Llewellyn H. Rockwell, Jr., is president and founder of the Ludwig von Mises Institute in Auburn, Alabama and editor of LewRockwell.com. Ludwig von Mises (18811973) was a major economist and thinker whose historic treatises include Human Action and Socialism. The mission of the Ludwig von Mises Institute is "to restore a high place for theory in the social sciences, encourage a revival of critical historical research, draw attention to neglected traditions in Western philosophy, and promote the free and enterprising commonwealth."
Myles Kantor: Ludwig von Mises entitled one of his books The Anti-Capitalistic Mentality. What did he mean by this?
Llewellyn H. Rockwell, Jr.: It’s a marvelous book, written in 1956. It still holds up. Mises addressed the question: why are the cultural elites so biased against the free-market economy, and all it represents, despite the evidence that it is the only system compatible with a developed civilization?
He took it for granted that huge sectors of the intelligentsia and media are deeply ignorant of economics. In this book he addresses the problem not of ignorance but hate: hatred of the businessman and entrepreneur, and the assumptions that the business class is secretly criminal, that the rich never deserve what they own, that businesses that rake in profits by serving others through enterprise somehow "owe" something to the "community," so, if they don't give it up voluntarily, it should be taken from them.
We see this on display in these disgusting Enron hearings, lovingly reported by the echo-chamber press. It's one thing to prosecute crime, but this is anti-capitalism running wild. Nobody remembers that during the u201890s boom phase of the market created by loose credit, investors cared only about accounting in order to sell companies with real earnings and buy those without. The conventional wisdom on the street was that any company that paid dividends was worthless. That's the topsy-turvy world that easy money created in the late u201890s.
So Enron was typical of major corporate start-ups during the boom phase of the business cycle, but in 2001 the free market struck back with a dose of reality. Unviable businesses melted. Thank goodness for that! And now investors are wary, as they should be. There is a wonderful witch-hunt on for companies that bury debt as subsidiaries, and there is u2018fessing up all over the place. Truth at last, courtesy of the market economy.
Now contrast this process with HUD, the post office, or any other federal bureau. The GAO comes out with regular reports showing that these agencies' books are in complete chaos, with tens of billions missing, unaccounted for, or uncollectible. There are no earnings. There are no dividends. And who cares? No one. In Washington, GAO reports are used for scrap paper and birdcage lining.
And so now we have these politicos who specialize in public relations and wealth redistribution putting Enron on trial for alleged accounting malpractice. And why? Because the company went belly-up. But the market is supposed to punish unviable enterprises by shutting them down. Lord knows that would never happen to a government agency. Government specializes in keeping unprofitable operations going: look at the history of industry in the Soviet Union, or at American farming or the TVA.
Kantor: What type of anti-capitalism did Mises draw attention to?
Rockwell: All of the same types of bias were present forty-six years ago when Mises wrote his book. He noticed in those days that detective novels, for example, frequently make the rich businessman the villain. In movies, bureaucrats are heroic and public spirited while businessmen are greedy, racist, and vaguely criminal. In popular music, the "suits" are the ones ‘dissed.
As for academia, outside one or two economics professors, nearly the entire faculty of the typical university is reliably anti-capitalist. As a class, academics can be depended on to oppose economic development, support high taxes, and latch on to every anti-enterprise cause that comes along.
Some of the anti-capitalism of the intellectuals is self-interest at work: those paid by the state identify with the state and its interests. There's also snobbery at work: most intellectuals hate commercial culture. Well, folks, the glory of capitalism is that it permits you to choose what to consume and what not to consume. If intellectuals prefer the music of Anton Webern to Britney Spears, fine. Tower Records offers both.
But Mises’s analysis goes further to identify the problem of envy at the root of anti-capitalism. Whether in the arts, entertainment, or academia, the dominant players are talented people who believe that they are wiser and better than the masses. They are appalled that capitalism permits a B-school dropout to become a billionaire while they scrape by for a measly raise when promoted from assistant to associate professor. They set out to cripple the system that brings this about.
