This talk was delivered at the Mises Institute’s 2003 Supporters Summit in Auburn, Alabama, on October 25.
The great problem that has occupied political philosophers for several millennia, and economists for centuries, has been finding a rationale for the state and its managers that will assure the state longevity and stability.
On the face of it, this might seem to be a strange thing to be concerned about. One might think that curbing despotism would be a greater worry. Mises laid out the ideal in 1929, when he wrote, “The citizen must not be so narrowly circumscribed in his activities that, if he thinks differently from those in power, his only choice is either to perish or to destroy the machinery of state.”
Sadly, however, no government is liberal by nature; they all have a tendency to grow and become menaces to society. Also, by definition, the state enjoys a territorial monopoly on the legal use of aggressive force in society, and thereby does not face a problem of compliance most of the time.
Given this, one might think that the last problem that would occupy anyone is how to assure the state’s stability and longevity. It is akin to medical researchers trying to figure out how to make diseases as long-lasting, painful, and deadly as possible.
By comparison, far less energy has been applied to addressing a greater problem: how and when to throw the bums out and start anew. If we look at the sweep of history, especially modern history, we can see that the state as an institution is responsible for the largest and gravest of all social, economic, cultural, and humanitarian disasters. The problem isn’t so much assuring that states survive, but in limiting the power of states, and getting rid of them when they go too far.
The Encyclopedia of Revolutions and Revolutionaries chronicles more than a thousand cases of internally driven regime change from the ancient world to the present. Some were peaceful, with regimes dissolving without a trace. Others were not peaceful at all. Many ended in greater liberty, while some ended in terrible tyrannies. The difference, in case after case, is the intellectual climate that surrounded the great event.
In the sweep of history, however, this much is clear: far too few states have been overthrown. Liberty is the exception and tyranny the norm. Why are states not stopped before they attack private property, wreck economies, destabilize families, and engage in mass murder? As Thomas Jefferson wrote: “all experience hath shown, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed.”
There is an additional factor: it is rather difficult to stop states and probably impossible to limit the state to a certain set of functions. The tendency is always and everywhere for it to grow and become overweening.
Stopping any voluntary institution in society is comparatively easy. All enterprises in a market economy can be brought to their knees by the simple act of refraining from buying. Families too are broken up by the simple act of walking away. Churches collapse when people lose interest in faith. Private schools go belly-up when the students stop showing up.
But states always and everywhere extract their revenue by force. People have no choice but to comply, or rather, they face the choice of complying or being physically punished. Of course, states prefer to elicit compliance through other means — by inspiring patriotic fervor or devotion to the prince.
What are the conditions under which a state falls? What are the moral and practical justifications for giving it a push in that direction? What is the best method for assisting in the overthrow of a regime and bringing about a new social and political system? These are the questions that have been addressed by relatively few thinkers in the history of ideas. In fact, we can single out the groups of intellectuals who have addressed the topic in any depth.
- The moral thinkers of the high middle ages addressed these questions because they believed that the state could not justly rule without being subjected to the higher law. The state was not seen as inherently legitimate but only provisionally so.
- The classical liberal tradition spoke to the issue because it was the first to see that social order and prosperity were not sustained by the state but rather existed despite the state. In that tradition, the founding generation of the US that overthrew British rule drew on the writings of John Locke and others.
- The Marxists too have been variously consumed by this topic. They, like the classical liberals, view the state as something of an artifice masking a deeper structure of political dynamic. To this extent they are correct.
The issue is directly relevant for our own times. We just witnessed the amazing spectacle of a recall election in California. The citizenry concluded that the regime in charge had failed to do what it said it would do. With the legitimacy of the regime lost, the California system, premised in some small measure on the idea that government should reflect the people’s will, permits citizens to petition for throwing the bum out. They elected a new manager in his place.
Now, there are many obvious problems with this system. There is no real justice for the bum. He is not punished for his transgressions. He loses nothing out of his personal assets for his mismanagement. He only loses the right to rule. But the biggest problem is that Californians were only permitted to vote on who should manage the government apparatus, not on the legitimacy of the government apparatus itself.
