Dawn Will Follow This Darkness

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In arguing that dawn will follow the present darkness, I must first establish that the darkness exists at all. If you believe Robert Bartley of the Wall Street Journal, the dawn has already arrived with the government’s response to September 11, and its political and economic aftermath.

Now, Bartley’s a supply-sider, and if you know something of that school, it is a mixed bag. It can be very good on the need for tax cuts and the fallacies of zero-sum thinking. However, it is dismissive toward debt and public spending, and all-too-friendly toward inflation and State intervention generally.

Bartley writes that before the Bush administration’s bombing campaign, America was consumed with guilt "at being too powerful, too prosperous, and…too assertive." Now, however, with the war, we can consolidate "a new century of safety, peace, and spreading prosperity" (WSJ, Jan. 8, 2002).

Now, the supply-siders can be an absurdly Panglossian bunch, so long as stock prices are rising. And for many years, the Wall Street Journal editorial page has never found a low stock price that it didn’t believe can and should be raised with an injection of new liquidity. That leads the writers to celebrate any event that will prompt the Fed to lower interest rates. War, for example.

But the Journal is hardly alone in the opinion that war and prosperity go together: the whole media hold that the overthrow of a tottering and thuggish regime in dirt-poor Afghanistan represents some sort of triumph of the national will, a foreshadowing of the government-run utopia of peace and prosperity headed our way.

The tactic here is an old one: the identification of military prowess with economic health, which conflates the voluntary sector of private productivity with the coercive sector of central planning, and accepts fallacies from Keynes’s view that government spending boosts productivity to Lenin’s that capitalism thrives on military conquest.

But Bartley goes further. His point is not only that prosperity and military assertiveness stem from the same political priorities, which is not true in any case. He actually suggests that militarism itself is what brings about prosperity. After all, his column is not a tribute to enterprise but to war planners.

Bartley should know that it is not the military that makes prosperity possible. It is prosperity that makes it possible for the military, like all government programs, to exist in the first place. Government revenue that funds the military is seized from the private sector, the way a parasite lives off a host. The healthier the host, the happier the parasite, which is allowed to become fatter and stronger than ever.

Thus, it is capitalism and the astounding productivity of the free economy alone that accounts for the power and influence of the US. As to the government, when it isn’t taxing the markets, it is draining their productive power in other ways.

The current war on recession, for example, is being funded through credit expansion, which has led to massive debt accumulation. Meanwhile, the Fed’s 12-month campaign to keep the economic expansion going has been a spectacular failure. It has pushed interest rates so low that saving, already at historic lows, is punished in favor of stock speculation.

In the second half of 2001, American politicians got into the act by urging consumers and businesses to go on a spending spree. This was an attempt to stymie the good instincts that people have to get their financial house in order during recession. Instead of dumping debt, debt of all kinds has reached very dangerous highs. Americans have driven up total consumer credit, as well as corporate credit, to record highs.

Neither cheerleading nor an artificial injection of liquidity is a viable substitute for old-fashioned rebuilding. As we’ve learned at this conference, real economic growth can’t be created by a printing press. At a time when the political establishment is using happy talk to generate the appearance of happy days, and spending untold billions on war and welfare, no one wants to hear the message that there is a price to pay for this fiscal and monetary profligacy.

"War prosperity is like the prosperity that an earthquake or a plague brings," Mises wrote. "The earthquake means good business for construction workers, and cholera improves the business of physicians, pharmacists, and undertakers; but no one has for that reason yet sought to celebrate earthquakes and cholera as stimulators of the productive forces in the general interest."

Government power and market productivity work at cross purposes. As Mises wrote: "History is a struggle between two principles, the peaceful principle, which advances the development of trade, and the militarist-imperialist principle, which interprets human society not as a friendly division of labor but as the forcible repression of some of its members by others." He goes on to point out that: "The military state is a state of bandits. It prefers to live on booty and tribute."

