Recently by Gary North: Tenured Austrian Economists vs. Murray Rothbard
I wrote an article on Austrian School economist Murray Rothbard. I argued that one of the reasons why tenured Austrian School economists want to distance themselves from him, is his writings on conspiracies in American history.
Rothbard was quite clear about his commitment to apply Austrian economics’ theories of human action to the topic of conspiracies. He wrote this defense of the conspiracy view of history in 1977. He began with a description of the knee-jerk reaction of Establishment intellectuals.
Anytime that a hard-nosed analysis is put forth of who our rulers are, of how their political and economic interests interlock, it is invariably denounced by Establishment liberals and conservatives (and even by many libertarians) as a “conspiracy theory of history,” “paranoid,” “economic determinist,” and even “Marxist.” These smear labels are applied across the board, even though such realistic analyses can be, and have been, made from any and all parts of the economic spectrum, from the John Birch Society to the Communist Party. The most common label is “conspiracy theorist,” almost always leveled as a hostile epithet rather than adopted by the “conspiracy theorist” himself.
THE HISTORICAL GUILD
This brings up the issue of the academic guild. Every guild has rules and regulations. It has above all a system of screening. The guild screens out people who do not hold to the standards enforced by the guild. The guild attempts to define its own practices as the only true practices that are acceptable to the guild, and which should be acceptable by society. Any practitioner who deviates from the standards announced by the guild, and above all, systematically enforced by the guild, is automatically defined as some sort of deviant. The representatives of the guild warn the public not to accept the conclusions, practices, or presuppositions of anyone, and especially any rival group, that dares to call into question the conclusions, practices, and presuppositions of the guild.
The guild dismisses all suggestions that it is operating in terms of self-interest. It assures the public that it only has the interests of the public at heart. It is pursuing its goals in order to defend the public from unscrupulous operators who seek to defraud the public. For this reason, and only for this reason, the guild insists that it is necessary for the government to intervene and prevent those who offer opposing opinions, practices, and above all, lower prices. The public needs protection from charlatans, the guild insists, and in order to help the public, the guild calls upon politicians and bureaucrats to establish rules, which means rules written by the guild, to restrict entry into the field of study or operations presently dominated by the guild.
The guild seeks to define legitimate practices, presuppositions, and concepts in terms of the prevailing standards of the guild. It is this definition of legitimacy which is central to the promotion of the guild’s interests. The guild must deflect all criticism of the guild that is based on a careful study of cause-and-effect with respect to the economic results of the guild’s recommended political measures. Anyone who follows the money, from the effects of the regulations back to the bank accounts of the members of the guild, is dismissed as a conspiracy theorist. He is dismissed as a Marxist, or someone who was opposed to the protection of the general public. The guild insists that its adherence to its own standards of operation has nothing to do with the increased income generated by the guild, and by the decreased income generated by the guild’s competitors.
Virtually all modern political legislation, as well as virtually all standards adopted by government bureaucracies to enforce the laws, are the result of special-interest pressures brought to bear on politicians and bureaucracies by members of guilds. Almost all of modern economic life is based on guilds, as surely as urban economic life in the year 1200 was based on guilds. They are not called guilds today. They are called special interests. Special interests are groups of producers whose special interest is specifically their own personal self-interest.
One of the strange aspects of modern historiography and academic social science is this. The phrase “special interest group” is widely accepted, but the phrase “conspiracy history” is one of contempt. From an economic standpoint, a special-interest group lobbies politicians to get laws passed that restrict new entrants into the field which is presently dominated by the particular special-interest group. This is widely recognized as being basic to modern political life, and academicians have no doubts about following the money back to a capitalistic special-interest group: a corporation, a trade association, or a cartel. In other words, they follow the money when the money leads back to a specific group of capitalists. This tradition goes back to Adam Smith in the wealth of nations. It is a long-established tradition.
When the trail of money leads to well-known Establishment organizations, such as the Council on Foreign Relations or the Trilateral Commission, or worse, to the Federal Reserve System, the academic historian draws the line. “Thus far, and no farther.” He ceases to follow the money. It is legitimate, he says, to follow the money back to organizations whose sole purpose is making money. These are the bad guys. But it is illegitimate to continue following the money when it leads to nonprofit government advisory organizations made up of the prominent people in business, academia, the media, and the highest levels of national government. Rothbard put it this way. He singled out Davcid Rockefeller.
Do we say that David Rockefeller’s prodigious efforts on behalf of certain statist public policies are merely a reflection of unfocused altruism? Or is there pursuit of economic interest involved? Was Jimmy Carter named a member of the Trilateral Commission as soon as it was founded because Rockefeller and the others wanted to hear the wisdom of an obscure Georgia governor? Or was he plucked out of obscurity and made President by their support? Was J. Paul Austin, head of Coca-Cola, an early supporter of Jimmy Carter merely out of concern for the common good? Were all the Trilateralists and Rockefeller Foundation and Coca-Cola people chosen by Carter simply because he felt that they were the ablest possible people for the job? If so, it’s a coincidence that boggles the mind. Or are there more sinister political-economic interests involved? I submit that the naïfs who stubbornly refuse to examine the interplay of political and economic interest in government are tossing away an essential tool for analyzing the world in which we live.
