertarian” and free-market principles. The reduction or absence of control is touted as the way to ensure that good ideas, systems, and processes are offered up and adopted through demonstrations of their superiority, which leads to and emulation and further innovation. By the same token, the controllers and their systems are forced to prove their worth, rather than appeal to authority (“Because I say so.”) or use authority (regulation) to maintain control.

There is something to be said for both ways of ordering the world. Chaos and inefficiency would reign if organizations (from families to huge corporations) were anarchic. Order and efficiency might emerge here and there because of the instinct to survive and the pressure of competition, but turmoil and waste would abound.

The spontaneous order of “libertarians” and free markets isn’t necessarily instantaneous order. It may take some disastrous wrecks at busy intersections before drivers generally adopt a stop-and-look-and-yield-to-the-car-on-the-right rule. Government institutionalizes the rule by installing stop signs or traffic lights. Government, on the other hand, doesn’t do much between the stop signs and traffic lights, except to arrest and fine violators of speed limits and reckless drivers often enough (in theory) to procure a relatively safe and steady flow of traffic.

Similarly, individual firms may be tightly controlled — whether overtly through micro-management or covertly through processes that have the same effect. But free markets give those firms room in which to innovate, market, and price their products so that consumers get good value for their money, while badly run firms fall by the wayside. In this instance, government (ideally) polices firms only to ensure that they don’t sell dangerous products and services, don’t despoil the environment, and don’t cheat their customers. Government, of course, doesn’t limit itself to minimal interventions because the urge to dictate is made real, all too often, by the power of government to shape commerce to its liking rather than to the tastes and preferences of consumers.

Putting government aside (and how I wish we could, for the most part), there is a flaw in the picture of controlled firms competing freely for consumers’ favor. The flaw is obvious in this reductio ad absurdum: There is one firm in the United States that produces all products and services. The firm has many subdivisions, each of which operates according to protocols that range from minute micro-management to loose-seeming processes that guide workers in the “right” direction. But the giant firm has no competitors and so its output accords with the wishes of its managers, which mesh with consumers’ wishes only by sheer luck.

The easily recognizable result is equivalent to state socialism. The are two reasons that a self-proclaimed socialist won’t embrace mega-corporatism. The first is that he might not (and probably wouldn’t be) in charge of it. The second is that he believes, beyond reason, that transforming a private person into a government bureaucrat magically transforms him into all-wise, all-knowing, beneficent servants of the people with not wish whatsoever to impose his personal worldview on others.

What about something closer to the current situation, in which important industries are dominated by one firm or a few firms, but those industries compete furiously with each other for consumers’ patronage? That’s a far better situation than the corporate equivalent of state socialism, but it still means that a lot of what becomes available to consumers depends on the whims of corporate bureaucrats and is, at best, sluggishly responsive to consumers’ wants. Overlay it with the heavy hand of government regulation and you get something much closer to state socialism.

The irony of the anti-trust movement of the late 1800s and early 1900s was that it (temporarily) broke up the monopolies of the day, but instituted regulatory agencies that simply (and with greater force) replicated the inefficiencies and unresponsiveness of the monopolies. That is to say, the anti-trust movement (which still has a lot of life in it) brought the U.S. closer to state socialism and the resulting evils of non-competitiveness.

Is there a golden mean of sorts, a combination of orderliness in the small that yields order and efficiency in the large? Classical microeconomic theory posits the perfectly competitive market as the golden mean. The theoretical result of perfect competition is more of everything, which is another way of saying that competition pushes costs down because it squeezes out inefficiency and “excess” profits. But economists recognize that perfect competition is a theoretical ideal that is seldom if ever attainable in the real world, and then only in isolated cases.

Various kinds of less-than-perfect competition — and even monopolies in some industries — are therefore not only inevitable but also desirable from the consumer’s point of view. The massive deadweight losses inflicted by regulation cannot conceivably be worth the theoretical losses resulting from less-than-perfect competition. And regulation is just one aspect of a burdensome control apparatus — government — that has robbed Americans of trillions of dollars over the decades.

The moral of the story: Control what you can if it makes you feel better. Control what you can if it makes your business more profitable. But aside from the obvious things, like controlling crime and foreign enemies, don’t use government to make the world conform to your idea of what it should be like. You’ll only make yourself poorer — and less free.

(See also “Economics: A Survey” and “Putting in Some Good Words for Monopoly“.)

Socialism, Communism, and Three Paradoxes

According to Wikipedia, socialism

is a range of economic and social systems characterised by social ownership of the means of production and workers’ self-management, as well as the political theories and movements associated with them. Social ownership can be public, collective[,] or cooperative ownership, or citizen ownership of equity.


is the philosophical, social, political, and economic ideology and movement whose ultimate goal is the establishment of the communist society, which is a socioeconomic order structured upon the common ownership of the means of production and the absence of social classes, money, and the state.

The only substantive difference between socialism and communism, in theory, is that communism somehow manages to do away with the state. This, of course, never happens, except in real communes, most of which were and are tiny, short-lived arrangements. (In what follows, I therefore put communism in “sneer quotes”.)

The common thread of socialism and “communism” is collective ownership of “equity”, that is, the means of production. But that kind of ownership eliminates an important incentive to invest in the development and acquisition of capital improvements that yield more and better output and therefore raise the general standard of living. The incentive, of course, is the opportunity to reap a substantial reward for taking a substantial risk. Absent that incentive, as has been amply demonstrated by the tragic history of socialist and “communist” regimes, the general standard of living is low and economic growth is practically (if not actually) stagnant.*

So here’s the first paradox: Systems that, by magical thinking, are supposed to make people better off do just the opposite: They make people worse off than they would otherwise be.

All of this because of class envy. Misplaced class envy, at that. “Capitalism” (a smear word) is really the voluntary and relatively unfettered exchange of products and services, including labor. Its ascendancy in the West is just a happy accident of the movement toward the kind of liberalism exemplified in the Declaration of Independence and Constitution. People were from traditional economic roles and allowed to put their talents to more productive uses, which included investing their time and money in capital that yielded more and better products and services.

