Rule of the Demos

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Most people
today are quite sure of one thing.

A democratic
state is always and everywhere good.

If we didn't
have the tyranny of the majority, they argue, wouldn't we end up
with the tyranny of the minority? If we reject democracy, won’t
we end up with plutocracy?

Without government
to protect us, we are sure to have corporations to plunder us.

Money and business,
they point out, can be just as coercive as states and armies. Aren't
armies often for hire by the money men? Didn’t Carnegie send in
state troops to break up his unions and fire on his workers? Doesn’t
Microsoft bribe governments in Asia, and didn’t United Fruit topple
governments in Latin America?

There's no
doubt that this argument has some merit to it. You can be quite
sure that businessmen, like any other group of people, will get
away with whatever they can get away with…. whenever they can.
But, without being able to jiggle the levers of power on their behalf,
few businesses would ever get to the size needed to do damage. Few
would be able to inflict mayhem on the scale that even a government
of middling incompetence can.

And besides,
while many businesses do use fraud — and force — to swallow up their
competition, a commercial transaction, in essence, remains a voluntary
exchange between individuals. If you choose to buy neither Pepsi
nor Coke, it is unlikely that either company will force you to drink
their product. But refraining from pulling the lever for either
Bush or Kerry does not rid you of the guaranteed presence of one
of the two in your life for at least the next four years. What’s
more, drinking Coke does not entail any other obligation on your
part. You are not now compelled to eat at Burger King, wear Reebok
shoes, or shop at K-Mart. It is an isolated act.

But think of
the convoluted and improbable complications that have arisen just
because enough people chose to vote for George W. Bush. It is no
consolation to say that there would be an equal number of complications
— even if different — if other people had had their way and elected
Mr. Kerry to office. Voting for Bush or Kerry is no longer simply
a matter of voting for Bush or Kerry. It is voting on the nature
of Middle East policy, the proportion of the budget to be spent
on arms, health or education, the character of the Supreme Court,
the future of wildlife refuges, the health of the ozone, the size
of the trade deficit, the status of the dollar — and an almost infinite
host of issues, questions, policies and debates the outcome of which
even experts who have spent a lifetime on them are likely to do
not much more than guess at.

Now, it is
true that businesses can be heavy-handed when they sell their products.
A shepherd always tries to persuade his sheep that their interests
and his coincide. Indeed, for some people, the art and science of
sheep-suasion — advertising — constitutes the original sin of the
modern economy.

And not without
reason. Like Satan himself, the modern advertiser is armed with
devilish knowledge of the human psyche far beyond the ken of the
yokels of the Eden whom he is about to swindle.

HIDDEN PERSUASIONS

Like Satan,
he addresses his blandishments first to the female of the species.
Notice how real estate agents know well to whom they should pitch
their Jacuzzi-armed bathrooms and granite countertop-heavy kitchens?
Just so, the advertiser is certain that the purchase of anything
in the household — even a fig leaf — needs to be approved by the
lady of the house first. He waves the apple — his advertising copy
— under her nose before her husband’s.

In other words,
when it comes to the market, even before the umpire allows it on
to the field, sex is up and batting. Had it not been for his old
lady, our thick-headed Adam might still be idling buck-naked, his
feet up, enjoying the peaches and pears of paradise. As it turns
out, however, Mrs. Adam has an eye on the social ladder. How could
she let her spouse hang around neither toiling nor spinning, content
with his rustic life among the apes, when all heaven beckoned?

But, for an
“in” with the “better” crowd she needed something new, suggested
the wily salesman. She needed to take a bite — of the big apple.
We all know how the world's first ad campaign ended — with the two
consumers locked out of their home, sweating their derrieres off
in the fields to pay for their little binge. Adam got the workday
and his better half got labor pains . . . and their soul was mortgaged
to the devil for eternity

Which might
be better terms than those facing homeowners who've hocked their
houses in interest-only or adjustable-rate mortgages — where they
might not have the luxury of eternity before lenders come calling.

