Free-Market Thinking and the Impact of the Internet

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Introduction: Robert Higgs is Senior Fellow in Political Economy for The Independent Institute and Editor of the Institute’s quarterly journal The Independent Review. He received his Ph.D. in economics from Johns Hopkins University, and he has taught at the University of Washington, Lafayette College, Seattle University, and the University of Economics, Prague. He has been a visiting scholar at Oxford University and Stanford University, and a fellow for the Hoover Institution and the National Science Foundation. He is the recipient of numerous awards, including the Gary Schlarbaum Award for Lifetime Defense of Liberty, Thomas Szasz Award for Outstanding Contributions to the Cause of Civil Liberties, Lysander Spooner Award for Advancing the Literature of Liberty, Friedrich von Wieser Memorial Prize for Excellence in Economic Education, and Templeton Honor Rolls Award on Education in a Free Society. Dr. Higgs is the editor of The Independent Institute books Opposing the Crusader State, The Challenge of Liberty, Re-Thinking Green, Hazardous to Our Health?, and Arms, Politics, and the Economy, plus the volume Emergence of the Modern Political Economy. A contributor to numerous scholarly volumes, he is the author of more than 100 articles and reviews in academic journals. His popular articles have appeared in major media and he has been interviewed at Fox News, NPR, NBC, ABC, C-SPAN, CBN and many other networks.

Daily Bell: You’ve had quite a career thus far. Tell us about your background.

Robert Higgs: I was born in Oklahoma, but my family moved to California when I was 7 years old, and I grew up there in a rural area west of Fresno. After graduation from high school, I attended the U.S. Coast Guard Academy, Fresno State College, and San Francisco State College. I attended graduate school at the University of California, Santa Barbara, for one year before transferring to the Johns Hopkins University, where I completed my Ph.D. degree in economics in 1968.

Daily Bell: How did you get interested in libertarian issues?

Robert Higgs: My rearing imbued me with a strong desire for personal independence. Serving in the Coast Guard gave me an appreciation of how people with power often abuse those subject to their authority. My education in economics taught me about how markets work and how governments intervene in markets, often for the worse; most important, it taught me that scarcity makes trade-offs unavoidable, that is, that all choices have opportunity costs.

Daily Bell: How did you come to join the Independent Institute?

Robert Higgs: After I had worked for 26 years as a professor, I found that academic institutions no longer wished to employ me. (I had previously resigned positions as a tenured full professor at the University of Washington and as a tenured full professor and holder of an endowed chair at Lafayette College.) At that time, David Theroux, the president of the Independent Institute, offered me a position as research director. Three years later, in 1997, I handed off this position in order to concentrate on work as the editor of the Institute’s just-launched scholarly quarterly The Independent Review: A Journal of Political Economy, which began publication in 1996.

Daily Bell: Tell us about The Independent Review and your role in this prestigious publication.

Robert Higgs: I have been TIR’s editor from its creation to the present time, although I will soon surrender this position to a new editor. My responsibility has comprised the processing, peer review, and selection of all the articles and reviews in the journal. I have also put a great deal of time into improving the articles, both in substance and in exposition. We take pride in making TIR one of the most readable journals in political economy — a field that in my editorial capacity I have always construed broadly as including economics and the other social sciences, law, philosophy, and history, among other disciplines.

Daily Bell: What do you think of economics as it is currently practiced in the West?

Robert Higgs: I have many disagreements with the form and substance of mainstream economics. It is philosophically ill-founded, being essentially a positivistic pseudo-science that more or less apes what it takes to be the scientific approach of physics and chemistry. This project is not science, but scientism, because the methods of the "hard" sciences are not strictly applicable in the human sciences. In general, atoms and molecules act in constant, predictable ways under the same conditions. Human beings, in contrast, sometimes change their beliefs and values; they are creative in the invention and selection of the means they employ to achieve their ends; and, most important and most unlike the entities studied in the hard sciences, they have purposes, which they may also change at any moment. Mainstream economics ignores these essential differences and proceeds as if human beings were automatons that react to changes in conditions much as chemicals react, in constant, quantitatively predictable ways. Modern economics looks "scientific" to outsiders, however, because it covers its methodological nakedness with a thick cloak of mathematics and statistics. Empty formality gets high marks in modern economics, notwithstanding its frequently tenuous connection to economic reality.