Most “capitalists” in America were and still are workers who made risky investments to start and build businesses. Businesses that employs other workers and which offer things of value that consumers can take or leave, as they wish (unlike the typical socialist or “communist” system).

So here’s the second paradox: Socialism and “communism” actually suppress the very workers whom they are meant to benefit, in theory and rhetoric.

The third paradox is that socialist and “communist” regimes like to portray themselves as “democratic”, even though they are quite the opposite: ruled by party bosses who bestow favors on their protegees. Free markets are in fact truly democratic, in that their outcomes are determined directly by the participants in those markets.
* If you believe that socialist and “communist” regimes can efficiently direct capital formation and make an economy more productive, see “Socialist Calculation and the Turing Test“, “Monopoly: Private Is Better Than Public“, and “The Rahn Curve in Action“, which quantifies the stultifying effects of government spending and regulation.

As for China, imagine what an economic powerhouse it would be if, long ago, its emperors (including its “communist” ones, like Mao) had allowed its intelligent populace to become capitalists. China’s recent emergence as an economic dynamo is built on the sand of state ownership and direction. China, in fact, ranks low in per-capita GDP among industrialized nations. Its progress is a testament to forced industrialization, and was bound to better than what had come before. But it is worse than what could have been had China not suffered under autocratic rule for millennia.

“Free Stuff”

Here’s an explainer, which will go over the heads of Democrat presidential hopefuls and most Democrats:

Getting “free” stuff reduces the recipient’s need to work.

Therefore, giving out “free” stuff means that recipients work less than they would otherwise work, where “less” often means “not at all”.

But “free” stuff isn’t really free; someone has to produce it (i.e., work). (The work may be done by machines and computerized systems, but someone has to invent, build, operate, monitor, etc., those machines and computerized systems; and someone has to do some kind of work in order to generate the wherewithal for the invention, construction, and purchase of machines and computerized systems.)

As long as productivity rises fast enough, workers can continue to produce “free” stuff while maintaining or improving their own standard of living.

But if the value of “free” stuff rises faster than the value of the extra output afforded by productivity increases, something has to give. If the something is the real income of workers — what they get after providing “free” stuff for others — they will work less (though they may do so in ways that disguise the slowdown).

Some will argue that workers will just work more in order to maintain their standard of living. But just as companies will offer fewer goods and services as prices decline, so will workers work less as their real wages decline. The ability to buy stuff is an incentive to work, but there are other things to do with one’s time, so if a given amount of work buys less stuff, those other things look more attractive. (Greg Mankiw gives an economist’s explanation here.)

At some point, if productivity doesn’t rise enough (and it has been declining for a long time), while government continues to hand out more “free” stuff, enough workers will have reduced their output (in response to decreases in real wages) that the real (inflation-adjusted) value of total output will decline.

A kind of death-spiral will ensue: lower real wages leads to lower total output which leads to lower real wages (unless the “free” stuff is reduced drastically), etc., etc., etc. In the end, workers will do just enough work to afford a subsistence standard of living, and the actual value of the “free” stuff given to non-workers will be about the same as it is for workers. (In the USSR, most people were nominally employed (though not very productively), but there was so much “free” stuff being handed out — especially to the commissars and their favorites — that the result was the same: low real output and a low standard of living — by Western standards — even for the commissars and their favorites.)

Equality, ain’t it wonderful?

Natural Law, Natural Rights, and the Real World

Natural law is about morality, that is, right and wrong. Natural rights are about the duties and obligations that human beings owe to each other. Believers in natural law claim to start with the nature of human beings, then derive from that nature the “laws” of morality. Believers in natural rights claim to start with the nature of human beings, then derive from that nature the inalienable “rights” of human beings.

A natural law would be something like this: It is in the nature of human beings to seek life and to avoid death. A natural right would be something like this: Given that it is natural for human beings to seek life and avoid death, every human being has the right to life.

Maybe. But what about this? It is in the nature of human beings to enjoy sex. Given that it is natural for human beings to enjoy sex, every human being has the right to rape at will. Or not. Following the natural law-natural rights formula, it’s easy deny a natural right to rape at will: It is in the nature of human beings to seek pleasure and to avoid pain. Rape is usually painful to the person being raped. It is therefore a natural right not to be raped.

I daresay that many other contradictory and absurd propositions can be concocted from the natural law-natural rights formula; for example: Dying is often (usually?) painful, psychologically if not physically to the dying person. It is therefore a natural right not to be killed deliberately. But if there is a natural right not to be raped, and if a rapist is shot and mortally wounded by the person who is being raped (perhaps it was her only possible defense), how does that square with the supposed natural right not to be killed deliberately. Or what about the case of a terrorist who is killed just before he can detonate a bomb that would have killed dozens of persons? And so on.

In sum, natural law and natural rights are malleable concepts. Here, for example, is Timothy Sandefur, writing in “Judge Gorsuch’s Natural Law” (, February 12, 2017):

Natural law is among the oldest philosophical traditions. Some of history’s greatest geniuses, from Aristotle to Thomas Jefferson, devoted their most brilliant arguments to it, often differing about details but agreeing on the broad outlines. Natural law was the basis on which America’s founders wrote the Constitution….

… [E]ven those who embrace natural law, including Justice Clarence Thomas, have their differences. For example, while Thomas and his allies see natural law as a basis for attacking legal protections for abortion and euthanasia—because they contradict the sanctity of life—others believe that natural law theory actually supports these rights, because it prioritizes individual autonomy.

It seems that Sandefur is in favor of the right to an abortion, as a matter of individual autonomy. He is clearly critical of what he sees as Judge Gorsuch’s “circumscribed view of individual choice,” and “Gorsuch’s ultimate conclusion that government can bar people from doing things it deems evil—just because—without actually violating their freedom of choice.” So in Sandefur’s parsing of the natural law-natural rights formula, individual autonomy overrules a (qualified) natural right: the right to life.