So yes, modern
advertising is the spawn of the devil, we haven't a doubt. Subliminal
sales pitches nestled in TV jingles do their damage regardless of
conscious choice. Yet, the fact still remains that it is the consumer
who buys or does not buy. And should he fail to take the bait, no
goons come knocking at his door or truss him up like a Thanksgiving
bird. Let a soldier fail to show up for duty long enough, however,
he is liable to be chastised, investigated… and court-martialed.

So you don’t
want your minds turned into mush by advertising? There is a simple
remedy — turn off the TV. But try turning a blind eye to the law
and you are likely to find yourself in the pokey in short order.

And here one
must confess a bit of bafflement. Day after day, ordinary folk complain
about the stratospheric salaries of film actors, baseball players
and CEOs. You'd think they would worry about keeping their money
from adding to the outsize salaries. But what do they do? No sooner
do they manage to scrape together a hundred dollars than they blow
it on a movie or a baseball game or some flim-flam stock touted
by Alf down at the garage.

What we are
saying is that if Microsoft’s business ethics is . . . well . .
. bugging you, you can always shuck Explorer and use Firefox.
You can shelve Hotmail and try Gmail. Spurn Windows and woo Mozilla.

If Wal-Mart’s
labor practices worry you, switch to K-Mart. If you think American
workers are in pain, feel it yourself. Pay extra for their products.

But we notice
that the complainers rarely put their mouths where their money is.
They buy Chinese trinkets, but curse Chinese exporters; they bewail
American consumption, and run up their credit cards.

It can't all
be blamed on the wicked rich. It must be blamed in some small part
on the wicked poor as well. If there are greedy advertisers — as
there are, alas — there are also senseless consumers. And if you
ban all advertising, you might as well ban politicians from campaigning
and bishops from preaching.

But wait: You
say that pounding the pulpit is a different matter from making money?
Maybe so, but religion has its money-men as well, and if they can
push their wares in the heart of the temple, surely honest money-
changers in the market place should be given their moment.

Besides, even
if all commerce was as rank as Gorgonzola, it is not the only thing
that holds people together. There are a hundred voluntary associations,
none of which have to do with the state — or with trade. There are
churches, charities, reading groups, stamp clubs, sports leagues,
sewing circles, scouts troops, fire-fighting brigades — none of
which use force, fraud…. or even filthy lucre… to entice their
participants.

Here, people
cooperate, exchange, learn, debate, and act; and all without a gun
being fired, a law being passed, or a single cop being hired. If
men are such beasts to each other that they need Big Brother breathing
down their necks in all weather, as statists argue, how do you account
for ordinary civic life?

But the statists
have been hammering out their arguments for a while now and they
aren’t going to give in soon. The grip that holds people together,
they answer, has to be something stronger than a handshake or things
fall apart. The cords that bind should be stouter than heart strings;
the glue of human society should be thicker than blood. Voluntary
associations depend too much on good will, on feelings that can
turn on a dime. The heart is too fragile to bear the weight of responsibility
for man’s well-being. We had better turn in our handshakes for handcuffs
and our heart strings for leg irons or the jungle will take over,
they claim.

Homo homini
lupus est (man is a wolf to man), as one of the greatest statists
of all, Thomas Hobbes, noted in “De
cive, Epistola dedicatoria.”

It's always
surprising that the very people who claim to love humanity
so much should love human beings so little that they would
lock them up… for their own good.

“This is one
of the paradoxes of the democratic movement,” wrote the journalist
Walter Lippman in A
Preface to Politics in 1914
, “that it loves a crowd and
fears the individuals who compose it — that the religion of humanity
should have no faith in human beings.”

Lippman should
talk. He himself had little faith in human beings. A meddler of
the worst sort, during WWI, he became an advisor to President Wilson
and assisted in the drafting of Wilson’s Fourteen Points, which
are four more than even God needed, as some wit observed.

