Nixonian Socialism

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This
essay was first published in the January 1971 issue of The
Libertarian Forum
,
before Nixon's price and wage controls and many other interventions
over the course of his presidency. Rothbard predicted the future
state of the Nixonian economy in every respect. The essay is important
for another reason: he correctly sees that Republican socialism
is of a special sort that benefits the GOP constituency, and enjoys
the tacit approval of conservative organs of opinion.

It is traditional
at the turn of the year to survey the state of the economy and
to try to forecast what lies ahead. Despite the Pollyanna chorus
with which we have been deluged for the last year by “conservative”
and “free-market” economist-whores for the Nixon Administration,
we can state flatly that the state of the economy is rotten, and
destined to get worse.

In the 1960
campaign there first appeared the curious phenomenon of “anarcho-Nixonites,”
several friends of mine who had become aides to Dick Nixon, and
who assured me that Tricky Dick had assured them that he was “really
anarchist at heart”; once campaign pressures were over, and Nixon
as President was allowed his head, we would see an onrush toward
the free market and the libertarian society.

In the 1968
campaign, anarcho-Nixonism redoubled in intensity, and we were
assured that Nixon was surrounded by assorted Randians, libertarians,
and free-market folk straining at the leash to put their principles
into action.

Well, we
have had two years of Nixonism, and what we are undergoing is
a super-Great Society – in fact, what we are seeing is the
greatest single thrust toward socialism since the days of Franklin
Roosevelt. It is not Marxian socialism, to be sure, but neither
was FDR’s; it is, as J. K. Galbraith wittily pointed out in New
York (Sept. 21) a big-business socialism, or state corporatism,
but that is cold comfort indeed.

There are
only two major differences in content between Nixon and
Kennedy-Johnson (setting aside purely stylistic differences between
uptight WASP, earthy Texan, and glittering upper-class Bostonian):
(1) that the march into socialism is faster because the teeth
of conservative Republican opposition have been drawn; and (2)
that the erstwhile “free-market” conservatives, basking in the
seats of Power, have betrayed whatever principles they may have
had for the service of the State.

Thus, we
have Paul McCracken and Arthur F. Burns, dedicated opponents of
wage-price “guideline” dictation and wage-price controls when
out of power, now moving rapidly in the very direction
they had previously deplored.

And National
Review, acidulous opponent of the march toward statism under
the Democrats, happily goes along with an even more rapid forced
march under their friends the Republicans.

Let us list
some of the more prominent features of the Nixonite drive –
features which have met no opposition whatever in the conservative
press. There took place during 1970 the nationalization of all
railroad passenger service in this country. Where was the conservative
outcry? It was a nationalization, of course, that the railroads
welcomed, for it meant saddling upon the taxpayer responsibility
for a losing enterprise – thus reminding us of one perceptive
definition of the economy of fascism: an economy in which big
business reaps the profits while the taxpayer underwrites the
losses.

There took
place also the Nixonite fight for the SST [Supersonic Transport]
boondoggle, in which $300 million are going to follow a previous
$700 million of taxpayers’ money down the rat hole of gigantic
subsidy to an uneconomic mess. Bill and Jim Buckley can find only
ecological pollution as an argument against the SST – an
outright looting raid upon the taxpayer without even a flimsy
cover of “national security” as a pretext.

The only
argument seems to be that if we do not subsidize the SST, our
airlines will have to purchase the plane from – horrors!
– France; on this sort of argument, of course, we might as
well prohibit imports altogether, and go over to an attempted
self-efficiency within our borders. How many SST’s might be purchased
on an unsubsidized market is, of course, problematic; since the
airlines are losing money as it is, it is doubtful how much revenue
they will obtain from an airfare estimated at 40% higher than
current first-class rates.

And then
there is the outright $700 million gift from the U. S. government
to Lockheed, to keep that flagrantly submarginal and uneconomic
company in business indefinitely.

And then
there is agitation for the friendly nationalization of Penn Central
Railroad. Senator Javits is already muttering about legislation
for the federal bailing out of all businesses suffering losses,
which is the logical conclusion of the current trend.