What puts individual autonomy on a higher plane than life, or — to be precise — the life of a fetus? Sandefur is a clever lawyer, so I’m sure that he has a clever explanation. But I’m unable to access it because of a dead-end link in his blog. Speculation is in order.

If individual autonomy trumps the right to life there must be a natural law-natural right argument that makes it so. Something like this, perhaps:

It is in the nature of human beings that they own themselves and are not the property of others.

Human beings therefore have a natural right to reject man-made (positive) laws that dictate what they can do with their own bodies.

Among many things, this natural right encompasses suicide, drug use, consenting sexual acts of any kind, and abortion.

There are, of course, arguments against suicide, drug use, and unrestricted sexual acts. The arguments are “social”; that is, they appeal to the effects of such acts on other persons, and the ways in which such acts violate the natural rights of other persons. Only an extreme individualist (extreme libertarian) will reject such arguments by proclaiming the superiority of individual autonomy over other considerations. I wonder how those extreme individualists cope with the prospect of euthanasia in the guise of physician-assisted suicide, an epidemic resulting from widespread rejection of vaccinations, or the dire effects of inbreeding.

Is there a natural-rights argument against abortion? The basic one — the right to life — is sidestepped by arguments like these:

A fetus may be a human being but it isn’t yet a person.

A fetus is part of another human being, and not an independent being. The other human being (the mother) may therefore exercise her natural right to rid herself of an encumbrance.

The “personhood” argument is legalistic, at best, because personhood is an abstraction, not a physical fact. A human being is created at the moment of conception. It may be a rudimentary human being, but it is one nevertheless. And it has the potential to become a fully formed human being. In fact, it becomes one before birth. Is it then also a person? Why not, if a new-born baby is a person? But perhaps a baby doesn’t become a person until it vocalizes, or seems to recognize a face, or demands food. Arbitrary, as I say, and therefore unconvincing.

Which is why the “encumbrance” argument is usually deployed, though more euphemistically, in the form of slogans like “reproductive rights” and “a woman’s right to control her own body.” It boils down to the “right to choose,” whence “pro-choice” — meaning pro-abortion.

But this merely sidesteps the basic issue: Is there a natural right to life, or is there not? And if there is, infanticide is surely a violation of that right. So if a human being has a right to life as a new-born infant — which most pro-abortionists will concede — why doesn’t the same human being have the right to life just before he is born; or while he is “viable,” because he could be born prematurely and (probably) survive; or before he is viable but would become so were it not for the intervention of an abortionist?

Now, we’re down to line-drawing and can dispense with the fiction that there’s a natural-rights argument for abortion. In fact, line-drawing is a concession to the natural-rights argument against abortion. If you’re pro-life, you don’t draw a line. It’s those who wish to defend abortion who will argue about where to draw the line. But if there were a real natural-rights argument for abortion, there wouldn’t be a line. There would be a natural right to kill a defenseless, non-aggressive human being, whether it’s called abortion, partial-birth abortion, infanticide, or just plain murder.

As I said, natural law and natural rights are malleable concepts. They can be tortured into yielding almost any interpretation that supports the preferences of the torturer. Or, as Sandefur puts it, “differing about details but agreeing on the broad outlines.” But the devil is in the details.

An extension of natural law is that human beings not only seek to live, but also seek to flourish. (Sandefur likes that extension.) A natural right that fosters flourishing is the right to own property, to use it as a means to the end of flourishing, and to enjoy the use of the property itself, as an aspect of flourishing. Socialism denies or severely limits the right to own property, thus depriving some persons of the ability to flourish as fully as they could in order to underwrite the flourishing of other persons. Socialists — and do-gooders, generally — set themselves up as arbiters of flourishing: Some persons must flourish less so that others may flourish more. As skilled accountants of the soul, they know precisely where to draw the line — just like pro-abortionists (which most of them probably are).

There are those persons — like me — who don’t accept the broad outlines of natural law and natural rights. Jazz Shaw says this in “On the Truth of Man’s Rights Under Natural Law” (Hot Air, March 29, 2015):

Certainly … “natural rights” are things that most rational, decent people could agree upon as things that would be wonderful indeed. But if we are to accept that, then how do you deny someone else claiming a “right” which you don’t support? What of the liberal who claims they have a God given right to health care? Or even the right not to be offended by the speech of others? I can find you a library of examples of both with only a few moments on Google. Some of these same folks regularly point to the General Welfare clause and insist that this means they have a God given right to social security and any other number of safety net items. Are they right? Or are they misinterpreting the words of the founders? Oh, my… now we have another debate on our hands….

If we wish to define the “rights” of man in this world, they are – in only the most general sense – the rights which groups of us agree to and work constantly to enforce as a society. And even that is weak tea in terms of definitions because it is so easy for those “rights” to be thwarted by malefactors. To get to the true definition of rights, I drill down even further. Your rights are precisely what you can seize and hold for yourself by strength of arm or force of wit. Anything beyond that is a desirable goal, but most certainly not a right and it is obviously not permanent.


Where does that leave me? Try these on for size:
Negative Rights
Negative Rights, Social Norms, and the Constitution
Rights, Liberty, the Golden Rule, and the Legitimate State
“Natural Rights” and Consequentialism
More about Consequentialism
Positivism, “Natural Rights,” and Libertarianism
What Are “Natural Rights”?
The Golden Rule and the State
Evolution, Human Nature, and “Natural Rights”
The Golden Rule as Beneficial Learning
Rights: Source, Applicability, How Held
Human Nature, Liberty, and Rationalism
The Futile Search for “Natural Rights”
Natural Law and Natural Rights Revisited

See also: Jazz Shaw, “On the Truth of Man’s Rights Under Natural Law“, Hot Air, March 29, 2015

From Each According to His Ability…

…to each according to his need. So goes Marx’s vision of pure communism — when capitalism is no more. Unfettered labor will then produce economic goods in such great abundance that there is no question of some taking from others. All will feed at an ever-filling and overflowing public trough.