And yet this is not new. Since ancient times, the merchant has been scorned and his profession considered ignoble. The philosopher who strolls around speculating on the meaning of life is seen as the highest form of humanity while the man who risks his own money to make available food, shelter, medicine, clothing, and all the other material goods that make life liveable is despised.
Now I'm all for philosophy and other academic disciplines; like the priesthood, this is a vocation that requires sacrifice, and that is essential. But celebrate the risk-taking merchant too. He is a benefactor of mankind.
Kantor: Radical environmentalists in Europe often vandalize and perpetrate arson against McDonald’s restaurants. Is there a parallel between this aggression and the attacks on the World Trade Center?
Rockwell: Notice that whenever looting of businesses occur, at these anti-globalist events or in Europe when McDonald's restaurants are burned, the press will frequently write that no violence has occurred, on grounds that no one was hurt or killed. No violence? What do you call it when gangsters destroy property for ideological reasons? You can call it violence, or you might even call it terrorism. The Earth Liberation Front has been doing this for years in the U.S., wrecking research labs and burning the cars of scientists. It's hardly ever reported.
Think about the people who worked at the WTC: traders, insurers, speculators, retailers, lenders: financial experts whose contributions are essential to our daily lives. They labored every day to overcome linguistic, cultural, and regulatory barriers to unite the world in a great commercial project to improve the lot of mankind. But public schools teach that they are exploiters, Hollywood regards them as somewhat criminal, and not one person in ten thousand can tell you why what they do matters.
When the hijackers were choosing targets, they figured that they would smash these buildings because they somehow represented the "money power." Well, not many among the culture elites in this country or the rest of the world would really disagree with them. The urge to destroy business and finance as a sector plays itself out in politics and the media every day.
The attack on the WTC put into action what millions of students are taught every day in their college classrooms, what prime-time television suggests night after night, what the sociology journals seek to prove year after year: entrepreneurs and what they create are anti-social and wholly dispensable.
Yet enterprise and its symbols do not represent "money power" or any other kind of power. They represent the coming together of people to trade voluntarily with the hope of achieving material advancement and progress.
The watchwords of capitalism are persuasion and contract. Buying and selling is a cooperative act. No one ever forced a Parisian to eat a Big Mac. The urge to smash the system that makes it possible for people to have more choices in life stems from ignorance and evil. Without free enterprise, civilization would crumble and we would all starve and die.
Kantor: Has popular culture’s appreciation of these individuals increased since September 11?
Rockwell: I wouldn't say so. We've gained a greater appreciation of rescue workers, and that's great, though I notice that many of them are seizing the opportunity to sue the city for personal damages. But what about the people and the occupations that were actually targeted by the killers?
Hardly anyone can name a single business that was smashed. Among them: Morgan Stanley, Fred Alger Management, Cantor Fitzgerald, MassMutual, Fiduciary Trust, Harris Beach & Wilcox, Oppenheimerfunds, Bank of America, Kemper Insurance, Lehman Brothers, Dean Whitter, Credit Suisse, and First Boston.
I don't recall a single tribute to these institutions printed in the popular press. I don't even rule out that many people among the U.S. intelligentsia thought that because these people were on the front lines of capitalism, they had it coming. Yet these are the brokers who worked every day to invest our savings and channel resources to their most profitable uses. These insurance companies provide the valuable service of securing our lives and property against accidents, and did far more to achieve their aims than the Office of Homeland Security, which in fact has no real stake in the security of anything but its own budget.
Kantor: Have federal policies after September 11 reflected a greater appreciation of capitalism?
Rockwell: Again, the opposite has happened. At the World Economic Forum, held in New York in memory of September 11, you couldn't tell the protestors from the main speakers. The podium always seemed to be held by some demagogue railing against the wealth of the West. Not one speaker bothered to give a tribute to free enterprise, not even the corporate people there. In all, it was a disgusting show.