Even so, the very existence of a recall election taps into the inchoate sense we all have that there is nothing sacred about government managers. They can be replaced, deposed, overthrown. The government is not permanent. It can fall if the people will it, provided the system permits such a thing to happen. A system that makes this impossible is in some sense unjust because it makes power alone the measure of all things. If we believe that power must be justified in some way, there ought to be a mechanism to check power by the prospect of overthrowing it.
Now, obviously the founders believed in the right to overthrow governments, and believed that all governments should be subject to being overthrown. It is crucial for heads of state to understand that their rule is contingent. This serves a crucial role in keeping power in check. Even when putting together the US Constitution, the right of the Congress, as the people’s representatives, to impeach the president was firmly established. The founders expected that the threat of impeachment would be constantly held above the head of the president. Never having imagined a permanent bureaucratic class, they believed that getting rid of the president was tantamount to starting fresh.
In the modern world, however, governments have worked to make themselves unimpeachable, so to speak. It was once only dictators who advertised themselves as permanent fixtures, unalterable facts of history. The US started doing the same in the 1990s, when it became the world’s only superpower and Madeleine Albright declared that the US is the world’s only indispensable government. Well, she said indispensable nation, but we know what she meant.
In our own times, President Bush has not only declared the US government to be permanent and eternal; he has set up the US as the sole judge of all other governments in the world, which are somehow deemed dispensable. Other regimes can be changed and decapitated, but only one — the most powerful one of all — is regarded as sacred.
Why is the US the world’s only permanent government? Is it something written into the fabric of the natural law? We know the reason: it has the most guns, by far, and therefore no one is in a position to object.
With the impeachment power all but gone, the right of secession declared null and void, the impossibility of recalling presidents at the federal level, and the rise of the permanent bureaucratic class, does this mean that there are no mechanisms remaining to us to check the power of the state? Is there nothing we can do to dislodge these people from their seats of power and prestige?
There is still another force at work: the propensity of governments to overreach in so many areas of life that their exercise of power itself leads to their own undoing. The overreach can take many forms: financial, economic, social, and military. In this way, and with enough passion for liberty burning in the hearts of the citizenry, governments can be responsible for their own undoing. It comes about as a result of overestimating the capacity of power and underestimating its limits.
I believe this is happening in our time. It may not be obvious when taking the broad view, but when you look at the status of a huge range of government programs and institutions, what you see is a government that is at once enormously powerful and rich, but also very fragile and teetering on the brink of bankruptcy. Events of the last year indicate just how far the government has slipped in its ability to manage the economy, society, culture, and world order. Despite the exalted status of the state today, the vast and sprawling empire called the US government may in fact be less healthy than it ever has been.
The other day, we had a special speaker come to Auburn, probably the most famous man who has visited us since the country and western star Alan Jackson was in town. He was Mikhail Gorbachev, a very interesting figure in the history of nations. He came to power with the reputation of a reformer and instituted many reforms that were designed not to give more liberty to the people, but to stop the unraveling of an empire before it was too late. But it was too late. All his talk of perestroika and glasnost couldn’t fool the people, who had become convinced that the Soviet machine was something of a hoax.
The empire unraveled not because of him, but despite his efforts to save it. When it came time to make the critical decision of whether to try to hold the empire together by more and more force, or not, history had already made the choice for him. The empire dissolved in the blink of an eye. Not too many months later, he was out of a job, not because he was recalled in some formal process, but because the forces of history had run him over.
Ron Paul has said for some years that the US may be in a similar position to that of the late years of the Soviet Union: an empire that everyone believes will last forever, but which is decayed at its very foundations — financially and militarily overextended to the breaking point. I agree with him on this.
Let’s gain some insight into how governments travel the trajectory from high prestige to humiliation, by looking at the well-known tale of "The Emperor’s New Clothes," by Hans Christian Anderson. It has much to teach us about the nature of the state and its stability in good and bad times.