In Mises’s view, there are times when employing the military is necessary, but he pleads with us not to be naive about the consequences. "Not only economic but moral and political conditions will be affected," he writes. "Militarism will supplant democracy; civil liberties will vanish wherever military discipline must be supreme." Hence, says Mises, the use of the military always comes at the expense of liberty, and there’s no reason to pretend otherwise.

We see the erosion of liberty taking place in our own time. Thanks to legislation passed this fall and winter, the federal police now enjoy unprecedented rights against the people. And our supposed free media have been ignoring this — or, in the most abject, toadying fashion — heralding it.

Right now, political deviants are being rounded up without probable cause. In recent days, students said to hold anti-government views have been visited by the FBI and the Secret Service at their dormitories. So have business professionals, overheard making cynical remarks at, for example, the local gym. As for Congress, it has become utterly useless in curbing the executive state. By Congressional decree, the chief executive has been granted unprecedented power and autonomy, in complete violation of the Constitution.

That only begins the catalog of interventions. In economic affairs, we now have a conservative administration calling for a vast expansion of unemployment benefits, new restrictions on the use of cash, food stamps for foreigners, stepped-up federal spending and control of public schools, more foreign aid, and more Federal Reserve money and credit to make it all possible.

We can look forward to another round of international bailouts, possibly even of Japan, where banks are holding $1 trillion in bad debt and officials are burning up the phone lines to DC. And don’t forget the billions headed toward Afghanistan to fund a massive rebuilding of what the US just destroyed.

No one should believe the Wall Street Journal, that the dawn has arrived because the government believes itself to be more powerful than anyone or anything on earth. No, as Jefferson said, the opposite is true: the more latitude the government has at home and abroad, the more we ought to be concerned for the future of freedom.

Interestingly, Bartley pens a chilling sentence that would appear to indicate some knowledge of this. Listen to his choice of language: "A new era…cannot be consolidated in the foreign arena alone. In the new year, Mr. Bush will have to make the point that the serious minds who can so ably run a war are also the best minds to run an economy, nurture better education, make environmental trade-offs, and save a faltering Social Security system." [Emphasis added.]

Of course, he favors central planning by Republicans as opposed to Democrats, but from the point of view of the free society, it doesn’t matter whose calling card the State is carrying.

That free enterprise is capable of funding a huge military empire creates something of a problem for those of us who advocate freedom, for we know that the more wealth society produces, the more tempted governments are to steal it. This is why it is morally and intellectually incumbent on believers in free enterprise to take the lead in warning against expansions of government, of all sorts.

One may argue, of course, that to the extent that the US military assists in keeping peace and stability in the world, this is good for free markets and prosperity. But is this what the Pentagon does? The terrorists who attacked the World Trade Center were striking out at wealth and those who produce it, just as many bureaucrats in Washington strike out at market productivity on a daily basis. The damage done on September 11 was dramatic and compressed into one instant; the damage done by Washington bureaucrats is spread out over years and decades, and less visible to the eye.

But both forms of violence constitute the use of coercion against peaceful people. So by hating and attacking the market economy, the terrorists share a profession in common with the political class in this country, though the latter is in good standing with the law; indeed, it makes and enforces the law.

Moreover, there is more than enough evidence, including the statements of the terrorists themselves, that they were not only protesting economic freedom but also specific US military policies that would not exist in a free market, for example, a deadly embargo against Iraq, and US troops on what is to them the holy sand of Saudi Arabia. I don’t believe that US foreign policy ought to change because terrorists demand it; I believe it should change because it is the right thing to do.

The US government somehow managed to do more than simply provide terrorists with motivation; with policies dating back decades, it made it very difficult for Americans to protect themselves against terrorist attacks, by, for example, preventing privately owned planes from arming themselves against hijackers, and leading us to believe that a military budget larger than that of every other developed country combined might actually be all the protection we would need.

