More Than We Pay For

In The Manifesto of the Communist Party (1848), Marx and Engels made an accusation against the capitalist order: the system cares only about money.

The bourgeoisie, wherever it has got the upper hand, has put an end to all feudal, patriarchal, idyllic relations. It has pitilessly torn asunder the motley feudal ties that bound man to his “natural superiors,” and has left no other nexus between man and man than naked self-interest, than callous “cash payment.” It has drowned out the most heavenly ecstacies of religious fervor, of chivalrous enthusiasm, of philistine sentimentalism, in the icy water of egotistical calculation. It has resolved personal worth into exchange value, and in place of the numberless indefeasible chartered freedoms, has set up that single, unconscionable freedom — Free Trade. In one word, for exploitation, veiled by religious and political illusions, it has substituted naked, shameless, direct, brutal exploitation.

The familiar phrase, “cash nexus,” is derived from this passage. It is a term of calumny.

Ludwig von Mises titled Human Action to make clear that the free market economy is a subset of a more general science of human action, which rests on an axiom: “Human action is purposeful behavior” (p. 11). “Action means the employment of means for the attainment of ends” (p. 13). The logic of economics is not primarily about money; it is about choice.

Whenever we forget this, we fall into a trap set by Marx. We reduce everything to the cash nexus. This is reductionism, both socially and intellectually. It weakens the case for freedom.

Mises distinguished what he called praxeology from catallactics. The former is the general science of human action. The latter is the narrower science of economics (p. 3). These terms have not caught on, but we should not confuse them or what they represent.

There is a great temptation to reduce everything to monetary profit and loss, to balance sheets with numbers. This is not only an intellectual error, it is a moral error. Oscar Wilde’s aphorism applies: the cynic is a person who knows the price of everything and the value of nothing.

The defense of the free market should not exclude non-monetary motivation. If it does, it becomes foolish, as well as an easy target of religious people, including Marxists, who are deeply religious people. (Gary North, Marx’s Religion of Revolution: Regeneration Through Chaos [1968, 1988], which is on-line free of charge at www.freebooks.com.)

LewRockwell.com

There is no doubt that LewRockwell.com is the most widely visited libertarian Web site. It is the personal contribution of Lew Rockwell, who runs the Mises Institute for a living. Why should Lew Rockwell devote so much time to LewRockwell.com? The audience is there, but the money isn’t. If capitalism is all about the cash nexus, then he is not acting rationally. But the whole point of Mises’s economic theory is that rational action is inescapable in making choices. Rational choice is not limited to catallactics. Marx had it wrong.

There is a tendency for some specialists, called economists, to fall into Marx’s trap. This includes free market economists. The enormous academic success of economics as a science has depended on the use of narrow, unrealistic definitions and higher mathematics. Prices are objective, and objectivity seems scientific. To make the logic of economics appear more scientific, economists have trained themselves to think in terms of the cash nexus. They know in theory that money is not the sole motivator, but they write as if it were. An earlier generation of economists would begin their analysis with some version of this qualification: “To the extent that men seek to increase their wealth through accumulating money, we can say. . . .” The next generation relegated this qualification to the footnotes. In professional journals today, it has completely disappeared.

To establish economics as something more than reductionism, the defenders of the free market must return to Mises’s distinction between praxeology and catallactics.

John Taylor

I have been a fan of Celtic music for almost 50 years, stretching back to my love of the bagpipes (a peculiar taste, I am told) and the Clancy Brothers. I learned the songs of Sir Harry Lauder at age 11. Culturally, I have been roamin’ in the gloamin’ for most of my life.

A Celtic music revival has been going on for a decade. The international success of Riverdance is the obvious example. As to why it has taken place, I have no answer.

In my family, three of my four children have become aficionados in the last five years, as a result of Texas Celtic music festivals. My youngest son bought a set of bagpipes; my daughter bought a Celtic harp. Every year, three of my four children usually go to the Texas Scottish festival, and every other year, to the Irish festival. It’s a long drive for me, now that I live in northwest Arkansas, but my wife and I go. Two of the children are living near Dallas, where the festivals are held.

Each festival draws tens of thousands of attendees in a good year. The main lure is the music. Both festivals bring in pretty much the same musical groups. Celtic rock bands are big: Brother, Seven Nations, Lenahan, the Kildares. (Brother: “The greatest bagpipe, Australian aboriginal, rock-and-roll band in the world.” Eat your heart out, Mick Jagger.) Individual performers vary; they tend to be identified more closely with either Irish or Scottish traditions.

The performers are paid almost nothing by the festivals’ organizers. They make their money selling CD’s and tapes. If they have nothing to sell, they lose money on every appearance.

John Taylor is a good example. He is a master fiddler. His repertoire amazes the other fiddlers. It is in the hundreds of songs. He sits in with any of the groups, who are always glad to have him. The fiddle is the central instrument for any Celtic group that has no bagpipe. (I assure you, the bagpipe is the central instrument for any band on earth that allows a piper to sit in.) I have never seen him stumped when a band begins a song. He knows them all.

He is 6 feet 2 and lean. He looks remarkably like the Doc Brown character in “Back to the Future.” His white hair has a my-radio-just-fell-into-the-bathtub look. Sometimes he wears a cowboy hat.

I have seen him play for hours without a break: two hours, three hours. He plays at Scottish country dance sessions all over California. He plays at a dozen national festivals a year. He loses money on all of the road trips.

A festival may pay him $250 to cover air fare, food, and a motel for three days. He brings his wife along. So, he loses money. He has made a CD, “After the Dance,” but I have never seen him mention it on stage. He just plays.

If capitalism is all about the cash nexus, then John Taylor is out of tune and out of step.

He loves the music. He has mastered the music. He wants to share the music. He gives away time and money to do this. He lives in a free society that allows him to count the cost of his sharing. He can afford to share. By profession, he is an electrical engineer in Silicon Valley — and not at a dot-com.

I am one of John Taylor’s most enthusiastic free riders.

Free Riders

There are people who visit LewRockwell.com and never send a donation. The value of their time spent in reading the site’s postings every day is very high. It is surely not free. They do not donate because they know that the site will be on-line tomorrow anyway. They know that Lew Rockwell is an evangelist. He wants to get out the message.

John Taylor does not ask for donations. Even if he did, we fans all know that he will be back next year even if we don’t give him a dime. Fans may someday buy “After the Dance,” but they won’t buy the same CD every year just to support him. We are all discount riders. (At a Scottish festival, what else would you expect?)

We cannot logically explain Lew Rockwell or John Taylor in terms of the cash nexus. We can explain both in terms of their desire to share something: either a vision or a musical tradition.

The free market is about counting individual costs and allocating privately owned resources. It is not an end in itself. It is a means to an end. It allows all of us to make better decisions because we have counted the cost more accurately. It leads to lower plane fares and therefore more music. It leads to the Internet and therefore more ideas.

When it comes to the benefits offered by the free market, we are all free riders to some degree. We all get a consumer’s surplus most of the time: more than we paid for. Now, here’s a topic for some Ph.D. dissertation at (say) the University of Chicago. How can everyone get more than he pays for? I would call it the grace of God, but, then again, I’m not a Chicago School economist.

June 11, 2001

Gary North [send him mail] is the author of an eleven-volume series, An Economic Commentary on the Bible. The latest volume is Cooperation and Dominion: An Economic Commentary on Romans. The series can be downloaded free of charge at www.freebooks.com.