In the story, an emperor had the ambition: to be well dressed. He loved nothing more than showing off his clothes in procession, so that people might be ever more convinced of his glory. Now, we might think of this as a metaphor for the ideological dressings that cover the state, of which there are many. The philosophers tell us that all societies need a coercive head to insure justice and fairness. The political philosophers say that the people demand a head of state to represent their interests. The economists tell us that the state is essential to the provision of public goods. The historians tell us that the state is indispensable for making war, which is said to provide the essential hinge of history. The justifications multiply and change as often, and with as much caprice, as the emperor in the story changes his suit of clothes.
Some tailors of pre-established reputation are employed to make him the finest set of clothes he has ever worn, but these are very shrewd tailors. They come up with the idea of positing the existence of fabric that can only be seen by the smart and can’t be the seen by the stupid. The emperor is thus unwilling to admit that he can’t see the cloth. He is driven by vanity to praise the tailors as brilliant, observe the glorious beauty of the cloth, and eventually wear it in a processional. He is surrounded by sycophants who are similarly unwilling to tell what is true.
He first sends a minister, who thinks: “Oh dear, can I be so stupid? I should never have thought so, and nobody must know it! Is it possible that I am not fit for my office? No, no, I cannot say that I was unable to see the cloth.” Instead of admitting the truth, then, he says: “”What a beautiful pattern, what brilliant colors! I shall tell the emperor that I like the cloth very much.”
Next comes the "honest courtier" who we might think of as the bureaucrat. He is shown the cloth and thinks: “”I am not stupid. It is therefore my good appointment for which I am not fit. It is very strange, but I must not let any one know it.” He praised the cloth, which he did not see, and expressed his joy at the beautiful colors and the fine pattern.
Finally the emperor himself is shown the cloth.
“What is this?” thought the emperor, “I do not see anything at all. That is terrible! Am I stupid? Am I unfit to be emperor? That would indeed be the most dreadful thing that could happen to me.” “Really,” he said, turning to the weavers, “your cloth has our most gracious approval;” and nodding contentedly he looked at the empty loom, for he did not like to say that he saw nothing. All his attendants, who were with him, looked and looked, and although they could not see anything more than the others, they said, like the emperor, “It is very beautiful.”
Onward goes the agenda of wearing the unseen clothes at a major procession, and, sure enough, the population participates in the illusion. In the most dramatic and hilarious scene in the story, the emperor walks in the procession, as all the people yell: “The emperor’s new suit is incomparable! What a long train he has! How well it fits him!”
Everyone knows how the story ends. A young child, too naïve to understand the exalted status of the state and thus to know what can and cannot be thought and said, notes very simply: “But he has nothing on at all.” Another man, said, “Good Heavens, listen to the voice of an innocent child!” The spell is broken, and all the people lose their fear and cry out: “He has nothing on at all,” exactly echoing the words of the child.
It is significant that the voice that shattered the illusion was not that of an intellectual, a bureaucrat, a politician, or even a clergyman. It is also significant that the voice did not come from the masses of people who had gathered to observe the state in all its glory. These people instead were all willing to suppress what they knew was true in order to retain their position and not depart from received opinion.
Instead it was the voice of a child that told what was true, someone too unschooled to know the merit of repeating propaganda and too young to be afraid to speak plainly. He did not observe something others did not observe. What was different was his willingness to speak about it. He caused enormous humiliation to the state, but he did not pull a gun or a knife. He did something far more powerful: he said what was true.
That a young person said what was true when no one else seemed willing is itself significant. Murray Rothbard was fond of quoting Randolph Bourne on the virtues of youth: “Youth puts the remorseless questions to everything that is old and established — Why? What is this thing good for? … Youth is the leaven that keeps all these questioning, testing attitudes fermenting in the world. If it were not for this troublesome activity of youth, with its hatred of sophisms and glosses, its insistence on things as they are, society would die from sheer decay…. Youth is pessimistic toward the present and gloriously hopeful for the future. And it is this hope which is the lever of progress — one might say, the only lever of progress… ”
Once exposed by this young person, as the crowds join him in observing the absurd reality, does the emperor run and hide? No, he thinks to himself: “I must bear up to the end.” And he continued to walk. We are told that the chamberlains walked with still greater dignity, as if they carried the train that did not exist.