There are many holes in the Marxian argument. Here’s the bottom line: It’s an impossible dream that flouts human nature.

Capital accrues and markets arise spontaneously (where not distorted and suppressed by lawlessness, government, and lawless government) because they foster mutually beneficial exchanges of economic goods (e.g., labor for manufactured items)

Communism has failed to catch on, as a sustained and widespread phenomenon, because it rejects capitalism and assumes the inexorability of economic progress in the absence of incentives (e.g., the possibility of great rewards for taking great risks and the investment of time and resources). It is telling that “to each his own need” (or an approximation of it) has been achieved on a broad scale only by force, and only by penalizing success and slowing economic progress.

If the state were to wither to nightwatchman status, the result would be the greatest outpouring of economic goods in human history. Everyone would be better off — rich and (relatively) poor alike. Only the envious and economic ignoramuses would be miserable, and then only in their own minds.

If Marx and his intellectual predecessors and successors were capable of thinking straight, they would have come up with the winning formula:

From each according to his ability and effort,
to each according to the market value of his output,
plus whatever voluntary contributions may come his way.

Dumb-Ass Logic

Will Wilkinson, writing about some idiots who inhabit Cato Institute, notes that their

case for Bernie Sanders is simply that Bernie Sanders wants to make America more like Denmark, Canada, or Sweden … and the citizens of those countries enjoy more liberty than Americans do. No other candidate specifically aims to make the United States more closely resemble a freer country. That’s it. That’s the case.

Here’s the problem with that “logic”: You can’t take a country that has a lower index of freedom than Denmark, Canada, Sweden, etc., and make it freer by making it more socialistic. The citizens of those other countries enjoy as much freedom as they do in spite of — not because of — their socialistic institutions.

Luckily (I think), president Bernie would face a Republican-controlled Congress. Though the actual will and ability of Republicans to oppose big government has become highly suspect.

Political Philosophies in Brief

The libertarian wants everything to be legal and nothing to be free.

The conservative wants some stuff to be illegal and nothing to be free.

The fascist wants to tell everyone what they should like because it’s the “national will.”

The socialist wants to tell everyone what they should like because it’s “good for them,” and he’ll make the rich pay for most of it.

The modern liberal is a socialist who tries to hide it by calling himself a progressive.

Socialist Romanticism

Jean-Jacques Rousseau:

If then we discard from the social compact what is not of its essence, we shall find that it reduces itself to the following terms—

“Each of us puts his person and all his power in common under the supreme direction of the general will, and, in our corporate capacity, we receive each member as an indivisible part of the whole.”

Barack Obama, echoing Jean-Jacques Rousseau (and his progeny, from Marx to Castro):

Together, we determined that a modern economy requires railroads and highways to speed travel and commerce, schools and colleges to train our workers.

Together, we discovered that a free market only thrives when there are rules to ensure competition and fair play.

Together, we resolved that a great nation must care for the vulnerable, and protect its people from life’s worst hazards and misfortune.

Max Eastman, deflating Rousseauvian-Obamian romanticism:

A false and undeliberated conception of what man is lies at the bottom … of the whole bubble-castle of socialist theory. Although few seem to realize it, Marxism rests on the romantic notion of Rousseau that nature endows men with the qualities necessary to be a free, equal, fraternal, family-like living together…. (Quoted in The Great Quotations, p. 876.)

State-imposed “togetherness” is a kind of imprisonment in which the inmates suffer the illusion of freedom.

Don’t Use the “S” Word When the “F” Word Will Do

Every once in a while, Bill Vallicella (Maverick Philosopher) warns against calling Obama a socialist. Here’s a sample:

It is a tactical mistake for libertarians and conservatives to label Obama a socialist. For what will happen, has happened: liberals will revert to a strict definition and point out that Obama is not a socialist by this strict definition. Robert Heilbroner defines socialism in terms of “a centrally planned economy in which the government controls all means of production.” To my knowledge, Obama has never advocated such a thing. So when the libertarian or conservative accuses Obama of socialism he lets himself in for a fruitless and wholly unnecessary verbal dispute from which he will emerge the loser.

It is enough to point out that the policies of Obama and the Democrat Party lead us toward bigger government and away from self-reliance, individual responsibility, individual liberty, and sound fiscal policy.  If you want to use the ‘S’ word, you can say that Obama & Co. are pushing us in the direction of socialism.  But calling him a socialist is tactically inadvisable.  Never forget that the whole point is to remove him and his gang from positions of power.  To achieve that goal we need to persuade large numbers of fence-sitters that  that he is leading us down the wrong path.  That persuasion is less likely to happen if we come across as extremists who misuse language….

It’s good advice, and not just for the reasons given by Vallicella. It seems to me that persons of the left — and I mean to include so-called left-of-center “liberal” moderates as well as their “bomb-throwing” brethren on the hard left — suffer a not-fully requited passion for government control of almost everything. As long as it’s their kind of government and as long as their livelihoods are unaffected by what that government controls, of course.

How can so-called “liberal” moderates and “bomb-throwers” be brothers under the political skin? Simple. The so-called moderates like to say that they are against socialism — saying that is what makes them so-called moderates. Yet, whenever a something comes to their attention that they consider unjust, unfair, inequitable, and so on, their knee-jerk response is that government ought to “do something” about it, or to endorse (without thought) the usual and inevitable call for government to “do something” about it. In sum, so-called moderates differ from “bomb-throwers” mainly in being less honest with themselves and others about the depth of their attachment to socialism.

As Vallicella says, leftists will argue that Obama isn’t a socialist. But they will do so only because they know “socialist” is a scare word. And they don’t want their “boy” tainted by a scare word. So they will get technical and defend him (and themselves) by denying that he is in favor of something scary

But, really, they don’t care. To be a socialist is a good thing, even for the so-called left-of-center moderate who tries to conceal his true feelings from himself.