From having
started out as a newsman, Lippman soon despaired of the brain power
of ordinary citizens. He thought they would never be able to have
an informed opinion on important public issues. Most people, he
argued, were blinded by partial truths or stereo-types — a word
he coined himself. The average man was a spectator who strolled
into a play mid-act and left before the end. He was a member of
a herd. And herds required shepherds. The masses needed heroes —
or villains — on whom they could pin praise or blame for anything
they could not control or understand.

In Public
Opinion, Chapter I
, Lippman wrote:

“By the same
mechanism through which heroes are incarnated, devils are made.
If everything good was to come from Joffre, Foch, Wilson, or Roosevelt,
everything evil originated in the Kaiser Wilhelm, Lenin and Trotsky.
They were as omnipotent for evil as the heroes were omnipotent
for good.”

Lippman understood
the source of this tendency: The complexity of the real world.

“We are not
equipped to deal with so much subtlety, so much variety, so many
permutations and combinations,” he wrote. So we make a map of it.
The problem however was “to secure maps on which their own need,
or someone else’s need, has not sketched in the coast of Bohemia.”

That's to say,
our pictures of the world are more or less fictions. From the madman’s
hallucinations to the scientist’s models, we are all — to some degree
or other — creating stories and images that correspond only partially
to the changing flux of reality.

But then of
course, when we act, we step out of this pseudo-environment into
the real environment. In wartime, he observed, there existed “the
casual fact, the creative imagination, the will to believe, and
out of these three elements, a counterfeit of reality to which there
was a violent instinctive response.”

From that,
Lippman noted, arose Herbert Spencer’s tragedy of the murder
of a Beautiful Theory by a Gang of Brutal Facts.

Lippman was
also ahead of his time in understanding the nature of the press.
Unlike the liberals, who thought it would remedy the defects of
public opinion, he knew that it actually intensified them.

So far you
can have no quarrel with the man. He could have stopped and decided
then and there to become a haberdasher or grocer and one's respect
for him would have remained intact; indeed risen. But instead, the
virus of power bites into his innards. He looks at the herd and
instead of simply avoiding it, he wants to chivvy it along. He wants
to mold it, and turn it into putty in the hands of “a specialized
class whose interests reach beyond the locality.” These experts
and bureaucrats, whom Lippman called “elites,” one might as well
call hacks.

If Lippman
wanted a technique of government employed by a cadre of experts,
he got what he wanted. Ever since his time, busybodies have been
in charge of the American government. Political scientists and PR
men have been massaging and managing it. We can see how that’s turned
out.

Lippman was
finally no better than the Marxists and materialists he criticized,
and he fell a victim to the same errors they committed. Just as
they condemned religious ideologues for molding the consciousness
of the bourgeoisie with vain hopes of a Christian paradise, and
then turned around and tried to mold the consciousness of the proletariat
with even more preposterous hopes of a communist paradise,
he too thought he could control the masses with propaganda.

At the heart
of all these attempts is nothing more than monumental hubris. What
made Lippman take upon himself a role God was by most accounts unwilling
to assume? Even Christianity leaves our free will alone. Christ
is content to stand at the door of our hearts and knock. But Lippman
would like to pick the lock and make himself at home. In fact, he
has made off with the TV and the computer while we're kept in deep
slumber by his posse of propagandists and professional liars.

What Lippman
discovered was that men can't possibly know all they need to know
to think and act coherently within a large state. They become the
target of demagogues and desperadoes. They are manipulated by editorialists
and experts, politicians, and pundits, until at the end they can
hardly recognize where their own ideas end and other people’s opinions
take over. In short, Lippman has looked at modern man and found
that a large-scale democracy is a contradiction that does not suit
him. But then, rather than drawing the conclusion that such a state
is inherently unworkable and should be thrown out, he does the very
opposite. He decides to keep his imperial democracy…. and throw
out man.

THE UNIMPORTANCE
OF BEING EARNEST (IN INDIA OR SOMALIA)

So we need
to ask: Is man really such a hopeless creature?