In short, the emperor knows that, in some sense, he has always lived a lie. He is no more glorious and exalted than anyone else, and he may well be less so. But he has done well so far by pretending otherwise, pretending to be above the common folk and especially fit to rule them, so why should he change this posture now? The truth about him has always been there for those who could see it, but somehow the system worked. Now that everyone could see what was true, what could he do but continue the racket in hopes that the system would continue to work for him?
The story ends there, just at the most interesting part. One wonders how the affairs of state differed the next day? Was the emperor more or less tyrannical? Was he more or less successful in taxing the people? Was his rule more or less secure? We cannot know the whole outcome, but we can know that his status had been seriously diminished. And if we are to think of this as an allegory for the role that ideological garb plays in covering the affairs of state, we know that a major myth had been shattered and thus the grip of the state over the population weakened, even to the point at which the emperor might have to abdicate.
I submit to you that this procession of folly takes place every day in modern times. It is spread all over the newspapers. It is on television. It appears on websites.
The masses of people may not be willing to admit what they see, or they may even see whatever it is that they want to see. But once you have in your mind a model for understanding the state, and begin to see the linkages between its failures in area after area of life, you begin to stand out from the rest. You think and talk differently from the courtiers and masses of people who watch the same procession but are unwilling to say what is true.
Let us look at the US budget, which only a few years ago seemed to be approaching the point of being balanced. Of course it was an illusion created by a massive infusion of revenue due to an artificial economic boom. As we might expect, governments around the country took the new revenue and ran with it, creating a vast apparatus of new programs, only to find that when the recession hit, the money ran dry. Deficits exploded at all levels of government. Localities and states had to find new revenue sources or cut their budgets. As for the federal government, once you wipe away the phony statistics, the real budget deficit surpasses $600 billion, which is a new record.
What is the effect of deficits? Because the federal government enjoys the legal power to counterfeit with impunity, deficits do little to restrain spending. But the financial effects are real indeed. Unless the debt is inflated away, the US puts itself in hock to foreigners and citizens willing to fund the deficit, the effect of which is to crowd out private investment, and, frankly, waste hundreds of billions funding big government rather than productive private enterprise.
Now, this system of finance can work so long as private investors regard government debt as a safer bet than private enterprise, which government can mostly guarantee, thanks again to the printing press. But it cannot last forever. If China’s economy falls into recession and savings are depleted, they may stop holding US debt and then the US faces a very serious problem. In addition, interest rates could rise and dramatically raise the cost of funding the debt, creating ever more debt and putting pressure on the Fed to monetize it. The scenarios for financial collapse are actually unlimited.
The point is that in economics, there are limits to how far the state can go. It will use every trick in the book to keep the game going for as long as possible but it too bumps up against reality at some point. In any case, financial collapse of the state is the oldest and most common scenario in world history by which states are brought to their knees, and of all the governments in the world today, the US is the most prone to this fate. The tragedy of course is that this will happen at the expense of the people, our personal finances demolished by the reckless ways of the state.
Such a scenario is not an inevitability. The federal government could get its financial house in order. It could stop the reckless spending. It could cut back on its welfare and warfare. It could shut down the central bank and institute a gold standard to provide fiscal discipline. Instead of performing inflationary tricks, it could attempt to tax the people to pay for every dime that it spends. Of all scenarios, I would bet that this is the least likely to take place.
In the meantime, as the government spends more and more on less and less, its services continue to deteriorate relative to that which private enterprise provides. Consider the area of communications technology. It was revealed earlier this year that employees of the CIA are not permitted to have access to the Web or to Google to do their research. That tidbit of information is a window into a great reality: the government is remarkably blind as regards information access. And this is in times when the private sector is more information-connected than ever before.