And that is the real reason why it is counterproductive to call Obama a socialist. To be thought of as a socialist (i.e., a lover of big, all-powerful government) is high praise to a large chunk of the citizenry. Daniel B. Klein explains:

Government creates common, effectively permanent institutions, such as the streets and roads, utility grids, the postal service, and the school system. In doing so, it determines and enforces the setting for an encompassing shared experience—or at least the myth of such experience. The business of politics creates an unfolding series of battles and dramas whose outcomes few can dismiss as unimportant. National and international news media invite citizens to envision themselves as part of an encompassing coordination of sentiments—whether the focal point is election-day results, the latest effort in the war on drugs, or emergency relief to hurricane victims — and encourage a corresponding regard for the state as a romantic force. I call the yearning for encompassing coordination of sentiment The People’s Romance (henceforth TPR)….

TPR helps us to understand how authoritarians and totalitarians think. If TPR is a principal value, with each person’s well-being thought to depend on everyone else’s proper participation, then it authorizes a kind of joint, though not necessarily absolute, ownership of everyone by everyone, which means, of course, by the government. One person’s conspicuous opting out of the romance really does damage the others’ interests….

TPR lives off coercion—which not only serves as a means of clamping down on discoordination, but also gives context for the sentiment coordination to be achieved….

[N]ested within the conventional view that government is not a mammoth apparatus of coercion is the tenet that society is an organization to which we belong. Either on the view that we constitute and control the government (“we are the government”) or on the view that by deciding to live in the polity we choose voluntarily to abide by the government’s rules (“no one is forcing you to stay here”), the social democrat holds that taxation and interventions such as a minimum wage law are not coercive. The government-rule structure, as they see it, is a matter of “social contract” persisting through time and binding on the complete collection of citizens. The implication is that the whole of society is a club, a collectively owned property, administered by the government…. [“The People’s Romance: Why People Love Government (as Much as They Do),” The Independent Review, v. X, n. 1, Summer 2005, pp. 5–37]

Which brings me to the “f” word: fascism. This is the core meaning of fascism:

Fascism is a system in which the government leaves nominal ownership of the means of production in the hands of private individuals but exercises control by means of regulatory legislation and reaps most of the profit by means of heavy taxation. In effect, fascism is simply a more subtle form of government ownership than is socialism. [Morris and Linda Tannehil, The Market for Liberty, p. 18]

That is a proper definition of fascism. It is proper because it is devoid of the emotional baggage that the word carries because of its association with the (rightly) despised regimes of Hitler, Mussolini, and lesser figures of the past and present. (That Hitler’s party was the National Socialist German Workers’ Party — Nationalsozialistische Deutsche Arbeiterpartei — is an inconvenient fact, and therefore one that is ignored by the left.) Fascism is not — I repeat — not synonymous with such things as concentration camps and the Holocaust. Those were vile  aspects of Hitler’s regime, but they were not fascistic as such. But — and this is a big “but” — it is the lingering memory of concentration camps and the Holocaust that invests “fascism” with its emotional baggage.

The emotional baggage carried by “fascism” can be very useful to libertarians and conservatives who want to see the back of Obama and his crew of brown-shirts. Why? Because, the Tannehills’ definition of fascism fits Obama’s regime (and that of his spiritual predecessors) like a bespoke suit.

If only Romney could find copywriters who had the skills to connect Obama and fascism — subtly but convincingly.  The evidence is there, it’s just a matter of connecting the dots. The word “fascism” couldn’t be used, of course, because it’s a smear word, and its overt use would backfire. But the word could be implied by factually describing the thrust of Obama’s policies, then adding punchlines like these: “Policies that were disgraced long ago”; “Is this the America you want your grandchildren to inherit?”;  “Utopia comes at a high price.” The punch lines would be accompanied by newsreel clips that do not show Hitler, Nazis, or Nazi rallies, but which unmistakeably depict the Germany of the 1930s. Let viewers connect the dots.

Am I going too far in calling Obama a fascist? I think not. Fascism is simply another manifestation of The People’s Romance:

Notwithstanding the arguments of political scientists – who would distinguish fascism from other collectivist –isms such as communism, socialism, or national socialism (Nazism) – these distinctions are really irrelevant because all these forms of collectivism are equally pernicious to, and destructive of, individual rights and freedom. Leftists like to use the terms fascism or fascist as pejoratives because they naively believe that socialism is somehow less evil than collectivism of “the right” – that the murder of millions of people killed by Lenin and Stalin in the Soviet Union, by Mao in Red China, or by Pol Pot in communist Cambodia somehow was less evil than the murder of millions of people killed by Hitler’s regime in Nazi Germany or Mussolini’s regime in fascist Italy. Leftists have no legitimate claim on the truth, and neither do they have any monopoly on use of the terms fascism or fascist as pejoratives. [David N. Mayer, “2008: Prospects for Liberty,” MayerBlog, January 11, 2008]

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…B.C. Forbes, the founder of the eponymous magazine, denounced “rampant Fascism” in 1933. In 1935 former President Herbert Hoover was using phrases like “Fascist regimentation” in discussing the New Deal. A decade later, he wrote in his memoirs that “the New Deal introduced to Americans the spectacle of Fascist dictation to business, labor and agriculture,” and that measures such as the Agricultural Adjustment Act, “in their consequences of control of products and markets, set up an uncanny Americanized parallel with the agricultural regime of Mussolini and Hitler.” In 1944, in The Road to Serfdom, the economist F.A. Hayek warned that economic planning could lead to totalitarianism. He cautioned Americans and Britons not to think that there was something uniquely evil about the German soul. National Socialism, he said, drew on collectivist ideas that had permeated the Western world for a generation or more.

In 1973 one of the most distinguished American historians, John A. Garraty of Columbia University, created a stir with his article “The New Deal, National Socialism, and the Great Depression.” Garraty was an admirer of Roosevelt but couldn’t help noticing, for instance, the parallels between the Civilian Conservation Corps and similar programs in Germany. Both, he wrote, “were essentially designed to keep young men out of the labor market. Roosevelt described work camps as a means for getting youth ‘off the city street corners,’ Hitler as a way of keeping them from ‘rotting helplessly in the streets.’ In both countries much was made of the beneficial social results of mixing thousands of young people from different walks of life in the camps. Furthermore, both were organized on semimilitary lines with the subsidiary purposes of improving the physical fitness of potential soldiers and stimulating public commitment to national service in an emergency.”