Admittedly,
the evidence is all stacked against him. From Jacob onward, a human
being is a liar and a con man. From Cain down, he is a murderer.
But here let's make an observation. Goodness is very rarely newsworthy.
Had President Clinton been spotlessly faithful to his wife, he would
not have graced the front pages so often and entertained us all
so endlessly. We would have yawned and turned off our TV sets instead
of smirking. Goodness is boring, dull, uneventful.

And for that
reason, we have a very biased view of human nature. Accustomed to
reading gripping stories of treachery and mayhem, we usually fail
to notice fidelity and kindness. Our eyes are always scouring the
distant horizons for colorful scoundrels. The farther off they are,
the less we can know of them and the more our imagination can fill
in the gaps. The people we do know, on the other hand, are so close
we can hardly see them. We know them so well we cannot reduce them
to caricatures that entertain us. And so, entranced by reckless
outlaws, we ignore thoughtful in-laws.

The truth is,
ordinary people are neither good nor bad. They are, as we like to
say, subject to influence. That influence tends to the good in the
small circle of what a man knows first-hand, where he is among friends,
family and a small community. It tends to the bad everywhere else,
in the infinite circle of opinions and ideas at large in the big
world with its pomposity and punditry He is ill-equipped to deal
with them and they swirl around him in a miasma through which he
can stumble only dimly. To tell the truth, even in his home, the
best laid plans of men are surprisingly apt to go a-gley.
How much more in the world!

How much less
likely are we to figure out the road map for billions of people,
when we can't figure it out for ourselves?

If there is
a design in our lives, it is hardly one we spot ahead of us. It
is more likely to sneak up on us from behind after we have lived
through it. We look back and then notice a pattern in what we took
to be meaningless chance. Our intellects, perfectly suited to master
the physical world around us, are dangerously bad at understanding
ourselves or others in the same way. In fact, when we try to, we
are always rebuffed. Life seems to be impervious to logic and our
lives turn out to be more the product of contiguous actions piled
one on top of another like bricks in a wall, than the execution
of any preconceived design.

The Scottish
Enlightenment was quick to grasp this:

“Every step
and every movement of the multitude, even in what are termed enlightened
ages, are made with equal blindness to the future; and nations stumble
upon establishments, which are indeed the result of human action,
but not the execution of any human design,” wrote Adam Ferguson.
(An
Essay on the History of Civil Society
, Adam Ferguson, 1767:
Part Third. Section II, p. 122 of the Duncan Forbes edition, Edinburgh
University Press, 1966).

The patterns
that arise naturally from our actions rather than from our conscious
design create an order far more complex and sensitive than any artificial
structure designed by a planning committee. “This type of spontaneous
order — unlike the Zug-zwang of central planning — is the
result of “natural processes,” as I write in a new book with Bill
Bonner, Mobs,
Messiahs, and Markets
.

In the free
market, for example, theoretically at least, each actor knows what
he wants and he senses what others want. Not through second guessing
…or second sight. Instead, he does it through the mundane everyday
business of watching prices. The price quickly tells him all he
needs to know at that moment to best negotiate his needs. Free markets
make for the type of complex order that isn't ever predictable.
Central planning makes for the type of simple-minded mess that always
is.

Take a recent
case in India.

“They landed
up at my house and made me take this cow,” wailed Kamlabai Gudhe
in Lonsawala, Wardha in the north Indian state of Maharashtra.
(“Till
the cows come home
,” P. Sainath, Hindu Opinion, November
23, 2006).

Ms. Gudhe,
a Dalit (lower caste) farmer, lost a husband to suicide in the
summer of 2006. If that wasn’t bad enough, she was then the target
of an act of governmental mercy. She got a cow.

“I said we
don’t want this,” she remembered, when asked.

Other villagers
had similar complaints:

“The buffalo
I got through the government cost me Rs.120–Rs.150 a day,”
said one.

“I feed it
the wheat meant for my son — who was the ‘beneficiary,’” added
another.