Consider Mises.org alone. As Jeff Tucker pointed out, with our new news feeder we can immediately provide free-market news and views, in addition to scholarly work, as we post them, instantaneously, to millions of news sources around the world, in real time. We used to say that Misesian opinion was available to the world with the click of a mouse, but now that is not even necessary. News sites around the world stream Mises.org content the same as they stream the BBC, Reuters, or the New York Times. And this is true not only of our site but millions of individual blogs around the globe. The result is a world connected like never before.
Along with this has developed a vast international economy that is at once anarchistic and orderly. Everyone knows about Ebay and how the power of reputation creates this global marketplace without police. But fewer know about sites such as experts-exchange.com, where millions of technology developers pay $100 per year to have access to the insights and help from millions of other experts. Those who solve problems are rewarded with cash bonuses out of the fund. All the entrepreneurs behind the site did was create the infrastructure. The rest is the product of the remarkable power of commerce combined with the creativity of human ingenuity. It is a wonder to behold. In thousands of years of trying, governments have created nothing of similar productive power. These sites pop up on a daily basis online, a testament to the power of free enterprise.
This reality is not lost on the young generation, whose world is shaped not by the products of the state but rather those of private markets. It is this young generation, as with the story, that sees the stark reality that the government is wearing no clothes. The times are creating remarkable idealists, but they need systematic education. The child who spoke up about the emperor’s clothes had courage, but he also needed, as he grew up, to read in the Austrian tradition so that he could systematize his views and develop a consistent perspective on politics and economics.
That is one role that the Mises Institute plays: we take the young generation in college that is very sophisticated about technology, and holds the government in a kind of tacit disdain, and give them reading material to make sense of the bits of information that come their way. Those students who are involved in politics right now are attentive to issues of military security and war, and can’t but be astounded at events that have taken place over the last two years, since that ill-conceived War on a Tactic began.
The notion of liberation in Afghanistan lasted only several weeks before those who were still paying attention realized that it had been a myth cooked up by US war planners. Today the country is rife with violence, poverty, criminal gangs, and the Taliban forming to stop the enormous rise of drug production that began only weeks after the Taliban was thrown out of the capital. As for Iraq, with bombings, killings, human suffering all around, and nothing in sight but the bad choices of continued military dictatorship or fundamentalist Islamic rule, everyone but the war planners now regards Iraq as a disaster.
The war planners believed that their will alone was enough to make and remake a country (whether Iraq or Afghanistan) and the world, simply because they operated the levers of state power. State power sees people as pliable, all events as controllable, and all outcomes as the inevitable working out of a well-constructed plan. Being the top dogs of the world’s only superpower, they never doubted their ability to dictate the terms and so they had no plan for what to do if things went wrong.
What went wrong? They forgot several essential components of the structure of reality. People’s free will is often backed by the willingness to undertake enormous sacrifice. Most especially it overlooks certain underlying laws that limit what is possible in human affairs. In the scheme of how the world works, even the largest state is only a bit player. It is capable of creating enormous chaos and transferring huge amounts of wealth, but not of controlling events themselves. This is why government action often generates results the opposite of those the policy is constructed to create.
Donald Rumsfeld’s famous memo gives the whole game away. He admits that he does not know whether the US is winning or losing, but he is suspicious that it is losing. He admits that he lacks any means to discover whether the government is winning or losing. He admits that the private armies are doing better with millions than he and his government armies are doing with billions. He goes so far as to contemplate whether the government is capable of beating its enemies or whether another organization is needed.
If these comments don’t strip away the faade of the warfare state, I don’t know what would. Indeed, the entire apparatus of the warfare state is defeated by this fact: Human beings don’t respond well to being treated like prisoners in someone else’s central plan. If the desire is to wholly manage the future, the mega-planner is always a mega-failure, if not always in the short term certainly always in the long term. The Bush administration had bigger dreams than Wilson or FDR. But the group that began believing that it could reshape the world is now merely responding to events.