A government at war always uses the occasion to expand its power over the economic and social lives of its citizens. To be sure, some of its excuses are quite plausible: everyone favors justice for those involved in killing the innocent. But unleashing the dogs of war leads to unpredictable consequences. Even after adding to Afghanistan’s miserable lot, and killing some 4,000 civilians who had no part in September 11, the US still hasn’t caught Osama bin Laden. There were better ways than war to pursue justice, but there was no better way to increase the grip of the central state over America, which is what the government actually aims at.

That we have always known, but events of recent months have reminded us again of why it is so urgent to join the intellectual battle in defense of the free society, particularly in the field of economics, and for the sake of our personal well-being and that of society as a whole.

If there is new faith in government today, it is not a faith that government can completely manage society, as tracts from the 1930s claimed. Instead, it is a faith that government can pulverize its enemies with ease, and to that degree the faith is not entirely misplaced. The human mind has always been impressed by the ability of Power to accomplish spectacular acts of destruction.

Yet the Fed has proven itself powerless as a tool of macroeconomic stimulus during this recession. Its impotence has startled everyone, especially the Fed’s own economists.

Think of it: we live in times when the government cannot point to a single one of its programs and call it a success. We are faced with several huge fiscal crises in the future involving retirement benefits, rising debt, and the overvaluation of stocks. Because politicians destroyed the gold standard, we have a currency that is fundamentally unsound and unchecked by any limits on the central bank. We have collapsing public schools, public transit, and public services of all sorts, which no amount of cash infusions are going to fix.

Yet there are positive signs that have emerged recently. I would name the shredding of the Kyoto treaty and the hampering of environmentalism as a political movement, the inability of the left-liberals to enact more gun laws, the sucker punch that September 11 gave to the multicultural movement which claims that there is something inferior and inherently awful about the Western mind, the relentless march of the homeschooling movement, the well-documented trend among students to reject the left-wing prattle of their professors, the rise of a new bourgeois cultural sensibility, and the continued growth of a diverse internet as an alternative source of news.

The realization that the government, despite the Department of Homeland Defense, cannot protect us is probably a good thing too: it can only increase the use of market means of providing the security we all seek. These things are not enough to bring about a new dawn, of course. But we will also be helped by one thing we can be one hundred percent sure of: the State will continue to get egg on its face wherever it intervenes, in terms of spectacular scandal, and spectacular failure.

Before talking about what we must do, however, let me explain what I mean by dawn: for all of us, it is the free society, one in which we are secure in our property and privacy from a grasping government, when our families and community lives are permitted to flourish in absence of the belligerence of state officials, when the US government no longer believes itself the master of the country and the world, but rather begins to observe the Constitution’s limits on its power.

That dawn will require first, an ideological change in public opinion, where people’s latent distrust of government is hardened into a hardcore love of liberty itself. This change must begin in the world of ideas, the world to which the Mises Institute is dedicated.

Through it all, the Mises Institute’s intellectual work proceeds apace and with astounding results. Our teaching and resident fellow programs prepare the cadre that any revolution needs. Our journals overflow with outstanding scientific and historical scholarship. All of this, which you help make possible, is laying a foundation for the future, just as Rothbard and Mises did.

However, that doesn’t mean that good scholarship in the Austrian tradition goes unnoticed today. The IMF, for example, just released a working paper that does a credible job of presenting the Austrian theory of the business cycle. If you think about this, it is astounding for a theory that was supposedly killed off in the 1930s to be emerging into discussion again today. But it is happening, and at far more places than the IMF. This is the power of ideas at work.

Recently, Gene Callahan mentioned that there are so many articles appearing in the popular press that discuss Mises that you can’t swing a dead cat without hitting one. This would have been unthinkable 20 years ago.

Every summer we bring in hundreds of brilliant and dedicated students, leaders on their campuses, to receive systematic instruction in economics, history, ethics, law, and social theory. They leave telling us that their time here had a greater impact on their education than anything at their colleges and universities. Dozens of dissertations and books have been completed based on ideas sparked at these conferences.