That hasn’t
stopped the bureaucratic Mother Theresas who thought up the aid
program for poor farmers in which quality cow relief was the lynch-pin.
The Maharashtra Chief Minister planned to bring in 40,000 new cows
to the area in three years while the Indian Prime Minister guaranteed
18,000. Apparently, everyone had a say in the business, except the
cows.

Or the villagers.

And now, the
scheme turns out to be full of . . . well, bull. The villagers
know nothing about rearing the beasts. And since there had to be
someone to look after them, there was one less person earning a
living in each household. Inflow and outgo became as mismatched
as the US current account.

Or as Mother
Gudhe put it succinctly: “This brute eats more than all us in this
house put together. And we don’t get more than four liters of milk
in a day from it.”

None of this
was unforeseen, mind you. With admirable precision, if not tact,
even the Planning Commission called it “insane.” They would know.

“It was not
clever to give poor farmers costly cows in places where there is
no water or fodder,” say the agricultural experts.

No kidding.

And the state
supply of chow is so bad that even starved cows turn up their noses
at it.

That might
be because they weren’t from anywhere around the place. They were
phoren — to use the Indianism for it. The Animal Husbandry
Department, which started out looking for cheaper breeds, ended
up with Jerseys — and half-breed Jerseys at that — each costing
Rupees. 17,500. That’s a fortune for poor Indian farmers. Especially
in a state where wheat production is in decline from lack of water.
What does a starving farmer do with a ravenous cow?

The Jerseys
might not be full-blood, but they have all of their appetite. They
each need Rs. 50 of oil cake a day, green fodder, and someone to
look after them. Then there’s the Rs. 30 for the bus ride to sell
the milk. That adds up to almost Rs. 150 for maintenance, against
earnings of less than Rs. 70 a day during the milking season. And
nothing at all the rest of the year. Why, it’s almost as bad as
a Neg Am mortgage…..

Nature can
only take away your harvest or starve you.

It takes a
bevy of hacks to make you have a cow over it as well.

To gain more
support for that thesis we turn from the animal husbandry of central
government hacks to the Infotech policy of warlords.

There is proof,
after all, that Hayek's spontaneous order exists. Apparently, you
can see it at work — in Africa.

Somalia is
the only country in the world, they say, where there is almost no
government. It is a pure free market, say some observers.

According to
some others, it is also a Hobbesian jungle where “life is solitary,
poor, nasty, brutish and short.”

You don't have
to make up your mind about it. But is it?

Its true that
since President Siad Barre was overthrown in 1991, the country has
been without much in the way of a central government.

Rival warlords
roam unchecked, pillaging and extorting. Famine has killed more
than a million and sent even greater numbers fleeing abroad. Public
education and literacy are low compared even to other African countries;
there are few roads, and the country is forced to rely on foreign
financial institutions for a number of things. Health care is out
of the reach of most people.

A failed state,
a third world hell-hole, a basket case, some would say.

Look what happens
when you don’t have government, statists cluck. With dismay.

But if Somalia
is a failed state, it's an odd sort of failed state; with Internet
cafes all over the place, the cheapest web surfing in the continent,
and cheap local and international phone calls. (“Telecoms
thriving in lawless Somalia
,” Joseph Winter, BBC, November 19,
2004.)

There is no
formal banking system, but the money exchange services handle up
to a billion dollars worth of remittances in a year. The main market
in Mogadishu has everything you could want from food to electronics.
The private sector offers other services efficiently too — such
as, hospitality and security. Since the demise of the central government,
the Somali shilling has become far more stable in world currency
markets, while exports have quintupled. (“Stateless
in Somalia and loving it
,” Yumi Kim, February 21, 2006, Von
Mises.org).

Look what happens
when you don’t have government, crow anarchists. With glee.

But here, an
about-face is in order. It's true that the government and the governing
classes are a circus fit to have scorn and ridicule heaped on them.
But that's because government as it is today in most countries is
unwieldy, parasitic, inefficient, and murderous.