Daily Bell: Are you a full-fledged Austrian? Do you believe in free banking or just a gold standard?

Robert Higgs: Whether I am a full-fledged Austrian is for others to decide. Austrian economists differ among themselves in their views about what this approach to economics requires and prohibits. I certainly have been greatly influenced by Austrian economists, especially by Mises, Hayek, and Rothbard, and over the course of my career, I have changed the way I do my own work and the way I understand what economic analysis, at its best, can and cannot accomplish.

On banking as on everything else, I favor complete freedom. If people freely adopt gold as a medium of exchange, that action is fine. If they freely adopt another medium of exchange, that action is also fine. Banking ought to be an unrestricted business carried on by parties who contract according to agreements of their own making.

I do not support a gold standard like the one the leading governments operated during the thirty or forty years before World War I, which was essentially a government price-fixing scheme for gold. Nevertheless, going back to that system would be an enormous improvement over the banking regulations and central-bank operations of the present-day monetary system.

Daily Bell: What do you think of Ellen Brown’s point of view — as enunciated in her book Web of Debt — that the state is historically in charge of money and that state-run public banks along the lines that Benjamin Franklin suggested would be efficacious?

Robert Higgs: I have not read Brown’s book, but I do not believe that the state was always in charge of money. Money emerged, as Menger, Mises, and Hayek explained, as an instrument bound up with a spontaneous order of indirect exchanges. I am completely opposed to state-run banks of any kind, including such anomalous institutions as the Federal Reserve System. Such institutions, whether they are state entities or merely state-spawned entities, are certain to be a means of political corruption and economic mischief, and they will ultimately cause economic ruin.

Daily Bell: Tell us about some of the well-received books you’ve written. We are especially interested in your work on war and the modern economy. What is the book Arms, Politics, and the Economy about?

Robert Higgs: This 1990 book, which I edited, is a collection of papers that grew out of a conference I organized at Lafayette College in 1987. Although the authors range over a variety of subjects related to the economics and politics of the military establishment and its economic support in the United States, the book might fairly well be described as focused on the dimensions and operation of the U.S. military-industrial-congressional complex (MICC). The authors include excellent scholars in history, law, economics, and politics, including Dwight R. Lee, Jeffrey Rogers Hummel, William E. Kovacic, Frank Lichtenberg and Charlotte Twight. The chapters are probing, well-documented, and analytically astute.

My most scholarly work on war economy and the workings of the MICC appears in my 2006 book Depression, War, and Cold War. In the first part of this book, I show why the Great Depression persisted so long, debunk the idea of "wartime prosperity" during World War II, and demonstrate that genuine prosperity did not resume until after the war, when the "regime uncertainty" of the late New Deal period was reduced and resources were made available for civilian uses. In the second half of the book, I show the Cold War’s great opportunity costs and explicate the political, ideological, and economic aspects of the MICC from the late 1940s to the end of the 1980s.

Daily Bell: Tell us about Resurgence of the Warfare State and Against Leviathan.

Robert Higgs: Resurgence of the Warfare State (2005) is unlike my other books. It is essentially a cri d’coeur, rather than a sustained analysis or scholarly narrative. It contains 47 short chapters, including interviews, commentaries, and other forms of expression, such as satires and poems. The common thread is my outrage against the U.S. government’s exploitation of the 9/11 attacks to launch the wars against Afghanistan and Iraq and to occupy these countries thereafter. I cover the period from September 2001 to December 2004, devoting much of my commentary to exposing the scare tactics, illogic, lies, distortions, and other propaganda the Bush administration used to sell the Iraq war to the public and Congress. I also deal extensively with the U.S. military’s atrocities in the invaded and occupied countries.

Against Leviathan (2004) collects in revised form 39 essays originally published (and one substantial essay not previously published) over a span of more than 20 years. Although the topics range widely, all pertain in some way to the growth, form, and operation of contemporary big government — an institutional complex that I find morally repugnant, socially destructive, and economically indefensible. In Edmund Burke’s oft-quoted words, "The thing! The thing itself is the abuse."

Daily Bell: Tell us about The Transformation of the American Economy 1865—1914, Competition and Coercion, and Crisis and Leviathan.