Neither has
any note been taken of the Nixon Administration’s plan for tidying
up the construction industry. Many people have scoffed at the
revisionist view (held by such New Left historians as Ronald Radosh)
that the pro-union legislation of the twentieth century has been
put in at the behest of big business itself, which seeks a large,
unified, if tamed labor union junior partnership in corporate
state rule over the nation’s economy. And yet the Railway Labor
Act of 1926, which in effect compulsorily unionized the railroad
industry in exchange for compulsory arbitration and a no-strike
policy, was put in at the behest of the rail industry, anticipating
the later labor policy of the New Deal.

And now the
construction industry has gotten the Nixon Administration behind
a similar plan; all the members of the present small but pesky
and powerful construction unions are to be dragooned into one
big, area-wide industrial union, and then to be subject to massive
compulsory arbitration. The fascization of America proceeds apace.

To top it
off, the Administration is readying two socialistic “welfare”
measures of great importance: one further socializes medicine
through nationwide major medical “insurance” to be paid by the
long-suffering poor and lower-middle class Social Security taxpayer.
And surely it is only a matter of time until the disastrous Friedman-Theobald-Nixon
scheme of a guaranteed annual income for everyone is forced through
Congress, a scheme that would give everyone an automatic and facile
claim upon production, and thereby disastrously cripple the incentives
to work of the mass of the population.

In the area
of the business cycle, it should be evident to everyone by this
time, the Administration, trying subtly and carefully to “fine-tune”
us out of inflation without causing a recession, has done just
the opposite; bringing us a sharp nationwide recession without
having any appreciable impact upon the price inflation. A continuing
inflationary recession – combining the worst of both worlds
of depression and inflation – is the great contribution of
Nixon-Burns-Friedman to the American scene.

While it
is true that a recession was inevitable if inflation was to be
stopped, the continuing inflation was not inevitable if the Administration
had had the guts to institute a truly “hard” money policy.

Instead,
after only a few months of refraining from monetary inflation,
the Administration has been increasingly opening the monetary
floodgates in a highly problematic attempt to cure the recession—while
at the same time failing to recognize that one sure result will
be to redouble the chronic rise in prices.

But now the
Administration has swung around to the Liberal thesis of monetary
and fiscal expansion to cure the recession, while yelling and
griping at labor and employers not to raise wages and prices –
a “guidelines” or “incomes” policy that is only one step away
from wage and price controls. This direct intervention is supposed
to slow down the wage-price spiral. In actual fact, the direct
intervention cannot slow down price increases, which are caused
by monetary factors; it can only create dislocation and shortages.

Pumping in
more money while imposing direct price control and hoping thereby
to stem inflation is very much like trying to cure a fever by
holding down the mercury column in the thermometer. Not only is
it impossible for direct controls to work; their imposition adds
the final link in the forging of a totalitarian economy, of an
American fascism. What is it but totalitarian to outlaw any sort
of voluntary exchange, any voluntary sale of a product, or hiring
of a laborer.  

But
once again Richard Nixon is responsive to his credo of big business
liberalism, for direct controls satisfy the ideological creed of
liberal while at the same time they are urged by big business in
order to try to hold down the pressure of wages on selling prices
which always appears in the late stages of a boom.

While
we can firmly predict accelerating inflation, and dislocations
stemming from direct controls, we cannot so readily predict whether
the Nixonite expansionism will lead to a prompt business recovery.
That is problematic; surely, in any case we cannot expect any
sort of rampant boom in the stock market, which will inevitably
be held back by interest rates which, despite the Administration
propaganda, must remain high so long as inflation continues. All
in all, how much more of Nixonite “anarchism” can freedom stand?

Murray
N. Rothbard
(1926–1995) was the author of Man,
Economy, and State
, Conceived
in Liberty
, What
Has Government Done to Our Money
, For
a New Liberty
, The
Case Against the Fed
, and many
other books and articles
. He
was also the editor – with Lew Rockwell – of The
Rothbard-Rockwell Report
.

Murray
Rothbard Archives

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