There is, however,
another idea of government, with which no one can have a quarrel.
It is the one you find in the Federalist papers and in the writings
of the American Revolution.

“That government
is best which governs least,” wrote Tom Paine.

For the Founding
Fathers of America, government was an evil, but a necessary one.
It worked best when it was limited to protecting life, property,
and the rule of law — the minimum conditions needed for a society
to flourish.

Anarchists
will argue, of course, that you don’t need a government to do that.
Private groups are perfectly able to provide security, defense and
infrastructure. I am not ready to argue with them. I don’t believe
I know enough of the matter one way or other. But one thing I do
know is that both anarchists and statists are confused in their
talk. They say state when they mean government, and they say government
when they mean the rule of law. They confuse anarchy with chaos,
and the absence of the state with the absence of law.

Somalia is
stateless, but it is not entirely without laws; there is anarchy,
but there is not yet complete chaos. Somalia may well be an example
of how spontaneous order can take root even when the state collapses.
The Law
of the Somalis: A Stable Foundation for Economic Development in
the Horn of Africa
(2005) written
by Michael van Notten, goes to the heart of the matter. Van Notten
is a Dutch lawyer who married into a Somali clan and lived in the
country for the last decade or so of his life.

Van Notten
points out what western observers do not want to notice. Somalia
might lack a government, but it’s not completely without governance.
The country still relies on traditional Somali customary law, which,
he points out, would not be able to work if a strong central government
and Western-style democracy were imposed on top of it. In other
words, Somalia’s free market doesn't operate in suspended animation,
or in a vacuum. It rests — in a precarious, wobbly way, it's true
— on the traditional law of the Somalis. And it does have a government
— even if it's only the government of the Somali clans.

Somali customary
law and clan government follow natural law closely. And whatever
fragments of a genuine free market operate there do so only because
of the norms of behavior springing from this indigenous system.

Van Notten
makes another interesting point. He suggests that the terrible problems
plaguing Somalia don’t arise from the free market or the lack of
central government at all. Instead they are the result of the constant
attempts to impose government, albeit unsuccessfully.

“A democratic
government has every power to exert dominion over people. To fend
off the possibility of being dominated, each clan tries to capture
the power of that government before it can become a threat.” (Van
Notten, 136, 2005, cited by Yumi Kim
).

And the fear
of domination is only kept alive by incessant U.N. efforts to intervene
and impose a Western-style government in the country. Leave the
clans alone, he says. Let foreign governments just deal with them.

The irony is
that a real free market is not free at all. It is, and always has
been, restricted — by laws, customs, traditions, morals, expectations.
In Somalia or the West, you have to choose. It is either natural
law or the law of the jungle.

THE GOLDEN
RULES

We note in
this regard the arguments of Peruvian free market economist Hernando
Soto. De Soto thinks he knows why the ground rules in the West allow
the market to work:

Every increment
in production, every new building, product, or commercially valuable
thing is someone’s formal property. Even if assets belong to a
corporation, real people still own them indirectly, through titles
certifying that they own the corporation as “shareholders.” (The
Mystery of Capital: Why Capitalism Triumphs in the West and Fails
Everywhere Else
, Hernando De Soto, New York: Basic Books,
2000, p. 48).

Without these,
says De Soto, you don’t have a free market, no matter how big a
government you have. Otherwise, why is it that entrepreneurship,
natural resources, and abundant labor have not saved developing
countries like Egypt and Peru, or Kosovo and Colombia?

Without adequately
documenting property rights, they cannot “readily be turned into
capital, cannot be traded outside of narrow local circles where
people know and trust each other, cannot be used as collateral for
a loan, and cannot be used as a share against an investment.” De
Soto, p. 6, cited by H. Perritt

While Western
nations have sophisticated legal infrastructures that permit capital
to be created, property laws in developing countries are so unwieldy
that they actually pose a barrier to economic activity. Some of
the statistics De Soto lists would be comical if they were not appalling
(De
Soto, pp. 18–27
).