The Transformation of the American Economy, 1865—1914 (1971) is my first published book. It is essentially a long essay devoted to the interpretation of the U.S. economy’s growth and structural transformation during the period of its most rapid development. A novelty of my approach was the application of newly developed economic concepts and models to subjects that previous historians had treated less rigorously. I emphasized the importance of fairly secure private property rights as an underlying condition of the nation’s rapid economic progress.

Competition and Coercion (1977), my second published book, is subtitled Blacks in the American Economy, 1865—1914. This book departed substantially from previous historical treatments of the economic condition of blacks during the first 50 years after the War Between the States. I emphasized the powerful role of market competition, especially for laborers and farm tenants, in helping blacks to avoid to some extent the racial oppression of white-run state and local governments in the South. I also showed that the blacks made considerable economic progress during this era, a conclusion that clashed with long-standing claims by historians of the South.

Crisis and Leviathan (1987) is my best-known book. It advances analytical concepts and reasoning applicable to understanding the growth of government and then presents a detailed historical interpretation focused, as the subtitle states, on Critical Episodes in the Growth of American Government. The narrative covers the period from the late nineteenth century to the late twentieth century. Among the book’s novelties is a thorough explication of ideology as a central concept in the study of political economy and a detailed analysis of what I call the ratchet effect in the growth of government — an effect visible in all of the great national emergencies the United States experienced during the period studied, especially the world wars and the Great Depression.

Daily Bell: What is going on now? How do the wars in Afghanistan and Iraq fit into the larger goals of the nation’s military industrial complex?

Robert Higgs: These wars have an overarching geopolitical goal, which is to make the United States the dominant power in the Great Game region, ensuring the exclusion of competing powers China and Russia and intimidating uncooperative regional powers, especially Iran. Underlying this goal is the U.S. power elite’s belief that they must control access to the vast energy resources of the Caspian Sea region and, not coincidentally, reap great profits for U.S. energy and energy-facility-construction companies in the process. The wars themselves, which have cost more than a trillion dollars so far, have been a godsend for the military leadership and for the tens of thousands of contractors and their employees who have been able to plunder the Treasury, owing in part to the loose or nonexistent accounting associated with doing business in the war zones. Of course, the war in Iraq has also been aimed at weakening or destroying Israel’s enemies.

Daily Bell: Will the West be going to war against Iran?

Robert Higgs: I hope not, but I do not know. I am certain, however, that if the U.S. military or its Israeli counterpart launches at attack against Iran, the result will be catastrophic in every regard and that the only possible gainers will comprise no one except the political leadership of Israel and a handful of political figures and their "intellectual" shills in the United States. War against Iran is simply another scheme to satisfy the neo-cons’ bloodlust and fulfill their ideological fantasies — nothing more and nothing less.

Daily Bell: What is the meaning of these serial modern wars? What is the West, particularly the Anglo-American axis, trying to accomplish?

Robert Higgs: Different persons and groups with influence on this war-making have different goals. The political leaders understand that war is the health of the state, and as the state’s kingpins they stand to benefit politically (and in many cases materially, in due course) from U.S. aggression against weak countries in the Third World. An array of economic interests — the so-called military-industrial complex — stands to gain profits, as do other parties, such as some of the big financial institutions. Influential political groups, such as the U.S. evangelical denominations, have become iron-clad supporters of militarism and of pro-Israel actions of all sorts. The military itself seeks to get or to maintain a gigantic flow of money and the power and positions associated with maintenance of a globe-girdling empire of bases. Overarching all of these particular interests is the shared ambition many members of the U.S. power elite have in maintaining U.S. global hegemony, and in using the leverage such hegemony provides to serve a variety of subsidiary interests, ambitions, and fantasies.

Daily Bell: Are you optimistic about freedom going forward? Has the Internet had a positive impact?

Robert Higgs: In the United States and other advanced Western countries, freedom continues to shrink. The wars in the Middle East and the current economic crisis have accelerated the movement toward totalitarianism. Meanwhile, however, in other parts of the world, most importantly in China and India, economic freedom continues to increase, with magnificent consequences for the economic well-being of hundreds of millions of people long trapped in poverty.

On balance, the Internet seems to have had a positive effect in strengthening the position of people who are resisting the ongoing growth of government. It has not been sufficient to stop that growth, but matters might have been even worse had the Internet not been available to permit the rapid, inexpensive transmission of counterarguments and counterevidence to the government’s unceasing lies and propaganda.