And in 1976, presidential candidate Ronald Reagan incurred the ire of Sen. Edward Kennedy (D-Mass.), pro-Roosevelt historian Arthur M. Schlesinger Jr., and The New York Times when he told reporters that “fascism was really the basis of the New Deal.” [from David Boaz’s “Hitler, Mussolini, Roosevelt: What FDR had in common with the other charismatic collectivists of the 30s,” a review of Wolfgang Schivelbusch’s Three New Deals: Reflections on Roosevelt’s America, Mussolini’s Italy, and Hitler’s Germany, 1933–1939]

Obama’s regime is nothing less than a new New Deal — on steroids.

Related posts:
FDR and Fascism
The People’s Romance
Fascism with a “Friendly” Face
Fascism and the Future of America

Understanding Hayek

In an earlier post, I deployed the following statement by Michael Oakeshott:

How deeply the rationalist disposition of mind has invaded our political thought and practice is illustrated by the extent to which traditions of behaviour have given place to ideologies, the extent to which the politics of destruction and creation have been substituted for the politics of repair, the consciously planned and deliberately executed being considered (for that reason) better than what has grown up and established itself unselfconsciously over a period of time…. This is, perhaps, the main significance of Hayek’s Road to Serfdom — not the cogency of his doctrine, but the fact that it is a doctrine. A plan to resist all planning may be better than its opposite, but it belongs to the same style of politics. And only in a society already deeply infected with Rationalism will the conversion of the traditional resources of resistance to the tyranny of Rationalism into a self-conscious ideology be considered a strengthening of those resources. (From “Rationalism in Politics,” in Rationalism in Politics and Other Essays, new and expanded edition, pp. 26-7.)

I hereby retract my implied endorsement of Oakeshott’s view of Hayek as a rationalist. Hayek’s “doctrine” consisted of a reasoned, well-founded warning against central planning. That is no more a doctrine than a highway sign that warns of sharp curves ahead.

Hayek was very much an anti-rationalist. (The use of reason, in itself, is not rationalism, which values only reason and the ordering of socio-economic relationships by the use of reason.) For example, Peter G. Klein writes that

…Hayek’s later emphasis on group selection and spontaneous order is not shared by Mises…. A clue to this difference is in Hayek’s … statement that “Mises himself was still much more a child of the rationalist tradition of the Enlightenment and of continental, rather than of English, liberalism . . . than I am myself.” This is a reference to the “two types of liberalism” to which Hayek frequently refers: the continental rationalist or utilitarian tradition, which emphasizes reason and man’s ability to shape his surroundings, and the English common-law tradition, which stresses the limits to reason and the “spontaneous” forces of evolution. (“Biography of F.A. Hayek,” at Ludwig von Mises Institute)

As for The Road to Serfdom, Peter Boettke explains that it

was conceived of as part of Hayek’s Abuse of Reason project.  It was a political tract for its time, but it was also much more than that.  A careful reader can see in the book both where Hayek attempts to move beyond the political issues of his day to address more timeless issues of social cooperation….

Hayek’s basic thesis in The Road to Serfdom is that the lure of socialist ideology has the unintended and undesirable consequence of economic depravation and political tyranny when countries follow its policy agenda.  The reason for this is that the task of socialist planning requires economic planners to assume a level of responsibility for economic life in a country which is both cumbersome to the point of impossible, and powerful beyond any reasonable limit that could be safely trusted to any one individual or group of individuals….

Hayek’s book was not a deterministic one, but rather a warning to those countries of the West who were enamored with socialist ideology, that the implementation of socialism would tend to undermine the beliefs that were at the core of Western civilization….

…[S]ixty years on, we are still celebrating Hayek’s achievement with The Road to Serfdom.

Most of this celebration of Hayek, admittedly, is ideological in nature and confirms Hayek’s status as an iconic figure for the world-wide conservative and libertarian movement. I do not deny the importance of this in explaining the popularity of Hayek’s work, but I also think those who rely on this explanation exclusively relegate Hayek’s work to the status of a “coffee-table book” — a work to be seen as in one’s possession among the intelligentsia but not read.  Rather, I want to stress the analytical contribution that Hayek makes in his work….

Hayek sought to demonstrate in a manner persuasive to the public and the intellectual elite that the consequences of the policy choice of socialism would lead them down a path that they themselves would never want to go if they made their choices in full knowledge of the consequences of their choice.  It is a tragic tale he is telling in The Road to Serfdom, not one of determinism or even opportunism.  “Is there a greater tragedy imaginable,” Hayek asks, “than that, in our endeavor consciously to shape our future in accordance with our highest ideals, we should in fact unwittingly produce the very opposite of what we have been striving for?” (“On reading Hayek: choice, consequences, and The Road to Serfdom“)

Hayek was out to slay the rationalistic dragon of market socialism:

economic systems where the means of production are publicly owned, managed and operated for a profit in a market economy…. Theoretically, the fundamental difference between a traditional socialist economy and a market socialist economy is the existence of a market for the means of production and capital goods under market socialism.

On that point, Boettke writes:

[Hayek] never impugns the character of those he is arguing with, instead he points out how their intellectual error leads to results that would make these individuals shudder with fear. To reiterate …, the market socialists thought their model of socialist planning could be reconciled with consumer sovereignty, but their position was untenable due to the organizational problems of socialism in terms of aligning incentives, utilizing information, and discovering knowledge.  Neither Lerner nor Durbin [two leading market socialists] ever admitted that Hayek had refuted their claim to have squared the circle.  Of course, they believe in individualism and not authoritarian government. But their theory if put into practice would have resulted in a march toward serfdom as special interest forces would be unleashed to agitate for greater and greater government control over resources and the allocation of labor. Either consumer sovereignty would be suppressed, or planning would have to be abandoned — but the two could not be reconciled. (Id.)