In Peru, opening
a small shop with one worker takes 289 days. Registering it costs
31 times the minimum monthly wage. Getting a permit to build a house
on state land takes 6 years and 11 months, and 207 procedures in
52 governmental offices. Obtaining legal title to the land takes
728 steps.

In the Philippines,
formalizing informal urban property takes 168 steps and 13–25 years.

In Egypt, building
on desert land, needs 77 steps, 31 different governmental offices
and 6 to 14 years.

In Haiti, obtaining
a 5-year lease takes 111 steps and 4,112 days.

The result
of this bureaucratic obstacle course is that people live and work
outside the law. And they pay the price. No one will lend them money
except family members. So they end up specializing and producing
for smaller circles. The result? Lower productivity. Capitalism,
he argues, needs legal protections to work. It needs rules.

But here, I
have a bone to pick with Mr. De Soto. He thinks the only rules that
work for capitalism are western rules. In fact, the title of his
book makes no sense at all in some ways. Capitalism Fails Everywhere
Else? If so, why is Western investment capital flooding China? Not
to finance socialism, we can be sure. No, the Communist Chinese
have proved to be the biggest capitalists of all.

What that means
is that no particular set of laws and institutions — as long as
they protect the ground rules of exchange — can claim to be uniquely
fitted to the growth of the free market. Instead, the laws that
enable spontaneous order must arise — spontaneously — from each
society in which it operates. They have to be the result of the
unique history and customs of the people of that society. “Western”
laws are not necessary to Chinese or Malaysian capitalism. Chinese
and Malaysian laws are enough.

The reason
is that the laws that get passed with pomp and circumstance in legislatures
are not the laws that really govern society. They only look like
they do. But ask yourself this. If they really did, why is it that
the crimes committed by commissars in the Soviet Union, by the Gestapo
in Nazi Germany . . . and by the American CIA . . . were all committed
with the law books bulging at the seams?

It is not how
many laws you have that matters, but how well those laws are obeyed
— which is a matter of culture and history, of what people expect….
and what they are prepared to accept. And to know that takes the
study of history and manners; it needs a knowledge of morals and
religion. The usual smoke and mirrors sideshow supplied by the political
class won’t do. You need to turn to the accumulated wisdom of case
law and precedent, of customary law and conventions.

The free market
arises wherever there have been such laws and systems — whether
in Europe or Africa or Asia.

The spice trade
of the Indies, for instance, operated for 500 years without Western
laws, yet it corresponded roughly to free market capitalism. In
Africa, buyers and sellers met under a tree, not a mall, but what
they had was still a market where prices were arrived at by bargaining
between buyers and sellers. Not set arbitrarily by the chiefs.

Africans might
have used gold-dust salt before the Europeans brought in paper currencies,
but they were still using money.

Today, in fact,
some of us might think that gold dust look like the stronger currency.

How else can
we explain the difference between statutory laws and customary laws
like the Somali clan laws? One way to think about it is to see it
as the difference between fiat money, like paper currencies, and
a real store of value, like gold. You see, if there is nothing to
back up the paper currency churned out by a central bank, then the
country is in a bit of trouble. Pretty soon, people come calling
for their loans with cudgels and pitchforks. It's happening right
now in America.

The problem
arises because statutory laws can be passed endlessly, even if they
have little relation to how the masses of ordinary people actually
think and act. That means you can have a country where theft and
looting are the norm, that might still have very intricate laws
on their books against theft and looting. The statutes won't do
a thing to help.

Customary law,
on the other hand, can’t be plucked like a rabbit out of a top-hat.
It has to live…and breed… in the cozy warrens and nooks of particular,
real communities with particular real values.

And because
it does, people tend to accept it more often. It works more often.

It is a more
sensitive and complex measure of a society that tells the stories,
not of just those who happen to breathe now, but of the unborn…and
the long dead. It reflects the fractal fellowship of generations
and time. Not the unwieldy geometry of states and boundaries. It's
the contrast between a dynamic and a static page on the web.