The conventional wisdom now is that multinational corporations are just elaborate shell games covering every manner of criminality. The recent talk is not about whether there should be new regulation of business but how severe should it be.
Just recently, Pat Buchanan announced that the Enron collapse shows that "capitalism may contain the seed of its own destruction." That's a good summary of the Marxian view. Next he'll endorse a dictatorship of the proletariat and the expropriation of the Kulaks.
Kantor: To what extent was September 11 facilitated by domestic anti-capitalism, namely, regulatory impositions?
Rockwell: This is an interesting case. Of course the FAA has long prevented airlines from defending their own property. I know many pilots who saw the need for guns on planes long ago. But the regulatory view was that this was unthinkable. They were told that hijackers need to be placated and talked to by experts on the ground, while passengers and crew should be compliant.
This is what all the terrorism experts were saying before September 11. If you think about it, this entire war and the huge increase in government power that has resulted, including the thousands dead and the billions in destroyed property, might not ever have occurred had the pilots had the right to protect property from invasion and theft.
So, yes, regulators are to blame in part. Of course that doesn't remove responsibility from the hijackers themselves. But let's say you have a town council that forbids banks from installing alarm systems, and then all the local banks are robbed. Should the town council be held morally culpable along with the robbers? I think so.
There is also the interesting case of asbestos and the WTC. Might the steel in the building have weakened more slowly if asbestos had been able to be used on the upper floor as it was on the lower? Might that have given people more time to leave the buildings? Some engineers have said so.
As for restrictions on trade, those who support ongoing sanctions against Iraq and other countries need to consider that these polices violate free trade, and give rise to hatreds that can fuel terrorism. Long before the terrorists cited these sanctions as an excuse, people from groups like the Institute of International Economics had raised serious questions about the effects of these sanctions. Remember too that this is a region rich with oil profits made possible in part by domestic restrictions on energy production. This is why a policy of free trade with all peoples of the world needs to be matched by loosened energy regulations at home.
Kantor: Despite the devastation inflicted by socialism from Russia to Ethiopia to Cuba, its apologists maintain these regimes have perverted socialist principles. Is socialism inherently hostile to freedom? Is capitalism a precondition for peace?
Rockwell: That's right, there's always a new form of socialism being proposed in some new book. A bestseller on the college circuit called Empire, for example, calls for a new communism which, the authors promise, will be different from the old. But anything other than free enterprise always means a society of compulsion and lower living standards, and any form of socialism strictly enforced means dictatorship and the total state. That this statement is still widely disputed only illustrates the degree to which malignant fantasy can capture the imagination of intellectuals.
What the socialists hate most is that the masses have never risen up to overthrow the free-enterprise society. This had already frustrated them by the turn of the 20th century, so many of them hatched a new scheme to impose socialism by crisis. In Europe, and to some extent in the U.S., war was their preferred method of getting rid of the market economy. They saw that war puts the government in charge of economic life. They knew that if they ever stood a chance to impose central planning, it was to be through war socialism.
This is why the socialists and the left generally were such strong advocates of entry into World War I, and why FDR so badly wanted to enter World War II. Hitler too believed that war was the best way to bring about national socialism. Mussolini felt the same about fascism. Dictators love war. We even saw elements of this in the Clinton years: he turned to war when his collectivist domestic programs weren't panning out. And the left is correct in this: people are more prone to give up liberty in wartime.
Ludwig von Mises, who saw his country and civilization wrecked in two world wars, used to say: "The first condition for the establishment of perpetual peace is the general adoption of the principles of laissez-faire capitalism." People on the left and right today reject that view, and we live with the destructive aims and policies of anti-capitalism, and we have perpetual war.
This is why, so far as the Mises Institute is concerned, we will keep doing what we have always done: defend the economics of capitalism against its myriad enemies, because it is the very foundation of peace, prosperity, and civilization, and the best, and perhaps only, source of effective security as well.
March 12, 2002