Boettke concludes:

Hayek wrote The Road to Serfdom at a crucial stage in the 20th century. The Nazi threat to western civilization had just been defeated, but the Communist system had grown in legitimacy in the process.  Communism had avoided the Great Depression, and whatever problems might exist, Stalin did mobilize the resources in the Soviet Union to transform a peasant society into an industrial power in a generation and effectively enough to help the allies defeat Hitler.  Hayek’s argument was that our fascination with the Communist ideal will prove to be our undoing unless we recognize the warning signs.  He stood there and could do no other, but to pen this warning.

The Road to Serfdom made Hayek a famous man, but it also partially discredited him among his fellow academics and the intellectual elites in the west.  But he was not deterred and his career post-1944 focused increasingly on the issues of social philosophy and political economy….

…Hayek’s emphasis [was] on how alternative institutional arrangements, through their properties to align incentives and utilize dispersed information, impact the choices people make…. (Id.)

(For more by Boettke, see “Hayek’s the Road to Serfdom Revisited: Government Failure in the Argument Against Socialism,” and “Hayek and Market Socialism: Science, Ideology, and Public Policy.”)

Hayek, in short, was prescriptive only to the extent that his understanding of human nature and social relationships enabled him to issue well-founded warnings about the unintended and undesirable consequences of rationalistic schemes — like socialism.

As for Hayek’s Abuse of Reason project, here is Bruce Caldwell’s outline:

In late August 1939 Hayek sent a letter to his friend Fritz Machlup saying that … he would begin work on a new project, tracing the decline of reason from Saint-Simon to Hitler. The plan of the work was contained in an outline prepared in the summer of 1940, titled “The Abuse and Decline of Reason: The Reflections of an Economist on the Self- Destructive Tendencies of Our Scientific Civilization.” The introduction was to be titled “The Humility of Individualism.” Part 1, called “The Collectivist Hybris,” would trace the topic through French, German, English, and American phases. Part 2 was to be called “The Totalitarian Nemesis.” In a slightly later outline, the first chapter of part 1 was to be “Scientism.”

The Abuse of Reason project would tell a very different story from that of the steady side-by-side progress of socialism and democracy that Webb and others espoused. In Hayek’s alternative tale, the steady growth of scientism and of the planning mentality engendered the (in Hayek’s view, false) hope that scientific advances would allow the creation of a new planned socialist society. Scientism and socialism grew up together. Hayek would trace out the pedigree and history of the ideas that he felt had led the western world to totalitarianism. (“Hayek on Mill”)

In sum, Hayek’s work is anti-doctrinal. Its implications for policy are negative ones. As Francis Fukuyama writes,

Hayek’s skepticism about the effects of “big government” are rooted in an epistemological observation summarized in a 1945 article called “The Uses of Knowledge in Society.” There he argued that most of the knowledge in a modern economy was local in nature, and hence unavailable to central planners. The brilliance of a market economy was that it allocated resources through the decentralized decisions of a myriad of buyers and sellers who interacted on the basis of their own particular knowledge. The market was a form of “spontaneous order,” which was far superior to planned societies based on the hubris of Cartesian rationalism. (“Friedrich A. Hayek, Big Government Skeptic,” The New York Times, May 6, 2011)

So far, so good. But Fukuyama later discusses “two major critiques of Hayek’s arguments”:

The first comes from the left. Hayek provides a very minimalist definition of freedom as freedom from coercion, and particularly coercion by a central government. But as the economist Amartya Sen has argued, the ability to actually take advantage of freedom depends on other things like resources, health and education that many people in a typical society do not possess. (Id.)

Sen is talking about “positive liberty,” which I have addressed here (among other places):

In other words, it is not enough to have “peaceful, willing coexistence and its concomitant: beneficially cooperative behavior.” That kind of liberty — liberty in the fullest sense — encompasses the acts of love, affection, friendship, neighborliness, and voluntary obligation that help individuals acquire the “power and resources” with which they may strive to attain the fruits of liberty, insofar as they are willing and able to do so.

That should be enough to satisfy the proponents of positive liberty … but I suspect otherwise. I would be more sanguine were they proponents of a proper definition of liberty, but they are not. Thus, armed with an inchoate definition of liberty, they are prepared to do battle for positive liberty and, I fear, the positive rights that are easily claimed as necessary to it; to wit:

  • A lack of “power” entitles certain groups to be represented, as groups, in the councils of government (a right that is not extended to other groups).
  • A lack of “resources” becomes the welfare entitlements of various kinds — for personal characteristics ranging from low intelligence to old age — which threaten to suck ever more resources out the productive, growth-producing sectors of the economy.
  • The exercise of “free will” becomes the attainment of certain “willed” outcomes, regardless of one’s ability or effort, which then justifies such things as an affirmative-action job, admission to a university, a tax-subsidized house, etc.
  • “Classism,” “sexism,” “racism,” and now “beauty-ism” become excuses for discriminating against vast swaths of the populace who practice none of those things.

With respect to the final point, a certain degree of unpleasantness inevitably accompanies liberty. Legal attempts to stifle that unpleasantness simply spread injustice by fomenting resentment and covert resistance, while creating new, innocent victims who are deemed guilty until they can prove their innocence.

In sum, the line between positive liberty and positive rights is so fine that the advocacy of positive liberty, however well meant, easily becomes the basis for preserving and extending the burden of positive rights that Americans now carry. (“Positive Liberty vs. Liberty”)

Positive liberty and positive rights are aspects of social justice, a concept that Hayek rightly rejected. If some are granted positive rights in the name of positive liberty or social justice, others must perforce be denied liberty — at the whim of the state. Those who presume to decide who is deserving and who is not are arrogant accountants of the soul.