Austrian School academic economists do not follow him on this. Neither do academic historians. Why not? It is because they know who butters their bread. It is also based on their training. They have been trained for years to recognize where this leads: to unemployment. They recognize the unstated rules of the game, as all guild members do. They recognize the existence of boundaries, which begin with academic etiquette but extend to teaching contracts that do not get renewed. They know which topics gentlemen do not discuss in polite company. Conspiracy is such a topic. They say it is because there are no such things. I say it is because there are.
OPPOSITION TO CONSPIRACY THEORIES
Conspiracy theories in almost all cases argue that the goals of the conspirators extend beyond economic self-interest into the areas of religion, ideology, and the old boy networks. A conspiracy theory follows the money, but its long-term goal is to expose hidden interests that are deeper than economic self-interest and larger bank accounts. In other words, a conspiracy theory, while it relies on the assumption of the economic self-interest of politicians who are bribed, as well as businessmen who offer the bribes, focuses not on money as the goal of the conspiracy, but on money as the means of the conspiracy.
If a theory of organized special-interest behavior is limited to an exploration of political pressuring for the sake of making more money, virtually all modern social scientists and historians are willing to give it consideration. But if it argues that economic self-interest is secondary, and that religious, ideological, or family connection interests are at the bottom of the special-interest group, the theory is automatically dismissed as crackpot.
Why should this be? Why should there be any assumption that following the money leads to people who are seeking power rather than money? Following the money often leads back to people with an agenda that is based on membership that crosses economic and national boundaries. Economic boundaries are secondary, but confessional or family-based boundaries are central.
More important, what if the special-interest group is bound by some kind of loyalty oath, either explicit or implicit, and this oath extends across national boundaries? What if the loyalty oath involves loyalty to a hidden organization, or to a hidden section of the public organization, which screens out the vast majority of citizens?
This would indicate two things. First, it would indicate that the Marxist analysis of economic self-interest has always been seriously wrong. So have all Marxist-influenced theories of social development. It would mean that democratically elected politicians will prove to be incapable of working the special interests merely by altering tax policy. Their advoisors will be drawn from the most powerful special-interest groups, which are not primarily economic, but which are allied with favored industries in general, and favors international banking in particular.
This would mean that economic self-interest is subordinate to other interests, which again is a denial of Marxist theory. Original Marxist theory placed the mode of production at the center of social development throughout history. Virtually all forms of socialism, whether Marxist or non-Marxist, have adopted this basic idea. The one major exception to this was the supposedly Marxist Italian theorist Antonio Gramsci, who in fact was the most important anti-Marxist theorist ever to come out of the Marxist movement. Gramsci in the 1930s acknowledged that Western society was deeply religious, and that the only way to achieve a proletarian revolution would be to break the faith of the masses of Western voters in Christianity and the moral system derived from Christianity. He placed religion and culture at the base of the pyramid. This means that the mode of production is secondary.
Second, it would indicate that a conventional academic study based on a theory of personal economic self-interest and relying on public records is incomplete in all those areas where oath-bound special-interest groups predominate. These oath-bound groups cannot be understood accurately in terms of economic motivation, which is relatively easy to assess, but instead operate in terms of deeper, hidden loyalties that are beyond the lure of economics.
It means that some people are deeply motivated by the goal of changing humanity by changing the world. They are willing to use political influence to re-shape the world, even when this goal is in opposition to the prevailing democratic majority. This would indicate that the democratic majority is not a reliable guide to shaping policy, because policy will be re-written, re-shaped, and re-organized by hidden groups that possess the real power at the top of the political hierarchy. In other words, a conspiracy theory is inherently anti-democratic.
Democratic theory is the reigning religion of the vast majority of those people who have been trained in the social sciences in higher education institutions. Anything that challenges the ultimate sovereignty of democratic government is regarded as evil. This is why social scientists are willing to follow the money back to the goal of making more money. This way, it is possible to expose the shapers of policy as self-interested people who were opposed to democracy. The critics assume that democratic voters will respond to such exposés. This outlook was basic to the Progressive movement a century ago. It is basic to all liberal reform movements’ official pronouncements.
But what if the special-interest groups are only marginally motivated by money? What if their goal is power, which means the ability to shape what the vast majority of voters want to do, irrespective of their interests? Then democracy is an illusion, merely a convenient tool of deception manipulated by elites. Democracy is a means to elitist power, not an end — just as money is. So, a conspiracy theory undermines people’s faith in the efficacy of democratic government. The high priests of the religion of democracy are appalled. Such ideas undermine the trust of the masses.
So, there is academic resistance to any conspiracy theory that places a loyalty oath above either economic self-interest or the power of democracy to produce social good for the masses. A conspiracy theory, if true, would indicate that modern life is ultimately shaped, not by the mode of production, not by the polling booth, and not by money under the table, but by ultimately religious perspectives that operate behind the scenes.
March 15, 2013
Copyright © 2013 Gary North