Daily Bell: What is the future for America? Is it in inevitable decline or will the Internet, like the Gutenberg press that came before, change the course of history for America, Britain and the West and help reverse the decline and usher in a modern Renaissance, etc.?

Robert Higgs: I foresee no new Renaissance. People in the West today are more inclined to believe economic, social, and political nonsense than their nineteenth-century ancestors were. Statism is rampant in many forms and many areas of social and economic life. People are ideologically brainwashed by the government schools and the mass media. The intellectuals are overwhelmingly opposed to economic freedom and inclined toward various more-or-less totalitarian schemes. Fears about a looming global-warming catastrophe and other ill-founded scenarios generate widespread delusions, receive constant stoking by the media, and keep the academics and the crony capitalists well served with grants, contracts, and consulting fees, among other things.

Daily Bell: What is the Independent Institute doing to arrest the authoritarian decline of the West and America in particular? Is it speaking out or is it involved in any particular educational endeavors?

Robert Higgs: The Independent Institute sponsors a wide variety of studies, conferences, and public programs to spread more reliable information about sounder analyses of economic, political, scientific, and related developments. Its fellows and affiliated scholars write and speak actively in diverse venues, on television, on the radio, and in personal appearances before many different groups in academia and among the general public. The Institute also operates a scholarship program to allow young people to attend private schools and a summer program for high-school and college students that focuses on instruction in the basics of philosophical, economic, and political understanding.

Daily Bell: Do you have alliances?

Robert Higgs: The Independent Institute cooperates actively with a variety of like-minded organizations, groups, and individuals who seek to promote peace, limited government, and economic prosperity based on private property rights and freely functioning markets.

Daily Bell: What is your position on the current administration? Does it hope to advance a merger of Canada, America and Mexico?

Robert Higgs: I view the present administration as a menace to almost everything I hold dear. I viewed the previous administration in the same way. In today’s world, all governments pose standing threats to peace, prosperity, and simple human decency. I do not expect the U.S. government to seek a merger of the North American countries, which are already tightly linked by economic and financial ties, among other things. I view the prospect of such a merger as a bugbear of U.S. national chauvinists.

Daily Bell: What freedom literature can you recommend to our readers? What websites? Any of your own material? Do you have a private website?

Robert Higgs: The literature of liberty is immense and intellectually imposing. My own thinking owes a great deal to the writings of Ludwig von Mises, F. A. Hayek, and Murray N. Rothbard, but countless others have made important contributions to my education and understanding. Perhaps the most towering libertarian intellectual now writing actively, notwithstanding his advanced years, is the radical psychiatrist Thomas Szasz.

Extensive references to the literature of liberty — and related work by non-libertarian authors — as well as many complete texts may be found at websites maintained by the Independent Institute, by the Ludwig von Mises Institute, and by the Liberty Fund.

Many of the articles I have written during the past thirty years are available online HERE, which is the closest thing to a personal website that exists for me.

Daily Bell: Any last thoughts? What plans do you have for the future that you might want to point out?

Robert Higgs: The defense of liberty is a never-ending project. I continue to write and to speak on a variety of topics connected with the analysis of economic history, political economy, economic and military policies, and related matters. I contribute a substantial column on economic history ("Our Economic Past") to every third issue of the Foundation for Economic Education’s venerable magazine The Freeman. I speak from time to time at programs organized by the Mises Institute, the Cato Institute, the Future of Freedom Foundation, the Foundation for Economic Education, and other such pro-market groups, as well as at academic conferences and at colleges and universities in the United States, Latin America, and Europe. In 2006, I was a visiting professor of political economy at the University of Economics, Prague, and I work from time to time with the economics Ph.D. program at Francisco Marroquín University in Guatemala. I appear frequently on radio and television programs, and I make myself available for interviews by journalists with a wide variety of news media. Although I will soon hand off the editor’s job at The Independent Review, I expect to continue the other activities I’ve mentioned.

Daily Bell: Thanks for sitting down with us and sharing such an informed perspective.

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Robert Higgs [send him mail] is senior fellow in political economy at the Independent Institute and editor of The Independent Review. He is also a columnist for LewRockwell.com. His most recent book is Neither Liberty Nor Safety: Fear, Ideology, and the Growth of Government. He is also the author of Depression, War, and Cold War: Studies in Political Economy, Resurgence of the Warfare State: The Crisis Since 9/11 and Against Leviathan: Government Power and a Free Society.

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