Fukuyama, ends by echoing (unwittingly, I suspect) Oakeshott’s critique:

In the end, there is a deep contradiction in Hayek’s thought. His great insight is that individual human beings muddle along, making progress by planning, experimenting, trying, failing and trying again. They never have as much clarity about the future as they think they do. But Hayek somehow knows with great certainty that when governments, as opposed to individuals, engage in a similar process of innovation and discovery, they will fail. He insists that the dividing line between state and society must be drawn according to a strict abstract principle rather than through empirical adaptation. In so doing, he proves himself to be far more of a hubristic Cartesian than a true Hayekian. (Fukuyama, op. cit.)

William Easterly responds:

To say Hayek’s skepticism about government was based on “great certainty” is not just wrong, it is so much the opposite of  Hayek, it’s like accusing Michele Bachmann of excessive belief in the Koran.

Hayek’s view of knowledge was that it was partial and dispersed among many. The market gave individuals the incentives to apply this knowledge, and coordinated the uses of this local knowledge in a way that rewards each of us who knows best about any particular narrow area…. Government usually lacks both the incentives and the coordination mechanism. In government we don’t know who knows best, so which knowledge wins the argument could often be wrong. (“Saving Private Hayek”)

A good summation is found in a blog post by Peter Boettke:

Hayek [in The Road to Serfdom] was not diagnosing the situation in Russia and Germany, but offering a warningto the countries of the West that they could in fact go down the same path as Russia and Germany if they didn’t resist the lure of socialist ideology.  And critical to his argument was that democratic institutions were not a robust bulwark against the excesses that logically result from socialist planning.  In short, even a civilized attempt at democratic socialism will have unintended and undesirable consequences.

Another way to think about this is that Hayek begins his work with full knowledge (and acceptance) of Mises’s critique of socialism, but he is examining a world where political leaders and intellectuals do not accept that critique and so they will pursue the socialist plans anyway.  They think the problem with Soviet Russia or Nazi Germany is the non-democratic nature of the political systems, and not the economic planning being pursued.  So planning advocates in the West, wanted to pursue economic planning within the context of a democratic political system.  Hayek is just pursuing the logic of what results given the nature of economic planning….

Critical to the current discussion on Hayek, Keynes and Planning is not the liberal credentials of the two thinkers, nor their intentions, but the logical tracing out of the intended and unintended consequences of economic planning.  As Keynes’s letter to Hayek about The Road to Serfdom reveals, he believed that he and Hayek were in essential agreement about the horrors of Soviet and Nazi planning, but in disagreement about the question of whether planning is the problem.  Instead, Keynes argues we want more, not less, planning provided that the planning was being done by men of high character.  In essence, Keynes didn’t get the point about the Mises-Hayek critique of socialism. (“What Was the Argument in The Road to Serfdom?“)

And so it goes. In the 67 years since the first publication of The Road to Serfdom, Americans have been herded (often willingly) down that road. Why? Because of economic illiteracy (a widespread belief in the “free lunch,” for example), the interest-group paradox (the belief that I can have my “free lunch” but I will not have to pay for the “free lunches” of others), and the kind of “soft despotism” (fascism’s friendly face) that was foreseen by Alexis de Tocqueville.

Hayek was not a rationalist. He was a profound realist and, unfortunately, a prescient one.

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Related posts (most of the posts listed at the following links):
Liberty and Rights in Principle and Practice
Basic Economics
The Economic and Social Consequences of Government
Political Incorrectness — Antidotes to “Liberal” Cant

Experts and the Economy

In “Socialist Calculation and the Turing Test,” I wrote about the

suggestion … that one can emulate the outcomes that would be produced by competitive markets — if not something “better” — by writing rules that, if followed, would mimic the behavior of competitive markets.The problem with that suggestion … is that someone outside the system must make the rules to be followed by those inside the system.

And that’s precisely where socialist planning and regulation always fail. At some point not very far down the road, the rules will not yield the outcomes that spontaneous behavior would yield. Why? Because better rules cannot emerge spontaneously from rule-driven behavior….

Where, for instance, is there room in the socialist or regulatory calculus for a rule that allows for unregulated monopoly? Yet such an “undesirable” phenomenon can yield desirable results by creating “exorbitant” profits that invite competition (sometimes from substitutes) and entice innovation. (By “unregulated” I don’t mean that a monopoly should be immune from laws against force and fraud, which must apply to all economic actors.)

I suppose exogenous rules are all right if you want economic outcomes that accord with those rules. But such rules aren’t all right if you want economic outcomes that actually reflect the wants of consumers….

Of course, the whole point of socialist planning is to produce outcomes that are desired by planners. Those desires reflect planners’ preferences, as influenced by their perceptions of the outcomes desired by certain subsets of the populace. The immediate result may be to make some of those subsets happier, but at a great cost to everyone else and, in the end, to the favored subsets as well. A hampered economy produces less for everyone.

Socialism — a.k.a. “liberalism” — is all about reliance on experts. As Don Boudreaux says,

modern “liberalism’s” ideas are about replacing an unimaginably large multitude of diverse and competing ideas – each one individually chosen, practiced, assessed, and modified in light of what F.A. Hayek called “the particular circumstances of time and place” – with a relatively paltry set of ‘Big Ideas’ that are politically selected, centrally imposed, and enforced not by the natural give, take, and compromise of the everyday interactions of millions of people but, rather, by guns wielded by those whose overriding ‘idea’ is among the most simple-minded and antediluvian notions in history, namely, that those with the power of the sword are anointed to lord it over the rest of us.

Megan McArdle puts it this way:

So we get [from central planning] what most interests wordsmiths:  a succession of enormous plans (health care exchanges! privatize social security!), most of which fail….
But all this makes me very skeptical of handing elites more power, particularly when they are given that power in order to reduce the autonomy of some other group.  (And somehow, that usually is what it’s for–you haven’t seen much lobbying for better regulation of university professor quality, even though a bad idea is probably more dangerous than a bad apple.)
J.M. Keynes — the experts’ expert — said that “Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.” Keynes is the quintessential defunct economist, and mindless politicians (among others) are his slaves.