No effort at all was put into how the conquering heroes would manage an economy after they took power. It’s as if they just completely forgot about the people’s needs for electricity, clean running water, food, and communications.
The one principle that has guided the occupiers in their economic affairs in Iraq has been that whatever happens, the US should be in charge of it. The error has led them to kick out private entrepreneurs who attempted to start cell phone companies and airlines. Even now, the US is putting street vendors out of business, establishing monopoly providers, and throwing around US tax dollars to well-connected corporations in the name of rebuilding the country it first destroyed.
The war party has never really understood what freedom means. They have believed it is something granted by government, or the military as a proxy for government. They believed that freedom is something that exists because of the people running the government or the laws that manage society. In fact, freedom means the absence of despotism of all sorts. It can never be granted by the state. It can only be taken away by the state. If a government manager desires freedom for a society, his only path is to get out of the way.
The level of arrogance also had an effect on how the administration believed it could fund this war. It is increasingly clear that the total cost of the Iraq war will run into the hundreds of billions, and they proceed as if there are no worries about paying it. Of course the administration benefits by the presence of that great marble palace down the street that promises to print unlimited quantities of dollars to pay for whatever government wants to do.
The war policy of this administration may have failed in every way to achieve its stated aims, but it has succeeded in the one way war does succeed: it has transferred huge amounts of money and power from the private sector to the public sector. In believing that war is good for the ruling regime and its cronies, rarely have so few been right about so much.
If the government cannot be trusted to run wars, or provide the national defense that so completely failed on September 11, it surely cannot be trusted with the job of managing such crucially important institutions as education. And yet the Bush administration has succeeded in making unprecedented inroads into local schools with its “No Child Left Behind” policy. Just the name alone is worthy of the age of despots who purported to be the father and educator of every child. Yes, I know it is supposed to represent a humanitarian spirit to be concerned about the education of every child, but we need to ask ourselves whether having the government as the imparter of values, at taxpayer expense, is a good idea.
Evidently, many people think it is a bad idea. As public school enrollment falls in both rural and urban schools in most places around the country, home schooling is taking off, and creating a cottage industry of textbooks and materials that parents themselves use to educate their children. The effect of this is fantastic, not only for the children who are the main beneficiaries but also for the parents.
A major problem of public schools is that they socialize the parents into believing that they do not need to take responsibility for the education of their children. But homeschooling is bringing back an old value that parents bear primary responsibility for their children’s education and for their training generally. Homeschooling is still small by comparison to public education but the trend line is enormously encouraging.
Nor do I intend to slight private schools, which are also growing in size and diversifying in shape. They are rising up to meet the needs of parents, whose values are ever more diverse. And this fact raises an interesting point. The growing multiculturalism of the American public is often treated as a problematic issue for national unification, but this presumes that there is political value to homogeneity.
Believers in freedom should question this assumption. It could be that the rise of multiculturalism will indeed make the country ever less governable at some level. It will reduce the extent to which the population is attached to the central state as an expression of their values. A multicultural people will be ever less attached to the symbols of national unification. This could end up as one means by which the central state — heavily premised on the idea of a unified population — could unravel.
Like all empires in human history, especially ones with a growing population and rising prosperity, this country is far too large and diverse and complex to be managed by a central state. It is essentially an unviable project, one destined to fail just as it has failed. If it is true that the population is becoming ever more diverse in its values, as the political left constantly tells us, it makes no sense that there should be a single state that would presume overarching political jurisdiction over the entire entity. It is heresy to say it, but it is long past time that we bring into question the words of the pledge: "One Nation, Indivisible."
Crucially important in the process will be the growing problem of Social Security and the welfare state. For all the attention given to the income tax, it is increasingly less significant as a factor in the looting of average Americans. For three-quarters of US taxpayers, the bite that the payroll tax takes out of the paycheck — if you admit that both the employee and employer tax come directly out of worker wages.