We have hundreds of young professors, teachers, researchers, and writers doing the hard work of liberty. Our daily editorials reach tens of thousands of the world’s smartest students, educators, and business professionals. The intellectual movement backing our ideas has become nothing short of a well-oiled international machine spreading truth and good sense at all levels of academia, society, and culture. I submit to you that this trend should make us more bullish on liberty, despite any political or financial crisis.

The time is ripe for the Austrians to be heard. Only the Austrian School has coherently explained what is happening right now in Argentina and Japan. Only the Austrian School has provided a full account of what brought us to the present economic downturn in America, and why welfare and warfare and inflation only make things worse. Only the Austrian School has offered a consistent vision of a radical alternative, one that is capable of attracting young minds and appealing to society’s cultural and intellectual leaders.

Our greatest patron in this battle is the free economy itself, which daily astonishes us with its ability to provide, innovate, and expand in the midst of so many attacks. The creative power of commerce dumbfounds even the leftists who have foretold its death. The State may pave, but the flowers of enterprise break up the concrete. And by commerce and enterprise, what I really mean is human action, the choices of individuals to embrace their own self-interest, and that of their families and communities, rather than to live for the political aims of the omnipotent State.

For hundreds of years, and more so now than ever, the market has outrun the ability of interventionist governments to make it conform to some predetermined plan. And despite the boom and bust of dot coms — thanks to the Fed — the internet continues to grow as a source of commercial strength, and as an alternative source of news and analysis not cleared with DC in advance. The huge success of LewRockwell.com, the libertarian daily news, is only one example.

With the aid of human motivation and innovation, human action in the marketplace, aided by all those institutions that sustain it in society, will see our way out of the mire.

We must be aware, of course, that those of us who champion a consistent vision of a free society, without apology or compromise, are going to continue to come under fire. These criticisms can be brutal, but they are no different in character from what they have always been. The fundamental tactic is to question our motives, and to disparage our cause as only another special interest. But liberty is not the demand of a pressure group. It is a plea for the good of the entire society. That makes it unique.

Ours is not a mass movement, of course, and it need not be so. Throughout history, the true friends of freedom, the ones who believe in it as a matter of hard-core principle, have always been few. We have been reminded of this in recent days.

How much more important, then, to stress and restress our continuing theme: liberty for everyone, State privilege for no one. This is the social framework of a market economy.

This is a message that no faction within the ruling class wants to hear. No matter how divided the factions are among themselves, they form a united front against the libertarian idea.

That’s why to sign up with the cause of liberty is to take a principled step. It means rejecting the dominant strain of politics, that the State ought to be used to promote the agenda of some special interest, whether it be those who benefit from welfare, regulation, inflation, or war.

The cause of liberty rejects all this, not because we have a special interest but because we stick by the most unpopular claim of all: that society ought to be permitted to organize itself so that it benefits everyone in the long run. There is only one system that does so, and that is the competitive market economy operating under the natural order of liberty.

We must never, even now, underestimate the power of ideas. The State, with its attacks on freedom and peace, is ultimately no match for the truths we love and defend with all the energy we have.

Our tradition of thought is deeply rooted in European and American history. It flourishes today among students, faculty, and professionals all over the world. Those who seek to stamp it out through intimidation are no match for a body of thought that has withstood every crisis that has befallen it for centuries, survived and flourished, as new young minds join its cause.

One of the blessings of prosperity is that it permits serious scholarship and teaching — in addition to art and music and all the humane studies — to flourish. In this way, through the intellectual means, civilization perpetuates itself.

There will always be crises: financial, economic, social, and political. But there will also be great opportunities for change.

If we adhere to the spirit as well as the ideas of freedom, there will indeed be a new dawn. As Mises said, "ideas and only ideas can light the darkness." We have the ideas, and they will light the way to victory.

Llewellyn H. Rockwell, Jr. [send him mail], is president of the Ludwig von Mises Institute in Auburn, Alabama, and editor of LewRockwell.com. This speech was delivered on January 19, 2002, in Auburn, Alabama, at the Mises Institute’s conference on “Boom, Bust, and the Future.”

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