So, while the
cogito ergo sum might look like a rock from where to tackle
technical and physical problems, it is shifting sand when it comes
to human ones. History and experience are outside the beat of unalloyed
reason.

Which is why,
when it comes to understanding how masses of men think, we are better
off without naked logic. We are better off with the warm, colorful
outfits in which practical wisdom and rhetoric trick themselves
out.

MINDING
THE CROWD

That, ultimately,
is what the hidden persuaders in our democracies have figured out.
They know that the masses of men — and that could mean rich hedge-fund
managers just as often as poor villagers — don't really want to
think for themselves. And, for the most part, can't.

What they want,
as Lippman noted, is to simplify things.

Joseph Goebbels,
the Nazi minister of propaganda knew that… and knew how to use
it.

A lie, simple
enough, big enough, and repeated often enough, without explanation
or reasoning, is all it takes to drive a crowd mad.

And so we get
the pundits and the propagandists of the state. We get the real
rulers of our democracies.

How it happens
is easy enough to understand.

Take a fellow
going about his own business. Ordinarily, he is unlikely to settle
for less than a solid explanation for things that go wrong. If his
car starts skidding, he takes it apart at the mechanic shop to find
out why and he doesn’t get back in until it works. The penalty for
careless thinking on the subject might be his life.

Of course,
on many bigger issues, his life might also be at stake. If he lived
in New York, for instance, any explanation for New York’s crime
rate becomes rather personal. But while his car only affects him,
New York’s crime rate affects millions of others. On the subject
of his car, he confidently relies on his own hunches. On the subject
of New York crime, however, he becomes diffident. It is not his
problem alone. Some one else should think of it, he decides. Best
leave it to the people who know. Experts. Pundits.

He opens the
paper and reads the opinion column of Professor Tedious Pontificator
at Princeton University. He has never been to Princeton University.
But he has heard it’s very good. At any rate, it is very expensive,
which is the same thing, in his mind. It is a reliable brand. He
has also never heard of Professor Ponti. But professors, he has
been told, are egg-heads. They know. So if Professor Ponti says
that New York crime rates have gone down because of gun control,
he figures, it must be true. Besides, the fellow has said so in
the papers. It must be St. John’s Gospel. At any rate, he now has
an opinion on hand rather like a concealed weapon that he can fire
off at the nearest bystander.

 

 

Buy
this book.

 
 

“Dear,” he
begins, putting down his paper and glancing across at his better
half. “Did you know that New York’s crime rate has gone down because
of gun control?” Here, he gets the first pay-off for his secondhand
wisdom. With a single bleat, the poor sod has established himself
in his wife’s eye as a man of the world, conversant with public
issues. For a fleeting moment — since, in marital life, such moments
are always fleeting — he glitters before her, even if it is only
in Professor Ponti’s borrowed feathers. He too has become an expert.


 

Buy
this book.

 

 
 

But there is
another payoff. By thinking like everyone else, the poor man trades
in the uncertainty and loneliness of being an individual for the
certainty and camaraderie of belonging to a group. What use would
it be for him to be right if he was right all on his own? What would
it profit him to gain his soul but lose the world? He decides he
would rather have the world. Or rather, an instinct lodged in his
brain drives him to it. Solidarity with his unthinking fellows is
wired deeper in his skull than the fleeting pleasures of reasoning
on his own.

In his heart
and soul, man is a social animal and solidarity with his group —
however wrong — is more important to him than being right alone.

In that moment,
he catches the contagion of the crowd.

In
that moment, democracy becomes demagoguery.

This article
is an adaptation of an article published
in Dissident
Voice
in December, 2006.

August
27, 2007

Lila Rajiva
[send her mail] is the
author of the ground-breaking study, The
Language of Empire: Abu Ghraib and the American Media
(MR
Press, 2005), and the co-author with Bill Bonner of Mobs,
Messiahs and Markets
(Wiley, 2007). Visit her
blog.

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