And what does the worker get in exchange? A bankrupt system that doles out a pittance should you happen to reach the officially defined age of retirement. For the generations after World War II, this might have seemed generous, but for those who will retire in 20 years, it is nothing short of pathetic. Then there is the absurdity of retirement itself. The very idea that people need to throw in the towel at the age of 65 is a gross anachronism that takes no account of dramatically changed mortality statistics.
Even more fundamentally absurd is the idea that Washington, DC, which can’t manage even the slightest improvement in our well-being, can care for us in old age — providing a steady income stream to substitute for the care given by savings and family. This very idea alone drives a wedge between the generations and pits young against old. For young people these days, they know that they will be caring for their elders and that they need to provide for themselves in old age. The government apparatus that loots them day after day, and which is under intense financial strain, is nothing short of a fabulous failure.
If the welfare state in the US in under strain, it has reached the breaking point in most parts of Europe, where nearly everyone recognizes that something must be done to dismantle the grave errors of the postwar planners who instituted huge redistribution schemes. The choice at this stage is between continuing decline and a revival of prosperity by sweeping away the old structures that are inhibiting free initiative and capital accumulation.
Equally anachronistic is the idea of centralized fiscal and monetary management. The Keynesian planners from the 1930s through 1970s imagined themselves as masterminds operating this huge machine called the macro-economy. But they made a terrible mess of things, exactly as we might expect. They believed they were boosting aggregate demand, when all they were doing was looting the private sector and ballooning the national debt.
They believed they were stimulating production by creating new money and credit but all they did was generate inflation and the business cycle. In their management of international trade, they believed they were harmonizing regulations across borders to create efficiency, and protecting domestic industry from competition, but all they did was loot American consumers, entrench inefficient industries, and create conflicts between nations.
Even in this current recessionary cycle, the Bush administration has reached deep into the old Keynesian grab bag and pulled out 50-year-old gimmicks, none of which have helped the economy but instead only forestalled recovery. It is time the macroeconomic planners stop pretending and give it up. What is desperately needed are intellectuals who understand the utter futility of all kinds of central planning, including fiscal, monetary, regulatory, and trade.
These are far rarer than you might think. Even today, people who call themselves economic libertarians also counsel the Federal Reserve to provide more liquidity to the system and otherwise attempt every manner of gimmickry to stimulate the economy. They haven’t absorbed the central lesson of the liberal tradition: society doesn’t need central management by the state.
Why is that such a difficult message to get across? Those of us steeped in libertarian theory and the economics of the Austrian School are sometimes amazed that it takes others so long to come around to our point of view. But we must remember that it takes intellectual work to begin to see the logic of economics and apply it to our world. The ignorance is vast and overwhelming, and we must do everything we can to combat it.
Sometimes people ask why it is that if liberty is so central to the Mises Institute’s mission, we concentrate so heavily on economics. Mises gave this answer: the study of economics, properly considered, is the study of the rise and fall of civilization itself. Aside from the beauty and elegance of economic theory, economics delivers a bracing message to the state: your power is limited. The structure of reality limits the possibilities for power to have its way in this world.
Socialism will fail. Central planning will fail. Protectionism will fail. Regulations, taxation, welfare, warfare — all these programs — will often produce the opposite of their stated aims. Economics says to the state: society does not need you. The cooperative work of billions of people, exchanging and creating, is the very source of the quality of life, the very core of peace and prosperity. Economics sets the limits for the state, helps us understand our world, and leads us to make sense of the passing scene. With economics, we never would have been deceived about the true nature of the Emperor’s clothes.
This is not a message the state wants to hear, which is why we must be passionate, aggressive, and entrepreneurial in delivering it. We are fortunate that the message is capable of connecting very closely with ordinary people. If we look at the way people conduct their affairs in daily life, we find that people are utterly and completely dependent on free enterprise and the institutions on which it rests, and less and less so on the products of the state.
We are enormously fortunate to live in times when the wonders of free markets are constantly before our eyes. We can observe the way the seeming anarchy of the market economy, which is global in scope, operates as an orderly, productive process that improves our standards of living in every way. It not only provides us the goods and services we need to live. It is daily creating alternatives to the statist way of doing things.
Whether we look at communication, education, security, managing disputes, or any other area of life, the wonders of liberty and the failures of the state are all around us, in a grand procession in which the emperor marches onward in a humiliating pose and the rest of us wait for someone to break the silence and point out what is true.
Murray Rothbard argued that there are two conditions that must be in place in order to bring about a revolution: objective and subjective. The objective conditions are in place. Most everywhere in the world, people have embraced the promise and prosperity of freedom and rejected the poverty of despotism. The institutions we love — commerce, creativity, enterprise, property, trade, voluntary association — are on the march, while the state is languishing with its creaking and aged institutions of coercion, compulsion, war, and welfare.
What’s left undone is for people like us to work toward achieving the subjective conditions essential for revolution. We must make the intellectual case and teach the world to see the benefits of consistently embracing liberty in theory and practice. Our odds of victory are no better and no worse than they were in the 18th century, when the founding generation threw off the rule of a foreign king, and they are no better or worse than they were in the Soviet Union in the late 1980s, when the people dismantled an imperial system of despotism.
I’m optimistic about the prospects for liberty because our side has enough energy and enthusiasm to match and exceed anything coming from the partisans of stagnation and state power. The application of this energy in the area of political and intellectual activism has a cumulative effect over time. As you know, in the workplace, the employee who is just slightly more productive than the average can end up as a champion in a year or two.
It is the same in the intellectual arena. Long ago, we had become accustomed to thinking of ourselves as a tiny remnant of true believers, glad to write for anyone willing to read, but seriously hindered in our ability to get the message out. After 1996, all that changed with the web, when suddenly we found ourselves in a position to get our message out not only to the thousands we knew were interested but also to the millions we did not know anything about.
A key question to ask of any body of ideas is whether it is living or dying. Looking at the body of ideas of the Austro-libertarian tradition, and where they stand today as compared with 10 or 20 years ago, there can be no doubt as to our status. We are living and growing at compounded rates, and this is paying off in so many ways.
Twenty-one years ago, there were only a handful of Austrians teaching in economics departments around the world. Today there are hundreds, and they no longer have to hide their views. On the contrary, they are hired precisely for their Austrian connections. It is easy to see where this is headed. Not too many years from now, it will become the rule rather than the exception for every economics department at a vibrant institution to have at least one faculty member who embraces the Misesian tradition.
The history of the Mises Institute proves this much: a little work done each day adds up over time. Multiply that work by millions and we have a revolution on our hands. What should that work be? It depends on circumstances of time and place. We must first work to improve our own cultural circumstances, and this is something we can control. We must free ourselves from the party line and help others to do the same.
We must be good examples. An outstanding entrepreneur is the living embodiment of the power of private enterprise. A great teacher is a living example of idealism in practice. A great father or mother, of which we have many here, is living proof that the family is not a den of pathology as the left claims. A wonderful statesman like Ron Paul is proof that a politician need not be motivated by power lust.
No revolution in history has gone precisely according to plan. Every case is different, and the timing and nature of social change surprises its most brilliant intellectual architects. But know this: every time you learn something new about liberty; share a book, article or idea; contribute to a good cause; write a letter to the editor; or give another hero of liberty moral support, you are taking a sledgehammer to the foundation of despotism in our time.
We don’t know when it will finally crack but we do know that it is intellectual work, above all, that will bring it down. In its place, we must plant a garden of liberty that must be constantly cultivated, from its inception until the end of time.
All states everywhere enjoy power only because people are willing to continue to obey and not challenge the powers that be. This means that power is ultimately based on that illusive notion called legitimacy. Legitimacy can vanish in an instant, exposed as a façade that covers up the massive looting machine that is government. It is the role of all of us to break the silence. It is the role of the Mises Institute to teach, so that young people can state the truth in a way that others find compelling. The emperor may continue his march, but he will never again do it with the confidence that he can fool all the people, all of the time. Let us work toward a time when he fools no one.